Challenger banks are comparatively small retail banks which are established for the purpose of competing for business with large, long-established national banks. While Neo bank is referred as web based bank which provides complete range of banking solutions without having any physical offices or branch. Growing investment in financial technology has boosted the market for challenger and Neo banks. For instance, according to Accenture and Partnership fund for New York city, worldwide investment in financial technologies at the end of 2014 increased around three times and reached $12.2 billion.
Consumer convivence offered by banks is a prime factor driving the growth of challenger and neo banks all around the globe. Additionally, cost-efficiency & fast servicing, provision of advance banking features, healthier interest rates, and increasing smart mobile devices penetration also helps the challenger and neo bank market for further growth. Further, growing investment in Neobanking also boost the market drastically. For instance, Atom Bank received a 45-million-pound investment from the Spanish bank BBVA in month of January 2016. Security and privacy of the financial data and customer reluctance towards adoption of Neobanking might hinder the market growth.
Global challenger and neo bank market is segmented on the basis of bank type, and country. By bank type it is bifurcated as challenger bank and neo bank. Geographically, the global challenger and neo banking market is segmented as North America, Europe, Asia-Pacific, and Rest of the World. Europe is one of the leading sectors for challenger and neo banking. For instance, in 2015, challenger banks supplied over 200,000 UK consumers with mortgages and held a 20% share of the UK’s small and medium-sized enterprise (SME) gross lending, providing new loans and overdrafts to around 50,000 SMEs.
The challenger and neo bank market is in its nascent stage and is anticipated to gain popularity in the upcoming years. Various players are trying to enter the market. However, the entry is restricted due to the power of government over license and regulations for the financial institutes. For an instance, Bank of England issued the first license to a completely mobile bank, Atom Bank in mid-2016.
Top banks of the market are Atom Bank PLC, Fidor Bank Ag, Monzo Bank Limited, Movencorp Inc., Mybank, N26, Pockit Limited, Simple Finance Technology Corporation , Ubank Limited, and Webank .
Challenger and Neo Bank Market Segmentation
By Bank Type
• Challenger Bank
• Neo Bank
• North America
• Rest of the World
Key Market Players
• Atom Bank PLC
• Fidor Bank Ag
• Monzo Bank Limited
• Movencorp Inc.
• Pockit Limited
• Simple Finance Technology Corporation
• Ubank Limited