Challenger banks are struggling to tempt customers away from established banks for primary, everyday accounts, despite being perceived as different and exciting, a new report has revealed.
The report ‘BrandZ top 75 most valuable UK brands’ by Kantar found that UK challenger banks are finding it difficult to turn ‘positive buzz’ into a feeling of relevance, meaning and trust for consumers.
The report paints a varied picture for different challenger banks including Monzo and Revolut.
Monzo boosted its brand value by 21% in the past year as its customer experience and ease of use made it the most likely financial services brand for consumers to recommend to friends and family.
Its market share has doubled in the past five years to reach 4.8%, flying ahead of the 2.6% average for fintech banks more broadly.
However, it continues to lag, along with other challenger brands, on the proportion of its customers who report it as their most used banking provider – just 33% of Monzo customers say it’s their main account, compared with 61% for Barclays.
Revolut’s brand value has dipped by 9% in the past year to $4.7 billion, as consumers’ perceptions around how different and meaningful it is have waned.
Adele Jolliffe, head of brand consultancy, insights division at Kantar, said: “Fintech banks have been strong out of the blocks but they’re starting to stutter. Consumers love them for the clever, digital, different services they provide for specific needs, like easy spending abroad.
“Monzo in particular has taken the market by storm and become synonymous with digital banking. But the challenger brands haven’t yet been able to make the most of consumers’ predisposition for them and build the emotional connections around trust which people need from their main providers.
“It’s almost as though they’re the fun friend we want to have in our pockets on holiday – but for the big life moments, we still go back to the big high street brands. Revolut’s securing of its banking licence earlier this year could be a step in the right direction if it can grow its range of services to be relevant to more people more of the time.”
Traditional banks, meanwhile, are facing the opposite problem – despite being perceived as meaningful, reliable and relevant, they are failing to differentiate themselves from competitors.
Bucking this trend is Nationwide, which reached a brand value of $979 million this year as its rebrand, investment in advertising and Fairer Share initiative helped set it apart in the market.
Adele Jolliffe continued: “The real strength of the traditional banks is their breadth of products and services, meaning they’re more likely to play a role in customers’ lives every day in some way or other, whether it’s buying your lunch, saving for a home or paying your bills.
“It’s a good position to be in, but they can’t afford to be complacent. Customers don’t see them as different from competitors and that’s a real risk in such a crowded market. These banks need to ensure they’re making the right targeted marketing investment to stand out and grow in the long term.”
Looking forward, brands who carefully focus their marketing investment will be in the strongest position to navigate fluctuating consumer sentiment, says Adele Jolliffe: “With consumer confidence faltering and people waiting to see what the chancellor’s budget will mean for their finances, having a bank you can trust will be all the more important.
“There is a huge opportunity for the brands which can find the sweet spot between the buzz of the fintechs and the steady reliability of the traditional banks. As this year’s ranking shows yet again, it is the brands which differentiate themselves in a meaningful way with consumers who triumph.”