Comparing banking to Tinder is fitting when you consider how Open Banking has commoditised financial services in Europe.
It used to be that you chose a banking provider based on proximity, and that only financial institutions could sell financial products; but today, branchless fintechs, big tech, neobanks, and accounting platforms are all serious players, too.
Dating apps are the free-market economy come to sex, and Open Banking is the free-market economy come to banking.
With this in mind - it’s probable that customers are going to shift to multiple short-term relationships, instead.
What we’ve learned from dating apps, is that when there’s a surplus of options, the whole system shifts towards a “hook-up mentality”. Where historically 15, 20, even 30-year banking relationships were the norm, in coming years we’re more likely to see customers engaging with several providers simultaneously, on a needs-by-needs basis.
Soaring deal activity in the challenger banking space and a superior customer experience makes these entrants seem like formidable competitors, but an attractive UX without a sustainable revenue model doesn’t scream long-term potential.
The firms who win the relationship battle require the following traits:
- Good will
- Surprise and delight
Take Monzo, arguably the biggest player in the challenger space and valued at £1 billion. The firm reported overall losses of £33.1 million last year, quadruple that of the previous year – luminous pink debit cards, and all. And though the bank hit an impressive one million current account holders, four in five of those customers don’t deposit their salaries with the bank. For now, it seems that customers are willing to field their options and stray, but not split from their primary bank altogether.