Open Letter to the Challenger Bank Reloaded

Dear Challenger Bank,

Me again. Clench away. 

I know you didn't like this last one I wrote for you. I also know that while you've tried to ignore it because let's face it, "FCA meetings", some of those principles of how important the technology is, did hit home and while your product meetings were as cheerful and unaffected, in your heart of hearts you now know that there is no chance of existence long term while ignoring aggregation and weak or no categorisation. Which is a win in my book. Happy to be the bad guy if it makes you better. 

Back then I was saying:

"The quality of the Experience (...) I am not worried about - you can deliver that. It’s only here that you can count on the Social fun, the Gamification, the Telepathic Authentification, the new Free-2-Spends, the Causes, the Offers, the Notifications, the Trading Simulations, the Savings Ladderboards and all the other exciting, hopefully addictive features you dreamt that will grab them by the heart. If you sorted the Tech or the Product and you managed to get Adoption, you’ll get your Retention, you’ll be awesome and make them fall in love and want to stick around, that will be easy and magical."

Except it won't be that easy and magical, will it? A couple of months have passed since I wrote that and you're starting to worry me on the proposition side as well. The above only stands if your bar was to surpass the experience of the incumbents. What is on the offer on the market right now for everyone. But you're not building for everyone, are you? You're building for a particular niche and that's the kicker.

First off, I understand why you think you need a niche, I do. For one thing the regulator himself pushed you into believing you need one with the incessant discussion on your business plan and KYC. I myself invested in an Experience Challenger Bank that launched the other day and one of the main reasons why I was seduced by the proposition of Loot is that they have a clear niche, in their case, students.

With that said, the more clear you are on who your segment is, and in a way, the smaller it is, the more you have to hit the nail square on the round head. There's no room for error. If you're building for Milenials, Y-ers, for SMEs, for farmers or expectant mothers, you'd best intimately know their every single Money Moment Need and dedicate yourself to understanding how to truly serve it with gusto. 

I don't believe you're doing that. 

Am I wrong? Before you started on product, on building the front-end experience, when you chose your niche - how much honest-to-goodness research have you done? Did you spare no expense to KYN (sic) or did you pay an agency to run a focus group for you? Is there a side-by-side comparison you've made of all the incumbents and what they Do and Do not give your lucky segment? Are there any behavioural scientists who can attest you so intimately know your future customers that you've been chatting to them about how to proactively change their negatives and improve their positives to make their lives better?

I didn't think so... What about now that your proposition is nearly baked and you're only putting finishing touches?

Are there extensive heated debates well into the night about how a stamp collector in his 40s never ever bids on eBay after 11 pm so if you see activity on the card you should send them a notification to minimize fraud? Have you ever examined the common definition of SMEs and rang the alarm over how the corner shop owner, the gas station franchiser and H&M have very different needs? Have you ever stormed out of a product meeting because the team insists on the "YES/NO" Tinder swipe on a smart watch notification connected to a 1000 loan and you think that level of ease would tip your young professional into too much debt to handle? 

So yes, I admit, not only do I doubt you can hit it on the backend technology but now I'm starting to think you're not trying hard enough on the proposition side either. You worry me. What can I say, I'm a worrier, I was about to cry last week about Invisible Banking and you still haven't answered me about that niche premise.

Fancy marketing talk -sometimes "baffling" is a better word-, press releases on the Silicon-Valley-cca-1994 story of the founder, crowdsourcing cool ideas for apps and all the FCA meetings in the universe won't save you if you've told Gemma the nail technician that you're building a bank FOR HER and she gets in there and it turns out to be a shinier version of her Metro Bank account. Although maybe one with larger boxes in the forms. 

Incumbents don't have to pick niches. Whatever they say or like to believe, they cater to the lowest common denominator of all segments and the reasons they do so are many. They can rely on branches and extensive call centres to attempt to repair relationships when subpar experiences drive their consumers up the wall. You can't. They can accuse their big corporate machineries for being slow to offer new and truly useful things. You can't. They can rely on many years of irrational loyalty and trust investment from the consumers. You can't. 

Here's one for you - you can prove me wrong. Of the 26 Challengers I must be the segment for at least half or more. Give me ONE example of how you'll utterly change one of my Money Moments in ways my Metro or my Santander can't and I'll be happy to publicly eat my grumpy, jaded, old FinTech-er hat. ONE. I dare you. No, I plead with you. Please, prove me wrong, I need a banking experience to blow me away and I'm too old to be a student again.

Signed,

Still (barely) hopeful Future Customer