# 5 Things to Consider When Choosing a Challenger Bank Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2021-06-21 Category: BANKING Category URL: https://financedigest.com/category/banking Meta Title: Switch to a Challenger Bank: Find the Perfect Match for Meta Description: Discover how challenger banks are revolutionising the industry with specialized account options, unique overdraft features, and transparent fee structures. URL: https://financedigest.com/5-things-to-consider-when-choosing-a-challenger-bankhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/graphicstock-young-man-indoor-apartment-using-computer-business-customer-technology-conceptbpqfjv9jw-1736838275460-compressed.jpg) It will not have escaped anyone’s attention that the banking industry is changing rapidly, and what was normal ten or twenty years ago is potentially wholly different. Branch closures, the rise of online shopping and home delivery into the mainstream, and various other factors mean that consumer loyalty to the big brands is not what it once was. Deciding to switch is nowhere near as daunting as it once was, and there are various systems and incentives in place to make it as seamless as possible. What can make the concept more [challenging is the sheer number of banks](https://www.financedigest.com/open-data-represents-the-biggest-challenge-to-banks-in-a-generation.html "Open data represents the biggest challenge to banks in a generation") to choose from. For those with a [bank account](https://www.financedigest.com/are-banks-ready-for-the-new-accountability-regime-in-2016.html "ARE BANKS READY FOR THE NEW ACCOUNTABILITY REGIME IN 2016?") they have held for decades, the distance to the nearest branch probably played a significant role. Today, such a consideration is near the bottom of the priority list. Indeed, anyone that opts for a challenger [bank will discover that the concept of branches is virtually](https://www.financedigest.com/the-rise-of-virtual-agents-the-future-banking-experience.html "The rise of virtual agents: the future banking experience") non-existent. However, not all of this new breed of banks is created equally, and it makes as much sense as ever to research what each [bank can offer and how it relates to your financial](https://www.financedigest.com/financial-crime-is-the-chink-in-the-banks-armour.html "Financial crime is the chink in the banks’ armour") priorities. 1. **Types of Account** It would be easy to assume that any challenger [bank would offer checking and savings account](https://www.financedigest.com/new-legislation-makes-switching-bank-accounts-simples.html "New legislation makes switching bank accounts “simples”") as standard, as that is what most people are used to. However, such is the relative ease with which a [bank can enter the market today](https://www.financedigest.com/stress-testing-why-did-my-bank-go-bust-today.html "STRESS-TESTING – WHY DID MY BANK GO BUST TODAY? ") that there are numerous opportunities for specialization. An attempt to set up a Bank of America or Citigroup [today would be challenging](https://www.financedigest.com/from-fragmented-systems-to-unified-cpm-unicredit-prepares-for-todays-finance-challenges.html "FROM FRAGMENTED SYSTEMS TO UNIFIED CPM – UNICREDIT PREPARES FOR TODAY’S FINANCE CHALLENGES") enough to be considered impossible. However, [challenger banks](https://www.financedigest.com/challenger-banks-missing-golden-opportunity-to-steal-business-from-competitors-by-repeating-same-old-mistakes.html "Challenger Banks Missing Golden Opportunity To Steal Business From Competitors By Repeating Same Old Mistakes") are quicker, cheaper, and more streamlined. That has made it possible for different brands to emerge that specialize in various types of accounts. Nevertheless, if checking and savings accounts are your priority, it is safe to [say that there is no shortage of options](https://www.financedigest.com/taiwan-says-war-with-china-absolutely-not-an-option-but-bolstering-defences.html "Taiwan says war with China ‘absolutely’ not an option, but bolstering defences"). You can rest assured that no matter what you [expect from a challenger bank](https://www.financedigest.com/factbox-big-banks-expected-to-rack-up-more-than-1-billion-in-fines-for-whatsapp-use.html "Factbox-Big banks expected to rack up more than billion in fines for WhatsApp use"), there will be multiple options out there, and no research will prove fruitless. 2. **Overdrafts** The [**new breed of banks**](https://topmobilebanks.com/usa-digital-banks/) will often try to emulate their established counterparts in terms of features, then build from there. Overdrafts are every bit as commonplace at [digital banks](https://www.financedigest.com/britains-digital-banks-need-support-amid-banking-turmoil-trade-body.html "Britain’s digital banks need support amid banking turmoil – trade body") as more traditional ones, and their availability is often considered in the same way. However, challenger [banks set](https://www.financedigest.com/bank-of-england-set-to-hike-to-4-as-rate-peak-looms.html "Bank of England set to hike to 4% as rate peak looms") themselves apart by taking familiar concepts and doing something different. Research pays off once again, as the idea of the same overdraft facility for everyone no longer makes sense. Some digital [banks offer automatic overdrafts with no fees](https://www.financedigest.com/20-billion-in-bank-service-fees-are-you-overpaying.html " Billion in Bank Service Fees: Are You Overpaying?"), while others require an application. Depending on your financial requirements, the fee structure and size of the overdraft will be the main priorities, but those requirements will [change based on individual financial](https://www.financedigest.com/financial-risks-of-climate-change-overplayed-senior-hsbc-banker-says.html "Financial risks of climate change overplayed, senior HSBC banker says") circumstances. 