Challenger Banks Snapshot: New high-level executive appointees, established challenger banks see client growth, and Vernon Hill steps down

Cashplus announced the appointment of Monzo’s Tom Dolan as treasurer. Dolan will report to Chief Financial Officer Bob Van Breda and will play a key role in managing Cashplus’ liquidity and capital risks as it becomes a fully-licensed bank. Once a bank, the company will have access to ￡200m of lending capital.

Last quarter, the total number of people switching to digital banks Monzo and Starling, jumped by 60%. Furthermore, Starling Bank raised ￡30 million to fund its expansion as it approaches its millionth account. On the other hand, Monzo faced some backlash for freezing some of its customer’s accounts while the NCA (National Crime Agency) investigated those that showed signs of suspicious activity. Nevertheless, affected clients are frustrated with Monzo’s lack of information and claim to have been redirected to homeless shelters and food banks, in the meantime. Also, Monzo has named Novatech as its official technology partner. Over the past year Novatech has been working alongside Monzo to support its business expansion. Finally, the bailed-out Royal Bank of Scotland was forced to develop its own digital bank, Bó (ED of Launch: November), after failing to buy Monzo, due to not reaching a consensus on the price.

Good news for Revolut as its Swiss client base surges, trebling the number of clients to almost 250,000. Furthermore, Revolut continues to supercharge its growth plans and has launched a new cash referral incentive, issuing up to ￡12 per new user. Also, the digital bank’s CEO Nikolay Storonsky, sold part of $6m worth of shares to Emil Michael, Uber’s former Chief Business Officer.

Rough days for Metro Bank’s Chairman and founder, Vernon Hill. The remuneration committee first debated when to cut off his monthly ￡10,000 expenses budget; either December, the date he was first requested to step down, or March the month his contract officially ended. Regardless, on Wednesday he stepped down immediately and agreed to accept the honorary position of emeritus chairman.

Tide has appointed a new chief technology officer, former BMW’s connected car venture CTO, Guy Duncan. The executive-level hire comes a week after Tide raised ￡44m to fuel growth. Furthermore, last week Tide announced the introduction of optical character recognition technology and Rabo Frontier Ventures, has invested in the company following a Series B investment round.

Danish challenger bank Lunar selected Temenos’ award-winning Financial Crime Mitigation (FCM) to deliver the most complete protection and an enhanced digital customer experience.

After months of negotiations, French banking giant BPCE's proposed sale of Fidor Bank, one of the earliest digital challenger banks, to German Oldenburgischen Landesbank (OLB), has fallen through. Fidor, which was launched in Germany in 2009, was acquired by BPCE in July 2016 for over €100m and was put up for sale in November 2018.

The new German challenger bank, insha, focuses on interest-free Islamic banking. The bank is a digital offshoot of Istanbul-headquartered Albaraka Türk Participation Bank. 

NORTH AMERICA

Mastercard partners with Revolut for US launch, Mexico provides interesting fintech opportunities and Current sees serious growth and funding

Truebill raised $15 million in Series B funding to build a comprehensive platform for personal finance. This fall, it plans to launch additional features, including bill pay, credit score monitoring and a rewards program.

Minneapolis-based personal finance platform Branch is now a challenger bank. The company offers a suite of personal finance tools, including payday advance services for hourly workers through integrations with employer payroll platforms.

Current, which began as a teen debit card controlled by parents, has grown to host more than 500,000 accounts on its service and has closed on $20 million in Series B funding to further its growth.

Revolut has partnered up with Mastercard to help it expand into the U.S. by the end of the year. Mastercard will issue Revolut’s first debit cards in the U.S. and CEO Nik Storonsky said the firm would also use some of Mastercard’s new technology, including a platform that enables payments to be sent directly from one card to another.

The battle to become Mexico’s dominating challenger bank just started, changing the future landscape of its financial industry.Mexico, the second-largest economy in the region, has become a relevant market because 63% of its 130 million population are still unbanked.

OCEANIA

TransferWise announced a partnership with Up, Australia’s first digital bank. The integration with TransferWise makes Up the first Australian bank to provide international money transfers with no exchange rate markups, setting the stage for the rest of the banking sector. Furthermore, Up has gained more than 130,000 customers and has seen more than $650 million flow through the product. However, the bank has done this without offering any credit products or mortgages because these products do not match with its customers’ needs, yet. 

Volt Bank’s first product, a savings account, will launch next month to 36,000 customers on its waiting list. Furthermore, by joining the Cashwerkz online marketplace, an online platform uniquely designed for cash investing, Volt will be able to extend its deposit facilities beyond Volt Bank customers to direct investors and financial professionals. Also, through their partnership and app Volt Labs, Frollo and Volt Bank have gained valuable insights of customer demands for digital products in the banking space. 

Millions of Commonwealth Bank customers across the nation spoke of being stranded cashless for more than 12 hours after a massive outage.

Southland bank SBS has rebranded, introducing a new logo of a heart shape on an orange background. Bank chief executive Shaun Drylie says its previous rebrand positioned it as a challenger bank, but it is time to move on to the next stage of its evolution.

AFRICA

African Bank CEO Basani Maluleke says new MyWorld offering has attracted 100,000 individuals that have trusted it enough, after its near collapse in 2014, to do everyday business with it, just six months after it launched its transactional product. 

Discovery Bank fixed a flaw in its systems allowing incorrect credit card CVV numbers to be used for online payments. Due to being promptly alerted about the issue, it suffered no fraud losses. Furthermore, it confirmed that 10% of the bank will go to black clients, through an empowerment scheme that will offer free shares; but clarified that they will not receive shares directly in Discovery Bank, but in its listed parent company, Discovery Limited.

NOTE: This article was featured in my weekly newsletter on October 15, 2019. You want to be the first to read the news overview next week? Sign up for my Weekly Challenger Banks Newsletter here

Is weekly not enough for you? And do you want to be in the loop with the latest FinTech news every weekday? You should sign up for my Daily Fintech Snapshot here 

And last but not least: follow me on Twitter!