In the world of alternative finance and FinTech, the favourite word is 'disruption' - it defines the opportunity and gives a sense of purpose and, hey, it sounds edgy and cool at the same time. Nearly everybody I talk to wants to be a 'challenger brand'.
When we talk of challenger brands we tend to think of Virgin Atlantic playing out its long standing war of words with British Airways or Pepsi forever challenging Coca Cola, but what exactly does a challenger brand look like today? And more importantly, how does a business become one and sustain it for the long term?
For the answer, we can do a lot worse than go to the original book on the topic, Eating the Big Fish, written in 1999 by Adam Morgan. In his book Adam describes challenger brands as:
“…brands and businesses with ambitions that outstrip their resource; those who know they must apply a very different approach to strategy, positioning and company culture in order to compete with the established leaders.”
Well, there are certainly plenty of those in FinTech, so does that mean everybody is a challenger brand by definition?
The key defining characteristic of a challenger brand can be summed up in one word - attitude.
In a later work, Adam describes 10 different types of challenger brand. The credit for the definitions must all go to him, but where I can, I have suggested examples in the AltFi/FinTech space. Please give me other suggestions if you can think of them.
The truth is, while AltFi has some challenger brands, and it is surely no coincidence that they have succeeded, I have struggled to think of good examples for most of the categories.
Most AltFi and FinTech businesses cluster together under the heading of 'Scrappy David', nipping away at the ankles of the establishment, positioning the large banks and insurance companies as evil tyrants and themselves as the good guys fighting the battle for the downtrodden SME or saver.
But where are the real and human challengers; who is zagging while others zig; who are the new missionaries; and where is our truly irreverent Maverick?
I have argued before that businesses within the industry are paying insufficient attention to their branding. For understandable reasons, the initial focus has been on developing the technology and the infrastructure to deliver the functional elements of their propositions. Collectively, they have made FinTech the democratiser, the game changer and the scrappy David, but there are precious few examples of strong individual brands emerging.
To quote Adam Morgan again:
"The mark of all great challenger brands is their ability to disrupt the norm and create a passionate following. Whether moved by indignation or idealism, consumers engaged by challenger brands transform from a state of apathy to one of vocal buy in. Having found their voice, they take to social media – offering young, resource-poor businesses reach otherwise beyond their means. This sheer volume coupled with the authenticity of genuine consumer referrals works its magic, creating a critical mass resulting in rapid growth".
The problem is that, as the industry matures, the businesses that are finding traction and approaching critical mass are starting to discover why the incumbents that they set out to disrupt have been doing things a certain way for so many years. They are changing their policies and procedures and becoming more...well, like banks. The rub is that the consumers' initial wave of enthusiasm, born out of a sense of revolution, will inevitably peter out.
The imperative, therefore, is not just to adopt 'challenger brand' as a label, but to be and remain a challenger brand at the core. To do so, a brand must decide on the challenger profile that it is going to adopt and hold on to it passionately. And that means investing in it too.
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