3. **Fees and Penalties** [Challenger banks are businesses](https://www.financedigest.com/new-business-launches-to-support-it-professionalsfacing-mission-critcial-sector-challenges.html "NEW BUSINESS LAUNCHES TO SUPPORT IT PROFESSIONALSFACING MISSION CRITCIAL SECTOR CHALLENGES") like any other, and while many have entered the market to offer unique opportunities to customers, they still exist to make money. One area in which they still have plenty in common with their traditional rivals is that fees and penalties [represent a significant](https://www.financedigest.com/biosimulation-market-to-represent-a-significant-expansion-at-13-cagr-by-2017-to-2022.html "Biosimulation Market To Represent A Significant Expansion At 13% CAGR By 2017 to 2022") income stream. With that said, while it is not always the case, these fees and other [costs are often substantially lower](https://www.financedigest.com/just-eat-delivers-q3-profit-as-cost-cuts-outweigh-lower-order-volumes.html "Just Eat delivers Q3 profit as cost cuts outweigh lower order volumes"). Without a network of branches to support, and technology reducing operating costs significantly, it is not overly challenging to potentially find a better [deal through a challenger bank](https://www.financedigest.com/seven-out-of-ten-uk-adults-aged-25-44-never-seek-advice-on-dealing-with-debts-despite-depending-on-the-bank-of-mum-and-dad.html "Seven out of ten UK adults aged 25-44 never seek advice on dealing with debts despite depending on the bank of mum and dad") than through an aged competitor. It is worth considering which of the [available features available from each bank](https://www.financedigest.com/igtb-launch-digital-transaction-banking-available-as-saas.html "iGTB launch Digital Transaction Banking available as SaaS") matters the most and allowing that to influence the overall choice. If you need to build your credit rating, it can be worth [investing in credit building](https://www.financedigest.com/bmw-invests-1-7-billion-to-build-electric-vehicles-in-u-s.html "BMW invests .7 billion to build electric vehicles in U.S") functionality should it prove affordable. If you frequently use ATMs to withdraw money but keep your account in credit, a challenger bank that automatically refunds fees for doing so would be more valuable than one that does not do so but includes a free overdraft. 4. **Support Hours and Availability** With branches seemingly closing every month, the thought of heading for a chat with the [bank manager](https://www.financedigest.com/struggling-banks-need-to-modernise-and-improve-software-quality-management.html "Struggling Banks Need to Modernise and Improve Software Quality Management") couldn’t be further from most bankers’ minds. It is not just all about phone support now either, as most challenger [banks boast support](https://www.financedigest.com/comserve-to-support-allied-irish-bank-nationwide.html "COMSERVE TO SUPPORT ALLIED IRISH BANK NATIONWIDE") desks that operate around the clock, ready and waiting for live chat conversations and emails. While banks, new and old alike, are leaders in online security, things can go wrong. From something simple and easily solved like a lost card to more severe issues like fraudulent transactions, it is not unreasonable to expect an instant response. Once again, it is possible to research opening hours before committing to an account, and anyone that seeks the reassurance of 24-hour operations can find it. It’s also important not to underestimate how much some [banks enable customers](https://www.financedigest.com/how-will-open-banking-impact-the-customer-experience.html "How will Open Banking impact the customer experience?") to do for their security, usually through a mobile app. In days gone by, a lost card meant canceling it and requesting a new one – even if the owner felt there was a chance of finding it. Nowadays, customers can put a temporary freeze on their card without canceling and awaiting a new one. The levels of control increase all the time and are worthy of consideration by the security conscious. 5. **Unique Extra Features** With all things considered, [challenger banks are competing with established brands and the hundreds](https://www.financedigest.com/the-maserati-100-one-hundred-business-disruptors-challenging-the-establishment.html " ‘The Maserati 100’ One Hundred Business Disruptors Challenging The Establishment") of other digital options out there today. While every bank needs a specific range of features to [meet](https://www.financedigest.com/banking-stability-worries-go-behind-closed-doors-at-imf-world-bank-meetings.html "Banking stability worries go behind closed doors at IMF-World Bank meetings") the most basic banking needs, innovation and technology development are at an all-time high. Just as with any industry, offering something that nobody else does is a great way to stand out in the crowd. Features rarely remain truly unique for long, as the competition is always on top of what is working for others. However, relative uniqueness matters and is directly influenced by an individual’s [banking needs](https://www.financedigest.com/what-banks-need-to-do-right-now-to-improve-their-digital-services-without-sacrificing-security.html "What Banks Need to Do Right Now to Improve Their Digital Services Without Sacrificing Security "). Some challenger [banks enable stock](https://www.financedigest.com/asian-stocks-rally-as-bank-jitters-calm-alibaba-lifts-mood.html "Asian stocks rally as bank jitters calm, Alibaba lifts mood") trading in the app, while others provide saving pots and single-use debit cards. The pace of change means that there is not and likely never will be a single challenger [bank that offers](https://www.financedigest.com/first-abu-dhabi-bank-reiterates-not-eyeing-offer-for-standard-chartered.html "First Abu Dhabi Bank reiterates not eyeing offer for Standard Chartered") everything the competition does. Different features carry more weight for some prospective customers than others, and no matter what your ideal [digital bank](https://www.financedigest.com/digital-experience-and-security-the-crucial-combination-for-banks.html "Digital experience and security – the crucial combination for banks") looks like, there is every chance that the perfect option is out there. **This is a Sponsored Feature** --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---