Challenger Bank Market Updates by 2031
The challenger bank market is anticipated to expand at a CAGR of 41.1% from 2023 to 2031. The rising mobile penetration is fueling the challenger bank market growth.
Challenger Bank Market Analysis
The challenger bank market has experienced remarkable growth in recent years, disrupting the traditional banking sector with innovative products, digital-first approaches, and customer-centric services. These banks, also known as neobanks, have leveraged technology to offer a range of financial services without the overhead costs associated with brick-and-mortar branches. This has allowed them to provide competitive rates, lower fees, and enhanced user experiences, attracting a growing number of customers, particularly among younger demographics and tech-savvy consumers.
Challenger Bank Industry Overview
- Challenger banks are, in most cases, small modern retail banks that challenge longer-established institutes by offering modern financial technology and are more focused on the customer. Challenger banks are also called neo-banks. Before changes in the British regulatory landscape, there had hardly been any competition in the market.
- One of the key drivers behind the growth of challenger banks is their ability to capitalize on changing consumer behaviors and preferences. As digital natives become the dominant force in the market, there is an increasing demand for seamless, convenient, and personalized banking solutions that can be accessed anytime, anywhere, through mobile devices. Challenger banks have risen to meet this demand by offering intuitive mobile apps, streamlined account opening processes, and features such as budgeting tools, instant payments, and real-time transaction notifications.
Strategic Insights
Challenger Bank Market Drivers and Opportunities
An increase in Mobile Penetration is driving the challenger bank market.
Increasing mobile penetration can serve as a significant driver for the Challenger bank market in several ways:
- As more people gain access to smartphones and mobile internet, they can easily engage with financial services offered by Challenger banks anytime and anywhere. This accessibility breaks down traditional barriers to banking, especially for those in underserved or remote areas.
- Challenger banks typically operate without physical branches, relying heavily on digital platforms. With higher mobile penetration, the cost of acquiring and servicing customers decreases, allowing Challenger banks to offer competitive rates and fees compared to traditional banks.
- Mobile penetration fosters a tech-savvy consumer base accustomed to convenient digital experiences. Challenger banks leverage this trend to introduce innovative features such as real-time transaction tracking, automated savings tools, and personalized financial insights, attracting customers seeking modern banking solutions.
Challenger Bank Market Report Segmentation Analysis
- Based on service type, the challenger bank market is segmented into loans, mobile banking, checking and savings accounts, payment and money transfers, and others.
- The loans segment is expected to hold a substantial challenger bank market share in 2023.
- Offering loans allows challenger banks to generate significant revenue through interest payments and fees.
- Providing competitive loan products attracts customers to challenger banks, helping them grow their customer base and retain existing clients.
- By offering loans in addition to other banking services like savings accounts and payment solutions, challenger banks can provide a comprehensive suite of financial products, appealing to a wider range of customers.
Challenger Bank Market Share Analysis by Geography
The scope of the challenger bank market report is primarily divided into five regions - North America, Europe, Asia Pacific, Middle East & Africa, and South America. In the case of challenger banks, North America accounted for the largest share. There has been a rapid expansion in the market growth in North America. Financial companies differentiate themselves from traditional banks by offering state-of-the-art, client-centered financial services using technology. Several firms are competing in this sector for a share of the evolving banking landscape. One of the main drivers of the challenger bank markets in North America is the expanding need for digital and mobile banking products. These banks respond to customers' need for more practical and efficient methods to handle their accounts by offering user-friendly apps, smooth online experiences, and enhanced customer care.
Challenger Bank Market Report Scope
The " Challenger Bank Market Analysis" was carried out based on service type, end-user, and geography. In terms of service type, the market is segmented into loans, mobile banking, checking and savings accounts, payment and money transfers, and others. Based on end-user, the market is segmented into business and personal. Based on geography, the market is segmented into North America, Europe, Asia Pacific, the Middle East & Africa, and South America.
