The rise of the challenger bank
The last 10 years have seen a substantial change in the UK banking industry. Following the banking crisis of 2007, there was a loss of public confidence in the traditional big four banks.
This, combined with changes in banking regulation, led to a substantial number of new and smaller entrants to the banking market, known as challenger banks. The challenger banks operate differently to the traditional high street model, and will typically be online only, or even mobile app only, and will not have a network of high street branches.
Challenger banks will often be prepared to lend on matters which the traditional high street banks would refuse. Following the downturn of 2007, property prices fell and the high street banks severely restricted the amount of lending secured against a property – some banks even stopped lending on property all together and looked to persuade customers to go elsewhere. Various challengers stepped in to fill the void and some developed niche lending services – e.g. bridging finance, development finance, charities, tech companies etc.
We have seen a substantial growth in the number of instructions to act for borrowers using challenger banks – typically referred by finance brokers who are able to navigate this complex and changing market.