Historically a stronghold of the “Big 5” banks, the U.K. retail banking market has seen a number of new entrants in recent times, partially driven by spinoffs, and also by new “challenger” banks coming to market. More recently, a wave of technology-enabled propositions have emerged which have collectively been described as “neobanks”.

“Neobanks” have attracted much attention — taking market share and disrupting traditional retail banking models.

In this Executive Insights, London Partners Diogo Silva and Peter Ward identify the three broad strategies employed by “neobanks”, and examine the key merits and issues for consideration for each one:

  • Proposition led approach: savings vs credit vs current account
  • Channel led approach: mobile app only vs multi-channel
  • Technology led approach: focus on front-end vs API vs “full stack”

Traditional banking is conceptually simple — delivering what customers need at a fair price. Neobanks can deliver this by being more agile than large banks in their market approach and use of technology. The battle for the U.K. consumer has intensified and the winners will be those providing outstanding customer value whilst generating high returns for their shareholders.

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