Hanging by a thread: Is incumbent bank loyalty under threat?

How many of us bank with one of the incumbent mega-banks as our primary account?

I’d wager the answer is ‘yes’ for most of us.

But how solid are these relationships? Is our loyalty to these institutions as solid as oak?

I can only answer on behalf of myself, but that loyalty is being tested - badly. I feel like a man that’s been driving his trusty diesel estate for years but is feeling increasingly lustful watching the array of new electric cards zip around.

Change is in the air…

For some time now I’ve described what I call the ‘feature tipping-point’. A point at which digital challenger banks accumulate so much clear air in terms of killer features between themselves and the incumbents that people start to switch their primary accounts with increasing velocity.

In the last couple of weeks the UK quietly took a couple of very large strides in that direction.

Revolut finally launched Revolut10, their big new UI release, and my goodness it’s beautiful! I know I sound like a tragic fintech geek (guilty as charged), but the design is almost as beautiful as something I would associate with Apple hardware - it’s just stunning. 

Don’t misunderstand this change as a purely aesthetic move. Revolut are streamlining their UI and making it more navigable, ready to house the next phase of products for another growth drive, and they want ALL your financial business.

Monzo too has been surging forward recently, leaping in to launch its first ‘wealth’ proposition, and has just this week announced a massive strategic hire for its imminent entry into Insurance.

The pace these banks are moving at is dizzying, but you need to pay close attention to appreciate the magnitude of these moves. They are neither small nor arbitrary changes, but carefully planned and significant.

If you’ve ever worked in a big city and had the opportunity to see a skyscraper going up, you’ll know that they seem to spend a long time in the excavation and foundation stage - it seems like nothing really moves. Then, almost overnight the thing shoots up with the speed and urgency of one of Elon Musks rockets.

These trailblazers are leading the way in digital banking technology, but much of the innovation they adopt comes from partners and can be readily implemented by any bank. 

Neobanks across the world are well-and-truly out of the foundation stage, reaching for the sky, and boy do they mean business!