Challenger Bank Market News and Recent Developments
Companies adopt inorganic and organic strategies such as mergers and acquisitions in the challenger bank market. A few recent key market developments are listed below:
- In January 2024, Revolut launched Mobile Wallets, allowing for faster transfers across the world. Mobile Wallets redefined remittance experiences by offering a low-friction, intuitive process. Users send money abroad quickly using only recipient IDs, such as their name alongside their phone number or email addresses. Mobile Wallets reduce potential risks associated with some traditional payment methods, such as money being sent to the wrong account details or money being stuck with banks. Now, Revolut customers in the UK and most European countries (EEA) can send money to Bangladesh (bKash) and Kenya (M-Pesa) using Mobile Wallets, with other wallet routes expected to be launched soon.
[Source: Revolut Ltd, Company Website]
Challenger Bank Market Report Coverage & Deliverables
The challenger bank market forecast is estimated based on various secondary and primary research findings, such as key company publications, association data, and databases. The market report “Challenger Bank Market Size and Forecast (2021–2031)”, provides a detailed analysis of the market covering below areas-
- Market size & forecast at global, regional, and country levels for all the key market segments covered under the scope.
- Market dynamics such as drivers, restraints, and key opportunities.
- Key future trends.
- Detailed PEST & SWOT analysis
- Global and regional market analysis covering key market trends, key players, regulations, and recent market developments.
- Industry landscape and competition analysis covering market concentration, heat map analysis, key players, and recent developments.
- Detailed company profiles.
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Report Coverage
Revenue forecast, Company Analysis, Industry landscape, Growth factors, and Trends
Segment Covered
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to segments covered.
Regional Scope
North America, Europe, Asia Pacific, Middle East & Africa, South & Central America
Country Scope
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to country scope.
Frequently Asked Questions
The global challenger bank market is expected to grow at a CAGR of 41.1 % during the forecast period 2024 - 2031.
The key players holding majority shares in the global challenger bank market are Revolut Ltd; N26 AG; Chime Financial, Inc.; Monzo Bank Limited; and Varo Bank, N.A.
Rising mobile penetration is the major factors that propel the global challenger bank market.
Growing digitization and increasing mobile penetration are anticipated to play a significant role in the global challenger bank market in the coming years.
- Revolut Ltd
- N26 AG
- Chime Financial, Inc.
- Monzo Bank Limited
- Varo Bank, N.A.
- Starling Bank
- Atom Bank
- Monese Credit Limited
- Movencorp Newco Inc
- Tandem.
The Insight Partners performs research in 4 major stages: Data Collection & Secondary Research, Primary Research, Data Analysis and Data Triangulation & Final Review.
- Data Collection and Secondary Research:
As a market research and consulting firm operating from a decade, we have published many reports and advised several clients across the globe. First step for any study will start with an assessment of currently available data and insights from existing reports. Further, historical and current market information is collected from Investor Presentations, Annual Reports, SEC Filings, etc., and other information related to company’s performance and market positioning are gathered from Paid Databases (Factiva, Hoovers, and Reuters) and various other publications available in public domain.
Several associations trade associates, technical forums, institutes, societies and organizations are accessed to gain technical as well as market related insights through their publications such as research papers, blogs and press releases related to the studies are referred to get cues about the market. Further, white papers, journals, magazines, and other news articles published in the last 3 years are scrutinized and analyzed to understand the current market trends.
- Primary Research:
The primarily interview analysis comprise of data obtained from industry participants interview and answers to survey questions gathered by in-house primary team.
For primary research, interviews are conducted with industry experts/CEOs/Marketing Managers/Sales Managers/VPs/Subject Matter Experts from both demand and supply side to get a 360-degree view of the market. The primary team conducts several interviews based on the complexity of the markets to understand the various market trends and dynamics which makes research more credible and precise.
