Challenger Banks are small, recently-created and new to the market retail banks within the UK that do not usually have a high street presence. In order to be defined as a ‘bank’, the company must be authorised to accept retail deposits by the UK finical regulator the Prudential Regulation Authority (PRA).
Challenger banks can often only be approached via an Intermediary or Finance Broker. Some of the challenger banks will have a niche, for example, offer higher loan to values in areas such as Property Investment.
These banks compete directly with the older and more established banks within the county such as Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland Group.
Benefits of using a challenger bank?
- They may be more willing to consider propositions where clients may not have the experience in a field that a High Street Bank may be looking for.
- Given their smaller size can often move more quickly in adapting to a changing marketplace and expand their offering to meet changing client needs.
What's the main difference?
These challenger banks set themselves aside from the historic banks by using modern finical technology practices. This will include online-only operations which avoid the typical costs and complications of traditional banking.