In the light of news that Clydesdale and Yorkshire banks will close 28 branches due to the company's ability to sustain its current breadth, we take a look at the future of challenger banks in the UK. Weber Shandwick and research partner ComRes conducted research into consumer attitudes towards challenger brands and hosted a panel discussion with industry experts last Wednesday to discuss the findings.

The report largely indicated a mood of apathy and confusion among consumers when asked to give an opinion about new brands entering the banking marketplace. The study shows that just one in eight people would actually welcome an increase of high street bank branches. Of those who would welcome an increase in the number of high street banks available, only 26% would consider switching. The panel discussed the implications of these findings for challenger banks trying to break into the market.

Liz Wolstenholme, UK head of brand strategy at Weber Shandwick, says, “The new players in the financial services sector have their work cut out for them. Indifference and confusion among the British public are the greater forces at work, and this research shows brands need to adopt new rules of engagement.” She continues, “Our ‘classic’ brands are increasingly behaving like challengers, making the case for consumers to stay with their existing bank that much stronger. We know major banks are adopting what’s traditionally been described as a challenger model, offering online services with increasingly sophisticated user experience.”

The research also reveals that the majority of British adults believe the future of banking to be a predominantly online experience and therefore the question of high street branches was seen by some to be largely irrelevant.

Mary Whenman, managing director, Corporate, Financial & Public Affairs, Weber Shandwick, concluded, “The onus is now on bank brands themselves, ‘challenger’ or otherwise, to find new ways to engage with consumers, giving them a compelling reason to stay or switch. CMOs need to lead the way in driving innovation and engagement with existing and potential customers.”

The report is evidence that the public still experiences a great deal of mistrust and trepidation in its dealings with the financial sector. This is something that both the big four and the challenger brands will need to tackle as they move forward.