Editorial & Advertiser Disclosure Global Banking And Finance Review is an independent publisher which offers News, information, Analysis, Opinion, Press Releases, Reviews, Research reports covering various economies, industries, products, services and companies. The content available on globalbankingandfinance.com is sourced by a mixture of different methods which is not limited to content produced and supplied by various staff writers, journalists, freelancers, individuals, organizations, companies, PR agencies Sponsored Posts etc. The information available on this website is purely for educational and informational purposes only. We cannot guarantee the accuracy or applicability of any of the information provided at globalbankingandfinance.com with respect to your individual or personal circumstances. Please seek professional advice from a qualified professional before making any financial decisions. Globalbankingandfinance.com also links to various third party websites and we cannot guarantee the accuracy or applicability of the information provided by third party websites. Links from various articles on our site to third party websites are a mixture of non-sponsored links and sponsored links. Only a very small fraction of the links which point to external websites are affiliate links. Some of the links which you may click on our website may link to various products and services from our partners who may compensate us if you buy a service or product or fill a form or install an app. This will not incur additional cost to you. A very few articles on our website are sponsored posts or paid advertorials. These are marked as sponsored posts at the bottom of each post. For avoidance of any doubts and to make it easier for you to differentiate sponsored or non-sponsored articles or links, you may consider all articles on our site or all links to external websites as sponsored . Please note that some of the services or products which we talk about carry a high level of risk and may not be suitable for everyone. These may be complex services or products and we request the readers to consider this purely from an educational standpoint. The information provided on this website is general in nature. Global Banking & Finance Review expressly disclaims any liability without any limitation which may arise directly or indirectly from the use of such information.


Challenger banks must think carefully about their operational setup if they are to remain true to their roots, says Graham Donald, Managing Director, Equiniti Pancredit.

The UK’s big banks have had a tough start to the year, with fears relating to global economic slowdown, the impact of the huge fines imposed by the FCA and the threat of more big regulatory changes all taking their toll.  Few if any of these factors, however, are affecting the performance of the UK’s so-called ‘challenger banks’. These young, new lenders operate fleet-of-foot, unencumbered by the legacy systems and entangled processes that have long-hampered the bigger players. Innovation is key to their success; each has a different view of the world and all are intent on delivering a customer service experience which is both fresh and carefully differentiated in the marketplace.

They are certainly causing a stir. 2015 saw Aldermore and Shawbrook float and the FCA give the green light for a number of new lenders to launch, including Atom Bank and Tandem Bank.[1] Small, highly specialist banks that focus on particular vertical industries are performing healthily[2] and Virgin Money recently posted record profits.[3] But as ‘the challengers’ continue to grow they now face a challenge themselves – that of growing up. This means dedicating resources and scaling their operations to accommodate more customers, more accounts and more products – all of which lead to major hikes in servicing requirements. On top of this, just like the bigger high street lenders, they too must apply the same rigorous discipline to their own systems and processes as demanded by the ever-watchful FCA. All of which begs a question: How can they avoid getting bogged down in operations and processes? What can they do to protect their agility, which has been such a defining characteristic of the sector?

The answer lies in maintaining a clear focus on innovation, together with their own differentiated value proposition, and outsourcing the rest to a tried and tested partner that can manage day-to-day operations. Let’s think about this for a moment. For a small, high-profile, high-growth bank, what is the most sensible option? Undergo the rigmarole of recruiting and training in-house staff, designing and establishing FCA compliant processes and integrating new servicing technology platforms, or, partner with an established credit servicer and tap into trained staff, pre-approved processes and proprietary systems which are already up and running in the marketplace?

Knowing what to keep in-house and what to outsource will be a major determinant of future success for today’s challenger banks. Fortunately, the outsourcing market recognises this and is adapting to the market opportunity; a new wave of next-gen specialist credit servicers are emerging, offering blended solutions that combine specialist technologies to automate the management of loan portfolios, for example, with skilled customer service staff and auditable, best-practice processes, all wrapped up in a tailored package designed to address the specific needs of each bank.

This model, safeguarded by clear service level agreements, will enable the visionaries behind these new banks to concentrate on cultivating the disruptive and innovative qualities that have brought them this far. Allowing themselves to be distracted by operational management, which can be readily delivered through other means, will not only limit the success of their own organisations, it could also divert the wave of positive change that is sweeping through the UK’s banking industry.

In 2016, as more challenger banks enter the market, the case for establishing full service outsourcing partnerships is looking more compelling than ever before.