A typical research interview fulfils the following functions:
- Provides first-hand information on the market size, market trends, growth trends, competitive landscape, and outlook
- Validates and strengthens in-house secondary research findings
- Develops the analysis team’s expertise and market understanding
Primary research involves email interactions and telephone interviews for each market, category, segment, and sub-segment across geographies. The participants who typically take part in such a process include, but are not limited to:
- Industry participants: VPs, business development managers, market intelligence managers and national sales managers
- Outside experts: Valuation experts, research analysts and key opinion leaders specializing in the electronics and semiconductor industry.
Below is the breakup of our primary respondents by company, designation, and region:
Once we receive the confirmation from primary research sources or primary respondents, we finalize the base year market estimation and forecast the data as per the macroeconomic and microeconomic factors assessed during data collection.
- Data Analysis:
Once data is validated through both secondary as well as primary respondents, we finalize the market estimations by hypothesis formulation and factor analysis at regional and country level.
- 3.1 Macro-Economic Factor Analysis:
We analyse macroeconomic indicators such the gross domestic product (GDP), increase in the demand for goods and services across industries, technological advancement, regional economic growth, governmental policies, the influence of COVID-19, PEST analysis, and other aspects. This analysis aids in setting benchmarks for various nations/regions and approximating market splits. Additionally, the general trend of the aforementioned components aid in determining the market's development possibilities.
- 3.2 Country Level Data:
Various factors that are especially aligned to the country are taken into account to determine the market size for a certain area and country, including the presence of vendors, such as headquarters and offices, the country's GDP, demand patterns, and industry growth. To comprehend the market dynamics for the nation, a number of growth variables, inhibitors, application areas, and current market trends are researched. The aforementioned elements aid in determining the country's overall market's growth potential.
- 3.3 Company Profile:
The “Table of Contents” is formulated by listing and analyzing more than 25 - 30 companies operating in the market ecosystem across geographies. However, we profile only 10 companies as a standard practice in our syndicate reports. These 10 companies comprise leading, emerging, and regional players. Nonetheless, our analysis is not restricted to the 10 listed companies, we also analyze other companies present in the market to develop a holistic view and understand the prevailing trends. The “Company Profiles” section in the report covers key facts, business description, products & services, financial information, SWOT analysis, and key developments. The financial information presented is extracted from the annual reports and official documents of the publicly listed companies. Upon collecting the information for the sections of respective companies, we verify them via various primary sources and then compile the data in respective company profiles. The company level information helps us in deriving the base number as well as in forecasting the market size.
- 3.4 Developing Base Number:
Aggregation of sales statistics (2020-2022) and macro-economic factor, and other secondary and primary research insights are utilized to arrive at base number and related market shares for 2022. The data gaps are identified in this step and relevant market data is analyzed, collected from paid primary interviews or databases. On finalizing the base year market size, forecasts are developed on the basis of macro-economic, industry and market growth factors and company level analysis.
- Data Triangulation and Final Review:
The market findings and base year market size calculations are validated from supply as well as demand side. Demand side validations are based on macro-economic factor analysis and benchmarks for respective regions and countries. In case of supply side validations, revenues of major companies are estimated (in case not available) based on industry benchmark, approximate number of employees, product portfolio, and primary interviews revenues are gathered. Further revenue from target product/service segment is assessed to avoid overshooting of market statistics. In case of heavy deviations between supply and demand side values, all thes steps are repeated to achieve synchronization.
We follow an iterative model, wherein we share our research findings with Subject Matter Experts (SME’s) and Key Opinion Leaders (KOLs) until consensus view of the market is not formulated – this model negates any drastic deviation in the opinions of experts. Only validated and universally acceptable research findings are quoted in our reports.
We have important check points that we use to validate our research findings – which we call – data triangulation, where we validate the information, we generate from secondary sources with primary interviews and then we re-validate with our internal data bases and Subject matter experts. This comprehensive model enables us to deliver high quality, reliable data in shortest possible time.
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