Two people using different digital banking platforms on their laptop and iPad Source: Shutterstock.

There are a few new banks emerging post-pandemic – a subgroup of financial institutions called challenger banks. A challenger bank is typically a smaller bank that aims to compete with traditional banks by leveraging technology. Most challenger banks are digital or app-based and do not have a physical branch system. This structure provides a considerable benefit to the challenger bank because it can avoid the high costs of running in-person branches and use the money saved to deliver better digital service and product innovation, resulting in lower costs to consumers. The apparent target of challengers is those who embrace technology, primarily millennials and Gen Zers.

Because of their smooth digital and app experience, many challengers saw a rather nice uptick in use due to the pandemic. Challenger banks were able to process and deposit stimulus payments faster than traditional banks. This efficiency was appreciated by those who might have been living paycheck to paycheck or who lost a paycheck during the pandemic.

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