Incumbents now make up seven of the top ten banks by feature score. 11:FS benchmarking from August 2025 puts NatWest and RBS at 93 out of 100, within striking distance of Monzo’s 98. Spending insights, instant notifications, budgeting tools, savings pots. All present and accounted for.
The satisfaction gap persists anyway. Starling, Monzo, and First Direct top the Which? 2025 rankings. Barclays, Lloyds, and NatWest lag behind.
But it’s not because features are missing.
Something else is.
The gap isn’t about what a bank offers. It’s about how quickly a bank spots friction and fixes it. McKinsey research shows that FinTechs deploy features every two to six months. Incumbents take twelve to eighteen. Challengers didn’t succeed because they shipped a better budgeting tool in 2019. They succeeded because they’ve shipped a dozen improvements since, each addressing what customers struggled with.
The cycle time between “we identified a problem” and “customers experience the fix” explains competitive outcomes more starkly than any feature checklist.
For a challenger, that cycle might be days or weeks. For most incumbents, it stretches to quarters or years.
This matters because customer expectations keep moving. Salesforce’s State of the Connected Customer research shows 73% of customers expect companies to understand their unique needs, up from 66% in 2020. Zendesk’s 2025 data shows 63% will switch to a competitor after a single poor experience.
A bank that improves slowly falls behind even as it improves. The target moves faster than the progress.
Transformation programmes launch with executive sponsorship and a dedicated budget. Quick wins are plentiful in the first twelve months, and with the wins comes excitement.
Then the friction builds.
Legacy systems make changes expensive, siloed teams disagree on priorities, and compliance reviews add weeks to every release. The programme doesn’t immediately fail. It just slows down until the gap between ambition and execution regresses to the status quo.
BCG demonstrated that failure rates accelerate to 50% within two years without sustained sponsorship. It’s a slow, sad death for the programme that hurts both the customer and internal teams.
The instinct to copy features and experiences is understandable. If Monzo’s onboarding takes three minutes, make yours take three minutes. And it works up to a point. But by the time you’ve replicated one innovation, the challenger has shipped three more.
RBS learned this with Bó. The app looked modern enough, but legacy back-end systems constrained what could change quickly, and internal culture couldn’t support rapid iteration. Six months later, Bó was shut down.
A modern interface couldn’t compensate for the underlying structure.
Some challenger advantages come from business model choices that incumbents can’t easily replicate – free accounts, minimal fees, and higher savings rates. These work for challengers operating on venture capital with long runways to profitability. But an established bank copying those economics would cannibalise its own revenue.
The strategic response can’t be imitation. That won’t work. The only response is building a different kind of advantage.
NatWest reorganised its customer experience work around what they call “customer missions”. Small, cross-functional teams focused on specific moments (like a customer realising they’re paying unnecessary fees). Data specialists, product managers, and marketers share an AI toolset that surfaces friction, generates intervention ideas, and launches tests without waiting for engineering sprints.
The results are genuinely impressive, with 60% of sales now prompted by next-best-action algorithms. More importantly, customer lifetime value has doubled, built on 3.6 billion personalised interactions per year. Because of this, a self-serve journey deployment that once took six weeks now takes one to two.
It isn’t just NatWest. Lloyds has deployed 18 generative AI systems to support faster experimentation, and BBVA runs over a thousand A/B tests annually. What connects these examples is a specific view of AI’s purpose – powering an internal engine for detecting problems faster, testing solutions faster, and deploying changes faster.
Not building a poorly performing customer-facing chatbot.
Incumbents have options that challengers don’t, but most banks treat them as legacy burdens rather than sources of differentiation.
Data is the obvious opportunity. A bank with ten million customers across current accounts, mortgages, savings, and credit cards has behavioural information no challenger can match. Challengers see spending patterns. Incumbents could see spending patterns, income stability, debt levels, savings habits, and life-stage transitions all at once.
Could.
This only creates an advantage if it’s unified into a real-time view that teams can use. NatWest’s missions work because they’re built on that 360-degree view. Most incumbents have the data fragmented across product silos, so the advantage exists in theory but not in practice.
Then there’s the hybrid model. Customers still value face-to-face advice for complex decisions even as everyday transactions move digital. Incumbents can offer digital convenience for routine banking and expert guidance when it matters. But challengers structurally cannot replicate that within their financial model.
DORA research shows high-performing teams that deploy more frequently are twice as likely to exceed organisational performance goals. Whether speed causes the improvement or correlates with other capabilities is hard to determine. Banks investing in agile transformation typically invest in leadership, architecture modernisation, and customer analytics simultaneously.
But the practical implication is the same. Iteration speed appears to be a leading indicator of success.
Bain’s research on customer advocacy shows promoters generate roughly £8,000 more lifetime value than detractors, make seven times as many referrals, allocate 45% more deposits, and buy 25% more products. Better experiences drive higher retention, and higher retention increases share of wallet. All this funds further investment and, as you’d expect, the economics compound.
Banks that improve fastest pull ahead. Banks that stall fall into a cycle where customer defections reduce the resources available to prevent further defections.
The obvious counterargument is that if switching is so rare, why does any of this matter? It’s true that fifty-eight percent of customers perceive switching as a hassle, fifty-five percent find it stressful, and CASS volumes sit at around one million switches annually.
Inertia protects mediocrity temporarily. Not permanently.
Younger customers forming primary banking relationships now don’t have the same tolerance for friction, because they’ve grown up switching apps weekly. This helps to explain why half of UK adults now hold at least one neobank relationship, up from 16% in 2018. Equally, the introduction of open banking and faster payments has made multi-banking easier, even without full switching.
A customer who stays but moves their savings to Chase, their international transfers to Wise, and recommends Monzo to their children is still retained in your metrics.
They’re just worth progressively less.
The feature gap has largely closed. The hope that challengers would burn out hasn’t materialised. Monzo posted its first profit in 2024, doubled revenue to £880 million, and grew deposits 88% to £11.2 billion, while Starling has seen four consecutive years of profitability.
Chase UK has acquired 2.5 million customers and tops service satisfaction rankings, and Nationwide led current account switches in Q2 2025. The threat is no longer just nimble startups but digitally native offerings from players with both speed and scale.
The remaining gap is CX velocity. It’s the ability to detect what’s frustrating customers, test fixes, and deploy improvements before the competition does. That requires investment in data infrastructure, experimentation platforms, and cross-functional teams empowered to act on what they learn.
The banks making this shift aren’t waiting for a perfect plan. Instead, they’re building a culture that improves continuously because they know that’s how you sustain an advantage.
Everyone else faces a slower decline. Not a crisis or a mass exodus. Just a gradual fade, where customers stay on paper, but their deposits, their referrals, and their children’s first accounts go somewhere else.
You can’t fix that with a transformation programme that reports progress for eighteen months, then quietly stalls. You fix it by becoming the kind of organisation that doesn’t need transformation programmes.
We’re measuring what separates high-performing banks from the rest: how quickly they spot friction, test fixes, and deploy improvements that customers feel. Our upcoming Top UK Banks Digital Maturity Report 2026 benchmarks CX velocity across the industry—tracking who’s improving continuously and who’s quietly stalling.
Register here to download the report
If you’re working on closing the velocity gap at your organisation or want to discuss how to build the kind of capability that doesn’t need transformation programmes, get in touch.
