Firstly, and perhaps the most difficult, is how to convince someone who may have stuck with the same bank account for over a decade, to switch. Last year, there were just over 1 million people who switched bank accounts, an 11 percent drop to the year before. Even if the new players were trying to capture those people, that is not a big pool of users to grab, if split between over 10 banks.
And will the value proposition of the challenger banks be enough to get people to switch? I don't believe that a slick app will be enough to make the majority of people go through the hassle of switching accounts.
While the functionality of apps might be appealing, there's nothing stopping major banks fixing up their digital offering to compete. And if they do that, they already have the scale and products to retain customers.
And some of the upstarts aren't offering anything different. Mondo's CEO Tom Blomfield recently told CNBC that it would offer users zero percent on deposits with interest on overdrafts expected to be between 18 and 20 percent, a figure comparable to the major banks.