Bloomberg shines a light in this article on how hard it is to build a challenger bank. UK challenger Atom, which began offering savings accounts in April, has only 1,800 customers, who have deposited £16M ($21 million). Monzo has distributed 35,000 prepaid debit cards on which it says £31.7M have been deposited. Those are indeed tiny numbers in a country with 70M checking accounts. Will the big banks end up copying them or absorbing them?
The U.K. neobanks are a second wave of so-called challengers, including billionaire Richard Branson’s Virgin Money Holdings Group Plc. They plan to set themselves apart by offering mobile budgeting and investment tools, instant notifications on spending habits and smarter anti-fraud features. Some intend to take advantage of incoming European rules allowing firms to access banks’ customer data, which will enable them to act as brokers for financial services offered by other lenders.