Upstart challenger banks also need some degree of security that any platform partner has worked in similar capacities before, typically across large banks, credit/debit cards, auto financing, short- term, and retail financing. Colin Walsh, the CEO and co-founder of one such challenger bank, comes from a legacy banking background and has admitted the deficiencies of the old-school system as compared to a digital-first model: “I spent many years inside that [traditional banking] system. You are preaching to the choir here. The big banks are not innovating around customer problems. They are trapped in product silos. Specifically big banks. We are solving problems. Not pushing products. My measurement of success is to push out consumer expectations.”
Reliability in Experience and Service We briefly touched on platforms above, and it’s been argued that every business today must become a platform around ideas such as talent, technology, and information. The issue at the heart of developing and scaling challenger banks runs deeper, however. The first important idea is that of the on-demand economy. Once thought to be the purview of a younger, affluent middle class, it’s been shown to affect many more socioeconomic segments of the economy. The expectation is now, whether that’s ordering cars, food, or entertainment. 20-30 years ago, the idea of a loan being applied for and funded during an afternoon at work would be laughable. Now it’s normative, and that’s because of the on-demand economy’s increasing pressure for it. Challenger banks, keeping that in mind, need to operate on platforms and deliver in real-time, but they also need amazing customer experience. Because of choice overload and the reduced barriers to entry in establishing a challenger bank, there are dozens (hundreds) of options for a customer interested in working with a new kind of bank. A better, more reliable experience not only takes customers away from the established legacy banks, but it steals customers from the other upstarts. And again, to establish that reliable experience, you need the right partners and product suite.
That quote contains one major kernel of truth: the solving of problems is the reliability end customers want to see. Typically, the infighting silos are just for the relevancy of the employees, which a banking customer does not care about.
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