Challenger Bank Market to Grow $471.0 Billion by 2027
challenger bank

New research in which leading market players were analysed has reported exponential growth of the global challenger bank market over the next 7 years.

GCV portfolio company Atom Bank was analysed alongside Monzo Bank Limited, Fidor Solutions AG, MYbank, Movencorp, Inc., Simple Finance Technology Corporation, Number26 GmbH, UBank limited, Tandem Bank, and WeBank.

In the recent report published by allied market research the global challenger bank market generated $20.4 billion in 2019, and is estimated to reach $471.0 billion by 2027, registering a CAGR of 48.1% from 2020 to 2027. 

Over recent years challenger banks have been disrupting the traditional banking model by providing both retail and business customers with reduced costs by removing the need for legacy IT systems, physical branches and historical regulatory issues.

Unlike highstreet banks, challenger banks are able to act quickly, adapt to consumer and business needs, taking an agile and flexible approach towards developing banking systems and improving the customer experience.

 

High Growth for Challenger Business Banking 

The allied market research report details the segmentation of the global challenger bank market based on service type, end user, and region. 

Based in service type, the loans segment contributed to the largest share in 2019, accounting for nearly one-third of the total share, and is estimated to maintain its dominant position during the forecast period.

Based on end user, the business segment accounted for the largest share in 2019, holding nearly three-fifths of the total share, and is expected to maintain the largest share throughout the forecast period.

These findings shouldn’t come as a surprise given that as of July 2018, the SME Lending Market was reportedly worth over £154 billion yet £48 billion is still unmet in the demand by UK SMEs. 

At the same time new SME loans from high street lenders started to decline, there was also an increase in challenger banks presenting themselves as a viable external finance alternative for SMEs.

Business Banking has changed significantly over the past few years, with businesses requiring financing options in days rather than months. 

For customers wanting to borrow between £500k and £5 million, the experience for many is a very frustrating and a time-consuming process that ultimately stifles business growth for the business lenders.

 

GCV Portfolio Company B-North

At Growth Capital Ventures, we recently worked with B-North (a start-up which aims to transform the way SME lending is delivered).

B-North are committed to building a business focused bank which combines market leading personal service, best in class delivery and exceptional speed of funding.

Read More: How GCV backed and supported B-North to transform SME lending

By streamlining the lending process, it will seek to serve business customers in a way which cannot be matched by traditional banks.

Once operational, the bank will deliver loans of between £500,000 and £5m to ambitious companies looking to scale up their business, providing finance up to ten times faster than large mainstream banks.

Having raised seed capital of over £4m including a six figure investment from the Greater Manchester Combined Authority, B-North has used this to build the core team, develop a prototype lending platform and broker portal whilst also building significant momentum in the banking licence process. 

In late 2019, B-North further raised over £2.8 million through the Growth Capital Ventures online investment platform, exceeding its initial target of £2 million.

The latest investment round places B-North in a position to further strengthen the existing management team and continue building the infrastructure ready for launching the bank later in the year.

 

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