When Revolut launched in 2015, it had modest ambitions “to turn the financial banking sector on its head”. Founder Nikolay Storonsky was going to “democratise personal finance” in no time at all.
It’s a far shout from the accusations of money laundering, plagiarism, data fabrication and cultivating an exploitative workplace culture that Revolut today faces, just four years down the line.
And yet, though Revolut is the most serious alleged offender, it is not alone among troubled challengers. Metro Bank, one-time City darling, the first ‘new’ bank on the high street in a century, believed “customers simply want a better experience from their bank,” said chairman Anthony Thomson after its 2010 launch.
Open 12 hours a day, seven days a week, its ‘fun,’ open plan, dog-friendly branches drew in a clientele disillusioned by banks and bankers in the wake of the financial crisis and subsequent recession. Of course, we now know the pooch-loving castle was built on quicksand.
Those years following Lehman are important: they cultivated fertile ground for disruptors challenging the hegemony of the UK’s high street lenders. A massive underinvestment in technology by banks combined with a general public disdain for bankers meant that any firm promising to be different — that could match its claims with technology — stood a pretty good chance of success.
These challengers, without the weight of legacy technology, untainted by crises past, had more freedom and flexibility, which allowed them to develop their customer base faster. They built the most incredible brands, capitalising on the appetite for disruption of a tech-savvy, millennial audience, raised in the tumult of recession. Think of Monzo’s coral pink colourway or Starling’s vertical debit card; Revolut’s claims of democratising personal finance or Metro’s dog-friendly branches. Each is branding that created a distinct proposition in a market dominated by competitors offering vastly similar products.
But brand is about more than logo and identity; it encompasses everything from internal culture to customer service and the public actions a bank makes. The sum of brand is bigger than its total parts.
The crises facing Revolut is not a PR crisis alone, but also one of brand. If a disruptor builds a brand upon foundations of trust, authenticity and being ethically divergent to the old guard, then its actions need to reflect that brand positioning.
Strong branding drove Revolut so far. But it was too quick. In no time at all, it became what it set out to change. The bank suffered from reckless growth to the detriment of its ambitions.
For other fintech firms, the news of Revolut, and to a lesser extent Metro, could easily be read as a problem; that all will be tarred with the same brush, diminishing confidence in a sector built on trust. But with every problem comes an opportunity.
The news makes clear that sustainable disruption in mature industries and markets is a marathon, not a sprint. Challengers concerned about the Revolut fallout would do well to learn a trick or two from the old guard. If they’re not already, questions about how 300-year-old banks are still relevant, dominant brands should be on the lips of those trying to capture market share in an industry with famously low levels of churn.
If a true sustained challenge of the retail banking stalwarts is to occur, it will be mounted by the brand that can best invest in awareness, while continuing to demonstrate distinctive difference through tangible service and experience innovation that makes them seem like a genuinely worthwhile alternative.
While the sector may face increased scrutiny, there is no compelling evidence to suggest there exists a distrust of challengers — whereas the pains of the financial crisis, and distrust of those who caused it, are still felt a decade on.
Those being challenged have risen to the occasion, working hard to regain trust lost. They’ve invested in customer service and technology, moved from being functional to emotional brands, faced up to the reality of past mistakes — they are a part of people’s daily lives.
While the advantage in awareness incumbents have is almost unassailable, the job now for challengers is to do the same — to fortify their credentials as viable long-term players, not a flash in the fintech pan.
Joel Biswas is a planning partner at Coley Porter Bell.