Stuck in the Mud
“Stuck in the Mud”– a cartoon that illustrates how hard it is for challenger banks to build scale and effectively compete in the US market.
According to a new report by PYMNTS, consumers tend to “value companies with well-known, trusted brand names that have track records of providing excellent digital experiences and delivering products reliably and securely.”
The study identified Amazon and Apple, as well as incumbent Bank of America above any digital bank.
One of the primary reasons for this hesitancy is data security, with 41% of self-professed “uninterested consumers” citing “fraud risk as a reason for disinterest in switching, and 47% said data security concerns drove their reluctance to switch their primary banking service provider.”
Reflecting these challenges, N26, a German-based challenger bank, just announced it would pull out of the US market.
Monzo, another challenger bank, is likely to be the next to leave the market.
