# Does the ‘Monzo effect’ mean banks will need to rethink brand building?
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2020-03-04
Category: BANKING
Category URL: https://financedigest.com/category/banking
Meta Title: The Rise of Challenger Banks: Shaking Up UK Banking Sector
Meta Description: Explore how innovative challenger banks like Monzo, Starling, and Revolut are changing the game with mobile-first solutions, impacting traditional UK banks.
Tags: featured
Tag URLs: featured (https://financedigest.com/tag/featured)
URL: https://financedigest.com/does-the-monzo-effect-mean-banks-will-need-to-rethink-brand-buildinghtml

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_By **Mark Chamberlain,** Managing Director at_ [_Kantar_](https://www.kantar.com/)

The past few years has seen a whole new style of banks emerge, including Monzo, Starling, Revolut and Atom Bank, designed to be mobile-first and appealing to a younger generation of digital natives that want the flexibility and convenience of anytime, anywhere banking.

The impact of these so-called ‘challenger banks’ has been to shake up the traditional UK banking sector, which is playing catch up to meet the demands and expectations of younger customers. We are seeing high street banks start to add challenger-style apps and features to their mobile and digital offerings as they compete with the technology. Think spending notifications, [open banking](https://www.financedigest.com/why-open-banking-is-safe.html "WHY OPEN BANKING IS SAFE?"), the launch of Bo from RBS, and Barclays’ mobile payments business Pingit’s move into the world of wearable technology.

But it’s about more than just technology. Customers want products, but they also [expect advice and support and a 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") that is relevant to them. Banks must create an emotional connection with consumers who require less personal contact, but who want to engage via [banking apps](https://www.financedigest.com/why-you-should-use-a-mobile-banking-app-and-how-to-make-the-most-of-it.html "Why You Should Use a Mobile Banking App – and How to Make the Most of It") that offer simple, quick and convenient services.

In [2019’s BrandZ Top 75 Most Valuable UK Brands](https://www.kantar.com/uki/inspiration/brands/brandz-uk-2019/) report, we revealed the UK’s most valuable banks saw their brand value decline by an average of 7% in the past year. Of the nine banks in the ranking, HSBC and Barclays were the only ones to make the Top 10 and NatWest was the only [bank to increase its brand](https://www.financedigest.com/banks-need-to-become-a-lifestyle-brand.html "Banks need to become a lifestyle brand") value.

The challenger banks have yet to make the ranking, although they were one of the most talked about financial brands according to our TotalSocial 2019 scores. Looking at their growth figures and the amount of PR, surely it’s only a matter of time?

This is a wake-up call to the legacy [banks to effectively](https://www.financedigest.com/how-effective-talent-management-could-disrupt-the-retail-banking-sector.html "HOW EFFECTIVE TALENT MANAGEMENT COULD DISRUPT THE RETAIL BANKING SECTOR") communicate their brand difference to a new generation of customers who have very different expectations – and needs.

**A customer-centric approach is** [key to success](https://www.financedigest.com/why-transforming-the-back-office-is-key-to-customer-experience-success-in-financial-services.html "Why Transforming the Back-Office is Key to Customer Experience Success in Financial Services")

The importance of delivering a strong [customer experience has never been more important for banks](https://www.financedigest.com/the-bank-of-me-why-banks-need-to-be-totally-customer-centric.html "The bank of me – why banks need to be totally customer centric"). Kantar’s first customer experience index ( [CX+ 2019 Index](https://cxplus.tnsglobal.com/uk)) published last year showed that banks that narrow the gap between the promise they make to customers and the experience they receive, can achieve greater levels of satisfaction, loyalty and profitability. First Direct and Nationwide topped the CX+ 2019 Index, delighting [customers by exceeding their expectations](https://www.financedigest.com/banking-from-anywhere-embracing-technology-to-exceed-customer-expectations.html "Banking from anywhere: embracing technology to exceed customer expectations") to deliver an overall great ‘brand experience’. It’s clear that the better the experience, the more value a brand can command.

While challenger banks focus on personalisation, low fees, the promise of fast and efficient mobile banking and clever technology like [digital wallets](https://www.financedigest.com/digital-wallets-bring-value-to-banks-and-retails.html "digital wallets"), the established players have a strong heritage and the benefit of branches for face-to-face interactions – and for many this is still important. The likes of Monzo are delivering [customer experience](https://www.financedigest.com/getting-customer-experience-right-in-financial-services.html "Getting customer experience right in financial services") largely through the use of online and mobile apps, but the future is not mobile-only. Having a [human connection across various touch](https://www.financedigest.com/building-a-relationship-led-bank-requires-a-more-human-touch.html "Building a relationship led bank requires a more human touch") points will continue to be important for all generations of customer.

**_Brand-building for the long-term_**

When it comes to marketing their brand, the [challenger banks](https://www.financedigest.com/big-bank-ceos-to-sell-lawmakers-on-relief-diversity-efforts-amid-economic-regulatory-challenges.html "Big bank CEOs to sell lawmakers on relief, diversity efforts amid economic, regulatory challenges") are playing by very different rules. Monzo, the biggest challenger bank in terms of [market share](https://www.financedigest.com/countertop-spray-market-share-by-2028-upcoming-trends-and-analysis.html "Countertop Spray Market Share by 2028: Upcoming Trends and Analysis"), has been particularly successful in communicating a strong brand image in its efforts to connect with consumers at an emotional level, particularly the under-35s.

