Fintech: UK Challenger Banks are Outperforming their Legacy Rivals

These UK challenger banks are benefiting from a number of key advantages over their traditional and legacy rivals that will help them obtain market share over the coming months and years:


Better Rates:

Smaller challengers offered the best savings rates in 2015 at 1.08%, followed by larger challengers at 0.73%, and finally 0.36% for the ‘Big Five’ legacy or traditional banks (namely HSBC, Barclays, Lloyds, RBS, and Santander UK).


More Efficient:

Costs as a percentage of income for small challengers was 48.5% vs. 59.2% for larger challengers, and 80.6% for the Big Five. One advantage challengers have when it comes to costs is that many do not operate branch networks. Additionally, they use more efficient technologies for managing simple, focused products.

UK Banks - costs as a pc of income 2014 2015


Expanding in a Shrinking Market:

Lending assets on the balance sheets of challengers grew 31.5% in 2015, compared to a near 5% decline for the Big Five.


Source: KPMG and Business Insider



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