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Mitek: Trust Will Turn the Tide in the UK Banking Industry

Traditional high street banks have seen a gradual decrease in popularity with the rise of digital challenger banks. It has become apparent over the last few years, and increasingly more so following the pandemic, that simply holding a high street bank’s name will not be enough to secure new customers as they once would. Though many still have a high street bank as their main account, challenger banks have been gaining the public’s trust, and as this trust increases, more people are going to begin putting their earnings directly in their digital bank, rather than their traditional one. 

Customer experience has become one of the most important factors when the public decide their bank. Adam Desmond is the UK&I Country Lead at Mitek leading the operations and delivering growth in the region. Mitek works with more than 7500 financial organisations, including HSBC, ANNA Money, Airbnb, and Instacart – to ensure safety and security and improve customer experience through its proprietary digital identity verification tech.

With his knowledge of customer experience and the degree of importance it plays in keeping customers with the same company for the long haul, Desmond discusses how digital banks obtaining the public’s trust will change the banking industry: 

Adam Desmond, UK&I Country Lead at Mitek
Adam Desmond, UK&I Country Lead at Mitek

It’s easy to forget how much banking has changed. Today, there’s no need to type out every single digit of your friends’ account, or open up a calculator app to split the bill after a meal out. It’s two taps, and your debt is paid.

Mobile-first challenger banks have revolutionised banking, designing their apps and offerings to match how customers manage their finances on a daily basis. Their dedication in finetuning the customer experience has allowed them to outpace the big banks. Estimates have even predicted these non-traditional banking providers in North America and Europe will surpass more than 145 million customers by 2024.

But the question now is, will they? As the spotlight turns to the challenger banks becoming the major players, the tides are turning. Not only this, the big banks have been playing catch up too, inching ever closer to offering the same innovation in products and services, and an equally stellar customer experience. In the coming year, we might see the gears shift between these banks once and for all – but it could go one of several ways.

Will big banks eat up the challengers?

When it comes to choosing a banking provider, trust remains an important factor. A.T. Kearney found that four-fifths of respondents considered their primary account to be with a traditional bank, whereas only a fifth said a challenger. The same study also found that almost three-quarters of respondents chose to have their salary paid into a traditional bank, signalling the higher level of trust placed in them.

Backed by reputation and credibility, all that the big banks need is the technology and talent to level up the customer experience. We’re already seeing major banks doing this by acquiring small firms and doubling down on their developer talent. French bank Société Générale, for example, acquired Shine, a challenger bank last year, and another, Boursorama, back in 2015.

But acquisitions may not always work in the bank’s favour. Spanish bank, BBVA, had to close down the challenger bank Simple after acquiring them back in 2014, reminding us that challenger banks are still often operating on trial and error. They aren’t built on the same foundations as traditional banks, so may not always leave customers happy – the platform was reported to have turned off its banking features without warning. So, how else could banks leverage their reputation and credibility and deliver on their customer experience?

Doubling down on customer experience

Another route big banks could take is by doubling down on their own technology, by investing so strongly into customer experience that challengers can’t keep up.

Most people rarely change banking providers, and this is particularly true amongst the older generation. According to finder.com, more than half (57%) of elderly account holders stayed loyal to the same banking provider for their entire lives. That’s why major banks need to deliver the same level of customer service – if not better – online than in-store. As many as 1.4 million high-street bank customers also revealed that they don’t intend to return to a bank branch after the pandemic. This further proves that stepping up user experiences will be critical to retain existing customers and attract new ones too.

Whether this means improving the onboarding experience or guiding the customer journey as they solve a reported fraud issue, making this as easy as possible will be critical. If not, customers could quickly jump ship to other, more responsive banking providers.

Will challengers continue on their meteoric rise?

In the past year, challenger banks have continued to expand their offerings and grow their customer base. British challenger bank Starling raised £272million in its latest investment round, with the CEO announcing the money would go towards expansion into Europe and mergers and acquisitions.

Similarly, buy now pay later (BNPL) provider Klarna has been making headlines, with plans to offer its open banking solution to eight more countries, making a total of 24, to raising $1billion in a new funding round, Klarna is catching up to the big players with its strong user base of 18 million customers. To really compete with the major players however, it has to work on convincing its customers that it can be trusted with their money – and won’t end up as the ‘Wonga of the 2020s’.

It all circles back to trust

Whether customers choose to bank with a traditional bank, a digital-first challenger, or even new fintech entrants, it all comes back to one thing: trust. A huge part of this will be delivering user experiences that meet customers’ needs. Customers need to feel that their money is in safe hands, that they can report issues and have them resolved without a fuss, and the banking provider will do everything they can to protect and manage their money.

Today, it’s no longer about the name and reputation. Instead, it’s the experience that the provider delivers, and if they can live up to expectations. In this, trust and user experience are not the pinnacle – now, they’re the bare minimum.


  • Francis is a journalist and our lead LatAm correspondent, with a BA in Classical Civilization, he has a specialist interest in North and South America.

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