First, a challenger bank is in a unique position. As a startup without dependency on a traditional bank, it can focus on customers' needs from the start, using data tools. A challenger bank is in a position to advise its customers as to which products and services are the most appropriate. Focusing on customers' needs first and foremost ensures the gap between those needs and product offerings is either miniscule or nonexistent. It also ensures strong engagement — something incumbents struggle with either at a branch or online. Second, a challenger bank enjoys the benefit of creating its technology from scratch. From a high level point of view, we are dealing with newish core systems, usually a refresh or newer version of software. Challenger banks also benefit from specialized data hubs that allow them to acquire, analyze, monitor and act on data in a holistic way. Unlike a traditional bank, data does not sit passively in a silo after having been acquired.
You've Heard of Neobanks, Now Get Ready for 'Challenger' Banks | Bank Think
Room for both (banks and non-banks) but touches on why we’re happy to back Fidor Bank and Atom Bank