How to bank on the challengers investing in sport
Challenger banks aim to disrupt the status quo, primarily by exploiting technology in a way that traditional banks have failed to do. Driven by the smartphone as the new financial control centre, they take a service design-led approach to help people take back control of their money. It’s all about accessibility, transparency. efficiency and simplicity.
Banking may be the signature example of a sector facing such a disruptive battle between the old and the new. Loss-making new entrants – fuelled by the deep pockets and high hopes of venture capitalists – aim to compete with firmly established giants. The size and safety of lumbering supertankers being taken on by more nimble but frail speedboats.
This frailty, despite the billions being invested, has already led to casualties in the UK. The demise of N26 and Loot shows how ultra-competitive the UK challenger banking scene is and that differentiating oneself from the competition in consumers eyes is becoming increasingly harder to do.
Despite the meteoric rise and obsessive media coverage, challenger banks along with smaller conventional banks and building societies still only account for 13% share of UK current accounts. The big six banks alone still holding the other 87% (source: *Dr Andreas Kokkinis, Associate Professor, Warwick University, School of Law). Furthermore, the perceived wisdom is that the vast majority of challenger bank customers only use them as a secondary account. In addition, recent Accenture analysis revealed the actual average amount of money being deposited in a challenger account has fallen by around 25%.
Unlike their traditional counterparts, the challengers as a whole are yet to harness traditional marketing – let alone, sport sponsorship – in a significant way. Instead, relying primarily on word of mouth and influencer marketing. However, the challenges outlined around fierce competition, brand awareness, differentiation and ‘primacy’ are where rights holders – who already have loyal and highly engaged audiences – have valuable cards to play.
The signs are encouraging, the challengers are gradually spending more on above-the-line marketing campaigns to build brand beyond 20-something Londoners and Starling Bank has just become the official “Bank of Team GB” for the 2020 Tokyo Olympics. Rights holders offer that ATL exposure, legitimacy and trust – the latter absolutely critical if challenger accounts are to become primary ones. Furthermore, millennials and Generation Z increasingly look for brands to play a more active role in social action and change. Rights holders offer a genuine and believable avenue for ‘purpose-driven’ marketing, be it around health (physical and mental), community engagement and gender equality.
Certainly, the bigger and more established sports offer that wider brand awareness while the less traditional sports are better placed to provide a more natural fit in terms of younger audiences and embracing that sense of challenging the norm and disruption – as well as offering lower price points.
On a purely practical note, travel-related incentives (such as free currency exchange or no charges on withdrawing money overseas) are a notable part of the challengers’ offering. This is a natural fit with sports as fans often travel overseas to support their team and so is conducive with benefit-led activations that meet the financial needs of these travelling fans.
Whatever their DNA, rights holders who can display innovative thinking about how their vehicle can go beyond simply driving brand awareness to genuinely engaging fans are the most likely to open their account with challenger banks.
Challenger bank sport sponsorship is one of our new series of caytootarget™ reports designed specifically to help rights holders save time and resource when it comes to overcoming their key pain point – identifying viable target brands and hitting the right decision-makers with relevant and compelling proposals. We’ve covered sectors including:
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