Points of View

As challenger banks’ profits fail to match their growth, incumbents must continue to invest in digital

Feb 26, 2020 Sam Duncan

Incumbent banks, the traditional and often brick-and-mortar brands that have dominated banking for decades, have been threatened for some time that they’ll fall at the hands of challenger banks. The emergence of Monzo, Revolut, Starling Bank, and many more have made the threat real. However, while disruptors have gained rapid traction in the market, they’re struggling to turn a profit, and incumbents aren’t faring much better, as their own digital brands, such as JP Morgan Chase’s Finn, have had limited success. The difference is that incumbents have a significant advantage in their brands, capital reserves, and existing customer bases; they can use these to outlast challengers. In the meantime, they must continue to develop digital offerings—when they outlast the competition, they can swoop in with ready-to-go platforms or merge and acquire the more promising challengers.


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