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UK: Challenger Digital Banks
Revolut, Starling Bank, Monzo, and Atom are four of the top challenger banks in the UK. It is advised to keep an eye on Soldo, Mettle, and Tide, as they are claiming a market share.
REVOLUT
- Revolut was founded in 2015 and is based in London. In 2017, they reported $15.67 million in revenue, and $17.31 in 2018. From 2016-2017, their revenue growth was 443%. They offer personal and business products.
- Their market valuation is currently $1.7 billion, with $336.5 million in total funding over 12 rounds, with the last being March 27, 2019. They are a private company and considered a tech unicorn.
- Revolut has completed a total of 350 million transactions at a total value of $48.9 billion.
- Revolut states they have 7,000 new accounts opened daily.
- They have nearly 20,000 businesses as customers, along with 4.5 million customers total. In the UK, they have 1.6 million customers.
- Businesses may hold, receive, and exchange 29 currencies without charge.
- Revolut claims they are ten times cheaper than a bank.
- They have had significant reported losses.
- Their business customers have an Open API to integrate their Revolut account into their current workflow and stack.
- Revolut operates in Austria, Belgium, Bulgaria, Croatia, Republic of Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Gibraltar, Greece, Hungary, Iceland, Ireland, Isle of Man, Italy, Jersey, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland and the United Kingdom.
- Their website may be viewed here.
STARLING BANK
- Starling Bank was founded in 2014, by Anne Boden. They are headquartered in London and are a private company. They offer personal and business products.
- The 2017 reported revenue was $39 million.
- Starling's business account is currently only open to owners of limited companies with significant control.
- Their business customers have access to integrations with Xero and FreeAgent. A sole trader account may be opened if the customer has a personal account as well.
- Starling raised $54 million in funding in 2017.
- They won "Best Business Banking Provider" in 2019.
- Starling has 46,000 SME members along with a $122.4 million dollar grant to develop their business offerings. They plan to hit a total of one million customers in 2019.
- They have 20 institutional clients, including the UK government.
- Starling has over 30,000 SME business and sole trader accounts.
- A goal of a 6.7% share of the SME market has been set to achieve within the next five years.
- Their website may be viewed here.
MONZO
- Monzo is a London based digital bank that was founded in 2015, by Gary Dolman, Jason Bates, Jonas Huckestein, Paul Rippon, and Tom Blomfield. They are a private company with a Late Stage Venture funding status. They offer personal and business products.
- The current market valuation is $2.45 billion.
- Monzo has raised $397.56 million in funding over 14 rounds. Their latest funding round was on June 25, 2019.
- They currently have 2,797,950 customers total.
- Monzo launched business accounts for 100 sole traders this year. Currently there is a wait list with over 15,000 businesses.
- They are adding help with taxes, international payments, payroll multiple payments, and payments by a link for business customers.
- Their website may be viewed here.
ATOM
- Atom Bank was founded in 2014, by Aykley Heads in Durham, UK. They offer personal and business products.
- They have a total funding amount of $525.27 million raised over eight rounds. Their latest funding round was August 14, 2019.
- The current market valuation is $1.3 billion.
- Atom specializes in money management, savings and mortgage services.
- Only UK residents may become customers.
- In late 2018, they reached 65,000 customers and had $2.2 billion in deposits.
- They are investing in automation.
- Their website may be viewed here.
DIGITAL BANKS TO WATCH
- Tide, launched in 2017, operates in the business banking market with 86,000 small and medium business (SME) customers. They process over 11 million transactions per month, and have an annual transaction volume of almost $7.3 billion. They have a goal to secure 8% of the business banking market by 2023. They have 1.4% of the UK's SMEs as clients. They received a $73.4 million dollar grant to increase their business offerings.
- Soldo currently has over 40,000 SME businesses and was founded in 2015. They have raised a total of $83.2 million in funding over 6 rounds, with the latest being July 2019. They claim to offer a world-class technological, regulatory and operational platform.
- Mettle offers a free business account for small businesses, sole traders, and freelancers. They were founded November 5, 2018.
MARKET INFORMATION
- Britain is not saturated with big banks and branches like the US, leading to a favorable area to offer digital banking.
- The UK was an early adopter of digital banking.
- British SMEs account for 99% of all private companies.
- Fintech funding deals are on the decline in the UK. In 2017, there were 239 fintech, In 2018 there were 226, and this year there have only been 87.
- The global digital banking market is expected to grow at a CAGR of around 3.8% between 2019-2025.
- The business banking market in the UK is over $17 billion. There are 24.5 million SMEs in the UK, and the four largest banks have a 90% market share.
Research Strategy
To locate the top challenger digital banks, we first located industry articles that stated who the best digital challenger banks were. To be included in the next stage of our research, a bank had to be mentioned multiple times. Once we had our list, we then researched each bank separately to obtain an across the board metric. This proved difficult, as some banks did not list their annual revenue. We believe this happened because some banks are operating at a loss due to how new they are. Our next approach was to order them by their customer numbers. This again proved difficult, as the biggest bank we researched did not separate their customer base, and some banks only do business banking. Active users and monthly transactions also ran into the same issues. To combat this problem, we holistically looked at all the metrics we obtained to get our top listings.
To assess the market penetration, we began by locating industry reports and market studies. This did not give us enough information to triangulate a market share, as most of the information was global. Consulting business press releases from Globe Newswire, PR Newswire and from each business’ website gave us the bulk of our information. To finish our research, we researched available banking information from the government. Again, this gave us a few facts. Ultimately, we were able to put together a snapshot of the market, but not exact figures.