It’s seen as a breath of fresh air and its emotional connection is founded on an [innovative digital](https://www.financedigest.com/the-hemoglobinopathy-market-to-get-digitally-innovative.html "The Hemoglobinopathy Market to get digitally innovative") offer, its unique approach of involving customers in growing the business from the start and a dream to make Monzo work for anyone, including “people that don’t have a passport, people who are homeless to people who have just come out from prison”. Essentially, they have completely embedded their brand [strategy in all aspects of the business](https://www.financedigest.com/albumin-market-in-depth-analysis-business-strategies-and-growth-rate.html "Albumin Market In-depth Analysis, Business Strategies, and Growth Rate"), from tone of voice to employee engagement right through to the way they develop products, for example using customers/fans to test prototype products.

The brand is also known for its creativity, disruption and distinctiveness. It claims to provide functionality that other banking apps don’t offer and a transparency that other [banks can’t](https://www.financedigest.com/why-banks-cant-adopt-digital-identities-fast-enough.html "Why Banks Can’t Adopt Digital Identities Fast Enough") match. And there’s something quite distinctive about their coral coloured bankcards. Clearly it’s working, as Monzo claims to be signing up customers at a [rate of 55,000 a week](https://www.financedigest.com/shares-and-bonds-nervy-as-rate-hike-week-looms.html "Shares and bonds nervy as rate-hike week looms").

Faced with a new generation of technologically engaged, time-poor and highly demanding customers who are looking to do business with a brand with purpose, [traditional high street banks](https://www.financedigest.com/digital-banking-traditional-banks-vs-fintech-providers.html "Digital banking: Traditional banks vs. fintech providers") are at the risk of being left behind. Over reliant on their name and history – some dating back over 200 hundred years – they must continue to evolve their brand marketing and communications to ensure younger [consumers see](https://www.financedigest.com/european-airlines-see-travel-withstanding-consumer-squeeze-for-now.html "European airlines see travel withstanding consumer squeeze for now") them as meaningful or different.

This means investing in long-term brand building rather than [quick fixes](https://www.financedigest.com/eu-demands-quick-fix-from-u-s-of-green-subsidy-law.html "EU demands quick fix from U.S. of green subsidy law"). All too often in a volatile [sector like financial services](https://www.financedigest.com/protecting-the-uk-financial-services-sector-from-cyberattacks-now-and-in-2023.html "Protecting the UK financial services sector from cyberattacks now and in 2023"), businesses sacrifice long-term brand growth by focusing on short-term objectives. There is a huge opportunity for banks that can [strike a balance](https://www.financedigest.com/regulators-need-to-strike-the-balance-between-protection-and-strangulation.html "REGULATORS NEED TO STRIKE THE BALANCE BETWEEN PROTECTION AND STRANGULATION") between long-term brand building and short-term marketing. To future-proof a brand, [banks should look to balance their investment](https://www.financedigest.com/investment-banks-trading-revenue-likely-to-shrink-barclays-boss-says.html "Investment banks’ trading revenue likely to shrink, Barclays boss says") across three key areas of marketing:

**Experience:**

[Drive customer](https://www.financedigest.com/rationalfx-drives-customer-acquisition-with-regtech-platform-from-trunarrative.html "RationalFX drives customer acquisition with RegTech platform from TruNarrative") loyalty by delivering a personalized experience, showing you understand them and their needs as a valued customer. To grow, a brand [needs](https://www.financedigest.com/do-small-businesses-need-branding.html "Do small businesses need branding?") to retain as many existing users as possible by predisposing them to choose the brand again.

**Exposure:**

Influence [future growth](https://www.financedigest.com/plug-in-hybrid-electric-vehicles-phev-market-trends-growth-future-demand-analysis-and-forecast-by-2026.html "Plug-in Hybrid Electric Vehicles (PHEV) Market Trends, Growth, Future Demand, Analysis and Forecast by 2026") by increasing your brand exposure and reaching out to new potential customers. Do so by creating excess share of voice with a compelling, memorable creative that [builds clarity around](https://www.financedigest.com/ford-to-invest-around-300-million-to-build-electric-car-parts-at-uk-plant.html "Ford to invest around 0 million to build electric car parts at UK plant") what the brand stands for and encourage positive buzz and word of mouth.

**Activation:**

Plan your brand activation to create prominence with meaning among customers. Ensure that this comes readily to mind in relation to specific [needs and occasions to capture more customers](https://www.financedigest.com/3-reasons-your-business-needs-customer-reviews.html "3 reasons your business needs customer reviews") that are not predisposed.

Brands that concentrate [marketing and brand building investment into the moments that matter will be the ones that thrive and grow](https://www.financedigest.com/dental-implants-and-prosthetics-market-market-to-grow-at-robust-cagr-by-2028.html "Dental Implants and Prosthetics Market Market to Grow at Robust CAGR by 2028") regardless of changes in the banking sector.


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