March 2019 has been something of a disaster for Revolut, with its CEO forced to defend the company online. Is this the start of more challenging times and problems for a challenger bank?
Challenger banks are getting older, and much like teenagers are showing growing pains. Some are even throwing strops. Revolut’s CEO Nik Storonsky has responded to negative claims about the company’s culture and compliance with a number of strongly worded blog posts. Rather than the company putting its hands up and admitting it made a mistake, Storonsky decided to “set the record straight” and give Revolut’s versions of events. However, this approach could backfire if it is perceived as dishonest by both regulators and customers.
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One of the key drivers of the challenger bank space was the increased distrust consumers felt towards traditional banks following the 2007–08 financial crisis. Indeed, many challenger banks have been very vocal that they do not think or act like these untrustworthy incumbents.
GlobalData’s 2017 Retail Banking Insight Survey found that 69% of UK consumers value honesty and integrity. Therefore, the idea of a bank being truthful is very important to keeping customers happy.
Revolut’s actions could have a knock-on effect for other challenger banks, potentially labelling the whole group as untrustworthy in the eyes of consumers. And if challenger banks are seen to be just as misleading we are likely to see a shift back to traditional banks. It will be important for other challenger banks to be clear to customers and regulators that they are honest so they don’t also end up being grounded.
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