Atom Bank: The "Next Generation" Digital Challenger Bank in UK |
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Initially, in April 2016, Atom Bank started offering a one-year fixed saver account to millennials (between 18 and 35 years old). Gradually, the bank extended its product line by adding a two-year savings account. It offered a one-year fixed savings account interest rate of 2%, approximately 0.4% higher than that of its nearest competitors (Refer to Figure III for fixed saver accounts of Atom Bank as seen on mobile app). Additionally, in 2018, Atom Bank launched two fixed saver accounts for three months and six months with interest rates of 1.3% and 1.8% respectively. It also allowed customers to open an account with £50 initially. By the end of 2018, Atom Bank had touched £1billion in Fixed Savings accounts....
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| Atom Bank observed that millennials were anxious around money. The vast majority of millennials who did monetary transactions mostly through their phone, were worried that their money would not last until the end of the month. They were terrified about opening bank statements and checking their balances... |
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| Digital challenger banks like Atom Bank were forcing traditional banks in the UK to bring more innovative digital products to their customers, avoid downtime, and modernize infrastructure. In 2018, Lloyds started investing in digital strategy in collaboration with UK-based fintech Thought Machine , Lloyds launched a cloud-based core banking platform to meet its customers’ evolving needs. It also had a plan to migrate select customers to this new banking platform... |
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| Although the customer base and deposits of Atom Bank grew within a short time period because of a good user experience through always-available digital interfaces, its Net Interest Expense (NIE) increased from £1million in 2017 to £6million in 2018. As a result, the bank had to postpone its plans of launching a current account... |
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Exhibit I:List of Atom Bank’s Competitors
Exhibit II: A Comparison of the Platforms Used for Retail Banking in Europe (in %)
Exhibit III: Details of Atom Bank’s Mortgage Products
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