Challenger Banks - Banking 2.0?

Challenger Banks - Banking 2.0?

First things first. Let’s just clear up what a challenger bank actually is.

"A Challenger Bank is a relatively small retail bank set up with the intention of competing for business with large, long-established national banks."

That’s what Google tells us anyway.

To us, challenger banks are those that are completely confronting the stale approach that most of the high street banks have towards servicing businesses.

Business is no longer a 9-5, Monday to Friday world. It’s no longer normal (or really acceptable) to expect a bank account to take weeks to be setup, or even worse, take weeks to get an appointment to apply for a new bank account….which takes weeks to be setup. But that seems to be the world of the high street bank. It’s what we see and hear from our clients anyway.

Challenger banks attack this problem. Take Starling for example. Once you have details of your new limited company you could have a bank account setup and sort code/account number in 10 minutes. That means you could register a new company and be accepting payments in less than 24 hours. That’s what modern business owners want.

So, let’s consider if a challenger bank is right for you and your business.

Do you want the following from your bank?

  • Fully digital
  • Managed entirely online
  • No requirement (or rarely required) to pay in cheques/cash
  • “Smart” features – built in budgeting, cost tracking etc.
  • Online customer service

If these are all qualities that you’re seeking out, then you’ll probably find that a challenger bank is right for you. However, if you already have an established business and are looking to switch away from your mainstream bank there may be some areas to consider.


One of the draw backs that we’d seen from clients with tie ins to their existing bank was their overdraft. Up until very recently this wasn’t a service that was widely available from the challenger. However, Starling have now announced their lending facilities which include overdrafts of up to £150,000. That ticks the right box for our clients!

Multiple Users

If you have multiple users in your business who deal with banking and require access to the bank account, you may find that what is currently offered by the challengers is too restrictive.

Cash / Cheques

If your business still handles a lot of cash and cheques, as well as making payments by cheque, you’re probably best suited elsewhere. Costs can be high to handle physical deposits and the issuing of cheque books is something that you’re unlikely to see!


Some larger business can find themselves getting “tied in” with their high street bank. After years of trading, they might have a mortgage, loan, overdraft, as well as other lending facilities. This can sometimes put business owners off of moving away from their bank, but it should be viewed as an opportunity.

There is a substantial market for all types of lending facility now, with the market being swamped with alternatives to banks, so a move away from your current banking provider could also be used as an opportunity to review your overall borrowing and lending facility costs. We work with a digital broker to handle these reviews for our clients and the savings we see can be substantial.

The challengers now also have loan facilities available too, so that is covered.

We’re massive fans of the challenger banking industry but do understand that there are limitations within the industry (at the moment anyway). If you’re thinking about reviewing your options and wanted to hear about our own or our clients experience, just drop us a message. 


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