Up until 2008, the “Big Four” banks (Barclays, HSBC, Lloyds Banking Group, and NatWest Group) were the major financial organisations without any heavy competitors. However, the 2008 financial crisis gave birth to what we may term as the digital superhero- Challenger banks. Challenger banks are rather small retail banks that compete with the well-established banks in the UK. The Financial Services Act 2012 enabled these banks to gain banking license and now, they have outperformed the big four banks with their diverse financial offerings.

What makes challenger banks so special?

Challenger banks largely focus on customer experience and their offerings are mostly aligned with customer expectations. From basic functions, like acknowledging payment transactions to complex ones like commercial lending, challenger banks does it all. In most areas of banking, challenger banks are way ahead from the traditional banks with advantages like cost savings, reduced processing time, better customer interactions, etc.

One of the impressive technical aspects of challenger banks is the use of chatbots to understand customer requirements. Chatbots help customers in getting instant solutions, addresses all the queries, etc. Overall, chatbots aim to achieve impressive customer experience.

Currently, challenger banks are climbing a few steps above by including capable technologies like Machine Learning, Cognitive Computing, Natural Language Processing, etc. On the other hand, the pandemic came to them as a blessing in disguise as, the number of customers preferring a digital banking platform over traditional banks has increased gradually over this period.

What are the hindrances for challenger banks?

Challenger banks are in high demand currently, but that being said, these banks also faced some significant obstructions before reviving themselves. At the beginning of the Coronavirus pandemic, leading challenger banks had a significant drop of app downloads by 23.38%, endangering their position worldwide. Also, due to the initial worldwide lockdown, many travellers, restaurant-goers, stopped using their cards which affected the bank’s liquidity. Although, challenger banks are trying to cope up with the current situation and exploring different ideas, yet, there are two major hindrances curbing their expansion worldwide:

1. Increased Competition
2. Gaining License

Increased Competition

The nuance of various offerings makes or breaks a challenger bank. With the market wide open for new financial enterprises, there are many Fintechs and other banking organisations competing in the race of fine financial serving for the customers. Hence, it is imperative for challenger banks to be observant of their competitors and explore out-of-the-box ideas focusing on customer acquisition and retention.

Gaining License

Most challenger banks’ initial fallout is only due to the failure of gaining a license. These banks have to serve different criteria to gain the license and in some cases, apart from the federal regulations, they have to adhere to many state regulations as well. Adding to this complexity are different sets of regulations pertaining to data privacy like GDPR, etc. Such enormous processes finally lead to exhaustion of the banks and hence, the fallout.

AI-driven AMS for Challenger banks

As mentioned above, increased competition is one of the major issues of challenger banks. Adding to the sorrow is the volatile customer expectations. Hence, challenger banks need a super aiding agent which can help them retain customers for a longer time. Enter AI-driven AMS, which drives the whole banking application on the customer-centric vanguard.

Here are some of the features of AI-driven AMS:

1. Application Performance Management

AI-driven AMS takes full care of the entire application’s performance. It helps in resolving issues related to the performance of external services, monitoring transaction metrics and traces continuously, resolving performance issues related to API and middleware, etc.

2. Report Development

For a better understanding of the working of the application, AI-driven AMS provides an accurate analysis of various factors contributing to the application’s enhancements. It includes Custom dashboards, Capacity analysis reports, SLA estimations, Scalability, etc.

3. Problem Management

AI-driven AMS helps in ticket management and detecting any issues, hence, avoiding major escalations. It ensures preventive and adaptive maintenance and performs a routine check to ensure seamless navigation in and around the application.

4. Three-level Support

AI-driven AMS supports L1, L2, and L3 levels in several different ways. It helps to monitor ticket logs, resolve adhoc issues, detect the root cause of the defects, help in minor enhancements, etc.

Benefits of AI-driven AMS

1. Easy on the pocket

AI-driven AMS can help you save up to 70% of Application Management costs. AI-driven AMS automates ticket management functions, thereby, reducing the number of employees in the helpdesk team, hence, reducing the cost.

2. Gain in productivity

AI-driven AMS acts as a helping hand for the support team by handling the recurring ticket’s inflow enabling the team to concentrate more on other aspects. The recurring tickets are replaced by the robust mentoring and knowledge management structure which increases the productivity of the employees.

3. Real-time knowledge of the growing trend

Being aware of the latest trends in the financial zone is always beneficial for your bank. Hence, AI-driven AMS actively identifies major trends that can be implemented as enhancements.

4. Better customer engagement

AI-driven AMS provides an organised view of the tickets which help in faster debugging of the issues leading towards rapid response to the customers. Also, AI-driven AMS provides deep insights, which help the banks to understand the likes and dislikes of the customers and hence, enhance customer engagement accordingly.


Millennials and Generation Z are keen on digital banking which gives challenger banks a golden opportunity to shine. Needless to say that, digital banking users will only keep increasing in the future hence, challenger banks should consider effective innovation. The digital face of challenger banks has already inclined customers towards them, and the demand is ever-increasing. The only thing that challenger banks have to do is to plan smart and brainstorm ideas suiting the customer’s needs. Having innovative implementations, like AI-driven AMS also helps in gaining license as these implementations are built to automatically follow the regulations.