In our Challengers series, we interview experts in the challenger banking field. In this installment, we got the chance to speak with Šimon Kočí, the Head of International Partnerships at Dateio and founder of the challenger bank news source Everly.eu.
Name: Šimon Kočí
Role: Head of International Partnerships
Hi Šimon, thank you for joining us today. Would you like to introduce yourself to start off?
I am working as the head of international partnerships at Dateio, which specializes in payment data and enrichment. That is how I got into the challenger banks and fintech space. We provide payment data enrichment solutions for larger banks as well as challenger banks.
A few months ago, my friends and I also created a challenger bank online magazine called everly.eu, which is taking off pretty rapidly. What we are trying to provide is quality data insight to readers. Everly.eu is primarily focused on the challenger banks in the European market, looking at topics around innovation, product, user experience, open banking, and woman in technology.
You have a keen interest in user experience (UX). How important do you think it is for challenger banks?
UX is such a broad topic and crucial to what makes challenger banks stand out. It encompasses the user's entire journey, from recognizing the brand to their interaction on the application, whether it is depositing money or sending transfers. A few years ago, UX may not have been as essential, but as the world shifts towards digitalization, it has become a crucial topic in the banking space.
There are three critical areas that challengers are looking at within UX. First are the features, what the clients are looking for, and how to provide it most directly. Second is the design; removing the clutter and providing a clean, user-friendly interface with an aesthetic appeal. The third is customer service, providing a smooth user journey with the onboarding, security, and interaction with the available features.
Taking a closer look at features, what are some that are performing well for these banks?
Personal finance management, which allows the categorization of transactions, is another feature that challenger banks are putting a high focus on. The UK company, Hyperjar, enables you to have multiple accounts for multiple purposes with multiple credit cards. Revolut released a Junior Revolut account for kids, allowing for parent supervision and limiting their spending. Many challenger banks are coming up with creative solutions tailored to their customer's needs.
At Dateio, we also work with banks and fintechs to help them give meaning to their data and bring transparect of expenses to consumers.
With the market being so saturated, which players should we be looking at in the field?
We should be more focused not on the leaders, but the challenger of the leaders. Turkish banks Insha and Papara, Spanish bank Rebellion, German bank Tomorrow; all those smaller local challengers are cutting a considerable share of the local markets and going under the radar. Right now, the leaders are focused on mass acquiring customers, but the challengers to the leading challenger banks are focused on establishing themselves in local markets.
Shifting to a broader view, which countries are of interest in this space right now?
The UK is currently the hub for challenger banks, but with Brexit restrictions, things may be changing. We see a shift as banks begin to move into the EU, with many focusing on the Netherlands and Lithuania. Spanish bank Rebellion, opened offices in Lithuania, Revolut acquired their banking license there too; so there is a definite shift. It is easier to get banking licenses in certain countries, so you see many companies making that shift. With the focus till now on the UK market, with their significant population and large purchasing power, Eastern and Central Europe were markets that were all but forgotten. Focusing on these markets will help the niche challenger banks compete against the established ones, as they can tailor their products and services more specifically to local markets.
Africa is an entire continent currently being overlooked as everyone shifts their focus from Europe to the US. The market remains highly untapped with massive potential as fintech has evolved there. Swiss company Temenos has begun to focus its activities on the African market.
When compared to incumbent banks, what would you say are the key advantages and disadvantages of the challenges?
The challenger banking space is in a huge bubble, similar to when cryptocurrency and bitcoin was the talk of the town. Revolut was one of the first to bring the space into the forefront, both through its innovation and popularity. Now that we see more challenger banks emerging, the question arises are they going to survive and will they provide the full banking experience. As we see it now, a majority of challenger bank users still hold a primary bank account with traditional banks. This is a critical obstacle that challenger banks need to work towards overcoming. We are currently at the tipping point for this change. Revolut, as an example, acquired its banking license in Lithuania, which will allow it to provide a lot more services similar to the traditional banks. Banking licenses will be a key determiner on how much of a threat challenger banks prove to be towards traditional banking.
However, the challenger banks are also quickly gaining substantial market share. Take Revolut as an example; it has gained significant market share in the UK and Europe and is now expanding to the US. Overall, while the challenger banks may still be lacking in service, they are excelling in their global branding and UX. They have the ability to try out new features, strategies, and have refined missions. As a direct impact from COVID-19, contactless payment is no longer an added benefit, but a necessity. The need for going cashless is immediate as everything goes digital. These features are currently the head start challenger banks have against traditional banks. Their agile methodology allows them to implement change quickly.
They may not be a huge threat for the moment, but this could change quickly.
Thank you very much for the great insights Šimon!
Make sure to check out Everly.eu to stay up to date of all the latest news for challenger banks.