Challenger banks vs. crypto institutions: The battle for the future of finance
Over the years, the financial industry has undergone significant transformation as challenger banks and crypto institutions have emerged to challenge the traditional banking system (TradFi). According to data acquired by Finbold, downloads for selected six European mobile-only bank apps peaked at 26.3 million in 2022 for Android and iOS operating systems, representing year-over-year (YoY) growth of 54.09% from 2021’s figure of 17.06 million.
Number of European Mobile-only Bank App Downloads in 2022
Source: Finbold
Similarly, the global cryptocurrency market cap has grown significantly over the past year, reaching a total market value of over $2.5 trillion in early 2022. As digital banking and crypto adoption gain more traction, the competition to shape the future of finance is intensifying. Thus, which will come out on top?
Challenger banks represent financial institutions that ‘challenge’ the conventional banking sector by operating entirely online.
The likes of Revolut, Monzo, and Wise provide customers with a seamless onboarding process and efficient banking experience. Unlike traditional banks — which require extensive documentation and background checks — these banks typically only require a few simple steps to open an account, often within minutes.
Additionally, challenger banks offer features such as budgeting mechanisms, real-time transaction alerts, and even reward programs to provide consumers with a more enjoyable experience of managing their finances.
Whilst challenger banks have made significant strides in disrupting the traditional system, with the rapid innovation of crypto institutions, there is a growing recognition that the next wave of disruption in finance may come from the world of cryptocurrency.
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