Challenger Bank as a New Digital Form of Providing Financial Services to Retail Consumers in the EU Internal Market : The Case of Revolut

‘Challenger banks’ are banks or non-banking start-ups, the operations of which are based on digital technologies and which challenges big, traditional banks. It is a new approach to provide financial services, where an agile organization and new technologies are the key success factors. Due to branchless and often mobile operations, challengers banks are focused on offering to their customers great user experience and attractive prices for selected financial services. The aim of the study is to explore the operations of challenger banks and their new digital approaches to provide banking and investment services to retail consumers in the EU Internal Market as a business model innovation. The case of Revolut, one of the most successful European challenger banks, is used as unit of analysis. The study makes an attempt to identify and explore: (1) What innovative is in the new customer value proposition offered to retail consumers by Revolut? (2) What are legal antecedents of Revolut’s operations? (3) What is the Revolut’s profit formula? (4) What internal processes and resources of Revolut are key to provide customers with high quality services? From the perspective of management theory, the study identifies the mechanisms of developing and implementing business model innovations in the financial sector considering the opportunities resulting from advancement of information and communication technologies, and changes in law. Regarding business practice, studying the case of Revolut brings some observations, insights, lessons, and best practices to be useful for other challenger banks