…Are challenger banks successful because their tech-first approach satisfies consumers? Or are underserved consumers driving challenger banks to create new products and services that banks are unable (or unwilling) to offer?
… both challenger banks and incumbents know their target market. That is, the challenger banks are catering to an audience looking for a different bank experience than the one that appeals to their parents.
… take a look at the outward appearance. Traditional banks’ websites are text-heavy, with long-winded fine print, and are intimidating enough to drive away less experienced consumers. Conversely, challenger banks use colloquial language and present websites that look simple and transparent.
Taking a look under the surface, the products and services each bank offers are also different. Schwab’s are heavily geared toward investing and trading, while what Dave offers- paycheck advances and credit building tools- seems to center around keeping its users afloat.
In the end, the two approaches are perfectly suited for users on opposite sides of the generational spectrum… Now, to answer the question, “are Millennials and Gen Z consumers gravitating towards challenger banks because their websites appear more digitally savvy?” The answer is no. Challenger banks are built from the ground up to entice this generation of users. And while the banks’ advanced digital capabilities help to draw users in, they are not the sole reason younger, tech-savvy users choose them.