Winning the Grey Vote – How to Survive and Prosper The Challenger Banks Need To Diversify Their Client Base

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Like in other aspects of society in the UK; you can be cool, hip and ever so trendy by getting the engagement of the youth demographic. However to have all the power you need to be engaging with the people who have the money. Challenger banks are going to need to diversify beyond millennials. They are going to need to get out to the masses who are being directly impacted by the gradual death of the high street, and the banking branch closures that are happening across the country. Those outside metropolitan areas, who lack trendy haircuts and probably have the login to their grown up children’s Netflix account, but don’t use it as they get too frustrated with the user interface.

This challenge is showcased by Monzo’s user base where currently a third of their 2 million client base live within the golden circle of the M25, and less than 5% are over 60. In order to grow these numbers are going to have to radically shift; a fact they are more than aware of. The situation is similar with their key competitor Revolut, with 28% of their UK client base live in London.

Increasingly then, we are seeing a pivot from the key challenger banks, who have generally been mobile first in their engagement and growth strategies. They are trying to do this by evolving their UX to make them naturally more accessible to those who might not be a digitally savvy as their original client base. Monzo and Starling have led the way on this making it possible for all UK customers to make cash deposits, with Revolut the other great UK challenger, simplifying their customer contract to try and improve accessibility.

The Build Buy or Partner Debate Turned On Its Head

Whenever you look at new players challenging the incumbents there is always a build, buy or partner debate. This is where there is a paradigm shift of disruption, in an established industry, and the incumbent players take this strategy in order to remain relevant. The most explicit example of this outside banking would be in the past decade in broadcasting, where Over the Top (OTT) services turned the linear broadcasting model on its head. Traditional broadcasters looked at building their own OTT service (BBC iPlayer), Buy (many tried to buy Netflix) or partner (Channel 4’s partnership with Hulu). This has been the same with incumbent banks, looking at taking on these new challengers.

It is interesting then that in order to grow the challengers are having to adapt to a similar model. They are choosing to experiment with more physical forms of contact, responding to the fact that the reports of ‘the death of cash’, to quote the great Mark Twain, have been ‘grossly exaggerated’, especially outside London.


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