Will challenger banks take Lloyds' throne?

Will challenger banks take Lloyds’ throne?

As internet ‘challenger banks' continue to encroach on the turf of the ‘big four' banking giants, Erin Davis, senior equity analyst at Morningstar, analyses if they are a better investment opportunity that fund managers should be considering.

Lloyds Banking Group announced in October it planned to close 200 branches as its customers increasingly embraced digital banking platforms. The announcement brought to the forefront the question of whether the increasing importance of digital banking will reduce the competitive advantage provided by Lloyds' dominant branch network in the UK. The challenge comes at the same time as regulators are intensifying their efforts to increase competition in the retail banking market by lowering barriers to entry for challenger banks. But there is strong evidence that Lloyds' competitive advan...