Name: Insights: What's Driving the Growth of Challenger Banks?
Uploaded: 2020-03-10
Duration: 2 min 20 s
Description: Aspiration CEO Andrei Cherny discusses the ongoing transformation of the banking and finance world. (June 2019)

 ANDREI CHERNY: Fundamentally, I think that our opening comes from the single great challenge that we, as a financial industry, are facing. And it's not around costs, it's not fundamentally around innovation or distribution, it's around trust. The brutal fact is that 11% of Americans say they trust their financial institution. And if you're a financial industry executive, company-- large or small, incumbent, upstart-- and you are not solving first and foremost for trust, then you're whistling past the graveyard. Somebody said to me fairly recently that all these challenger banks came up because of 2008 and the aftermath of the financial crisis. And certainly, there's truth to that. But in my opinion, the bigger driver is not 2008, it's 2007 and the launch of the iPhone. The nature of competition has changed. It used to be people chose their bank basically based on what branch was closest to them. Today, they choose based on what brand is closest to them, which institution speaks most directly to them, to who they are, to their concerns, to how they see the world, whether they are living paycheck to paycheck or whether they're a college student or whether, as in the case of aspiration, they're a conscience-driven consumer. And ultimately, what all of these challenger banks are doing is reinventing the nature of what it means to be a community bank for a digital age. Not around community in a geographic sense about the neighborhood or town that you live in, but the community of the people who share your values and share your world view wherever they may be. And so that's our opening, that's what's driving this trend. I think, ultimately, what we're going to see is that the challenge presented by challenger banks is not a challenge to incumbents, but more broadly, it's a challenge to this industry and the way the financial industry does business. 

Insights: What's Driving the Growth of Challenger Banks?

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The ongoing transformation of the banking and finance world.

What's Driving the Growth of Challenger Banks?

Aspiration CEO Andrei Cherny discusses the ongoing transformation of the banking and finance world. (June 2019)

Fundamentally, I think that our opening comes from the single great challenge that we as a financial industry, are facing. And it's not around costs, uh, not fundamentally around innovation or distribution. It's around front. The brutal fact is that 11% of Americans, they, they trust their financial institution. And if you're a financial industry executive company, larger small incumbent upstart and you are not solving first and foremost for trust, then you're whistling past the graveyard. Somebody said to me fairly recently that all these Challenger banks came up because of 2008 on the aftermath of the financial crisis. And certainly there's truth that. But in my opinion, the bigger drivers, not 8 4007 In the launch of the iPhone, the nature of competition has changed. It used to be people chose their bank, basically based on what branch was closest to them. Today, they choose based on what brand is closest to them, which institution speaks most directly to them, to who they are to their concerns, how they see the world, whether they're living paycheck to paycheck or whether they're a college student, or whether, as in the case of aspiration there, a conscience driven consumer and ultimately, what all these challenger banks are doing is reinventing the nature of what it means to be a community bank for a digital age. Not around community in the geographic sense about the neighborhood or town that you live in but community of the people who share your values and share your worldview wherever they may be. And so that's our opening. That's what's driving this trend. I think ultimately what we're gonna see is that the challenge presented by Challenger banks is not a challenge. Two incumbent, but more broadly, it's a challenge to this industry and the way the financial industry does business.