When Metro Bank launched in 2010 it was the first new bank in over 100 years. Its emergence was welcomed at a time when the public opinion of the traditional high street banks was rock bottom.
The financial crisis of 2008 caused a significant recession and the finger of b lame pointed at the banks.
So when Metro launched with its new approach, introducing for example branches that are unmanned but open 24 hours, it was a breath of fresh air.
But today, just eight years on and Metro doesn’t feel like anything special at all. The fintech revolution has seen to that. As one banking professional said to me recently: “Think about Metro. It is hard to think what makes them really so special today.”
“Sooner or later you face the same challenges as the incumbents. You hire the same people like the incumbents, maybe coming from in incumbents. Sooner or later you might end up being just a normal bank
Chris Skinner, chairman of the Financial Services Club said: “Metro Bank, who have had billions of backing but are still struggling to challenge the big five.”
The early challenger s were simply not different enough.
Virgin Money is another example. Back in 2011 when it acquired Northern Rock from nationalisation, after the lender was rescued by the tax payers, it looked like it could become a major challenger on the high street.
But the bank has not really gained much market share. It is now even launching another, digital only, bank so it can take on the big banks and probably the fintech based challengers .In fact it has invested £38m in building this digital bank.
Today we even have traditional banks like TSB reinventing themselves as challenger banks and emulating some of the tech developments of the fintech challengers.
Meanwhile big banks like RBS and Lloyds Banks, which both relied on government financial assistance, seem to be getting strong again. They have also managed to keep up with and to an extent control a lot of fintech development.
Perhaps there will be third wave of challengers as a result of teh new open banking and PSD2 regulations. Watch out for Google bank.