As challenger banks continue to disrupt the banking landscape, they are harnessing new technologies in a way the incumbents can’t match. But where are they making the biggest investments and why? Abi Millar explores.

 In April 2018, Metro Bank announced the release of an industry-first feature – a money-management service powered by artificial intelligence. The feature in question, Insights, will be able to analyse users’ spending patterns and spot trends and irregularities in their finances.

This might involve alerting customers to an auto-renewing subscription (so they can cancel it if need be) or flagging up a duplicate transaction (such as when you’re charged for the same cup of coffee twice).

As Metro Bank’s head of digital, Alex Park, tells EMEA Finance, the feature will go live this summer on their personal banking app.

“Insights really has two parts to it,” he says. “One is a retrospective part where you’ll be able to look back and drill down into how your money’s been spent. The other side is a prospective future-looking side, where we analyse your spending patterns in real time, and give you tips and alerts for better ways of managing your money. That’s where the AI comes in.”

He adds that the system will able to learn and improve based on its users’ input. You’ll have the ability to rate the ‘insights’ it generates, and see more or less of them depending on your ratings.

“We recognise that there’s a consumer demand for personal financial management tools, and we think this is groundbreaking, because nobody in the market has got anything like this out at the moment,” he says.

Metro, of course, is not the only challenger bank to be exploring data-driven insights. Tandem Bank has also begun to offer personalised recommendations based on customers’ spending habits, and others including Atom, Monzo and Starling are investing in similar technologies. Where Metro has the edge, claims Park, is in terms of its accuracy and sophistication.

“Typically a lot of the forward-looking stuff in the market is based on standing orders and direct debits, but we don’t think that catches everything. Insights includes your general spending patterns too,” he says.

Metro Bank’s announcement is just one example of a larger trend in banking – specifically, the dominance of challenger banks when it comes to digitisation. Famously agile and fast-moving, they tend to be singularly well-equipped to make the most of new tech.

Read the rest of this article in the August-September 2018 edition of EMEA Finance (subscriber only)