It’s entering A/W season, and the finance world is pretty in pink, as Coral-card challenger bank Monzo is set to become the latest UK technology ‘unicorn’, lining up new finance that pushes its valuation to over £1 billion. The £150m of investor funding is the latest in a winning streak for the London-based fintech platform since they raised their first million in just 96 seconds three years ago.
Both the high street and consumers have been keeping their eye on the rise and rise of these digital disruptors, flooding the market in various shades of bubble-gum. And according to the Head of Information Security at a large European bank, there is a real cause for concern.
“I see a future where the challengers have completely taken over the consumer market”, he predicts. “They can innovate at a rate that bricks and mortar just can’t. A few of the largest traditional banks will survive…the Barclays, the HSBC’s…and do mostly B2B business. The middle market will just completely disappear”.
There’s a number of striking accessories that have given challengers their winning edge. Particularly popular amongst millennials, their smartphone-based interface and attractive rates have won over customers in their millions. But their pièce de résistance? An upper hand in security and
trust. Legacy technologies and the risk averse nature of many conventional banks has left their innovation strategy looking pretty last season, as Andy Cory, Head of Identity Management at digital transformation company KCOM is quick to point out.
Cumbersome operations can lead to IT projects being “rushed for the sake of customer convenience over security”. On the other hand, the newer and more flexible core technologies of the challenger banks mean that, according to Cory, they can bypass this “convenience versus security debate” and focus on the “altogether ‘easier’ currency – online identity”. A 2018 Edelman Global Trust Barometer rated technology the most trustworthy sector at 75% while financial services flopped at 54%. Tellingly, Monzo keep their distance from the traditional banking label, stating “We’re not a bank. We are a tech company based in Hackney. That means we do things a little differently.”
Some traditional banks are reinventing their look. Forbes reveals RBS is “feverishly building a new mobile-only bank” and has set internal goalposts to switch 1 million of its existing NatWest customers onto its mobile-only offering. They say if you can’t beat ‘em, join ‘em…
Digitalisation may be the latest trend, but a major UK bank admits that traditional threats like BEC and social media engineering are still tripping them up. If the high street wants to stay in style its banks need to up their security game and keep the trust of their clients. Fashion or finance, shoppers are fickle, and they’re not careful, it may soon be the end of the line for the bricks and mortar banks.