In early 2020, FT Partners published a report titled ‘The Rise of Challenger Banks: Are the Apps Taking Over?’
Challenger banks—alternatively, neo banks—are known as such because of how their business models seek to challenge the status quo within the financial sector. By reinventing customer experiences and utilising inventive technology, challenger banks have effectively placed pressure on stagnant financial incumbents within this constantly evolving industry.
Undoubtedly, founding and running a challenger bank is no easy task. Inspired by our previous post about ‘Financial Incumbents vs. Challenger Banks’, we at CFTE decided to conduct our own analysis into the founders of renowned challenger banks and their respective backgrounds.
Visual A 
Visual B
In visual A, we have compiled a list of major challenger banks from around the world and the backgrounds of their founders. Our methodology in driving this research has been to focus on estimated valuation and total funds raised. Additionally, we have sought to include challenger banks from different parts of the globe, for a more holistic and diverse overview.
Interestingly, we noticed a pattern. As shown in visual A, 55.5% of the banks have at least one founder that comes from a ‘hard’ science education background. Namely, physics, engineering, computer science and such. In visual B, however, it shows that out of 9 of the challenger banks we compiled, 5 (55.5%) of them have founders that hail from a previous consulting background.
In a different vein, out of 9 challenger banks, there are 18 founders in total. 44.4% of the founders have a consulting background, while 33.3% of them have had former experience working in a bank/challenger bank. Notably, 38.8% of the founders come from a university background of business management and finance.
From the data we compiled, a university degree in STEM and a former work experience in consulting seem to be highly prevalent within the founders. Could this possibly highlight that there may be certain characteristics an individual possesses which may attract them to working at a challenger bank? This could be an intriguing topic for further research.
Obviously, this does not in any way suggest that entrepreneurs coming from different backgrounds will not be qualified in running and/or founding a challenger bank. Oleg Tinkov from Tinkoff— one of the world’s largest digital banks—and Chris Britt founder of Chime who studied History at Tulane University are great examples that underscore this. Chime is also currently considered the leader in the US challenger bank space.
After-all, the beauty of Financial Technology is that it is a merger between two highly innovative and driven industries. And the very philosophy that FinTech is built on—being agile, disruptive and limitless—indicates that it is a sphere that not only challenges, but also rebels against the status quo. Post the financial recession of 2008, Challenger banks and FinTech startups started out as underdogs in the sector, now they have transitioned to shaping the industry.
Nothing is impossible!
P/S: if you would like to have your challenger bank included in the list, kindly send your details to [email protected] and we will see what we can do.
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