Insights Report: Frontier challenger banks

Why are frontier challenger banks outperforming their developed market peers?

Accelerated by the pandemic, the tale of challenger banks (‘challengers’) across the world has been diverging. In frontier markets, Tinkoff (Russia) and Kaspi (Kazakhstan) are reporting record figures, with the later recently listing at a valuation of $6.5bn on the LSE. In contrast, developed market challengers are coming under increasing pressure: Monzo (UK) was forced to accept new funding at a 40% lower valuation, Revolut (UK) has made mass redundancies, and N26 (Germany) shut its UK operations – effective April 2020. In this article, we highlight some of the reasons for this divergence and build a case for frontier challengers being structurally superior to their developed market counterparts.

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