Christina Trampota

Like many industries, banking has been dramatically impacted by the coronavirus pandemic. Consumer trends that had been gaining steam over the past several years have only accelerated due to health and safety concerns.

One important change is the shift towards mobile and digital banking. A 2019 study by innovative card-issuer Marqeta found that more than 60 percent of US consumers conduct their banking online, while only about 30 percent prefer to do their banking in branch. In fact, at the time of the survey, only about 30 percent of respondents said they expected to visit a physical bank in the next three months. And while only 14 percent of survey respondents said they use a digital-only bank as their primary banking, that figure is much higher in Europe where about 20 percent of all consumers have their primary account with a digital bank (often referred to as “challenger banks” or “neo-banks”).

But it’s not only convenience that digital-only banks offer, according to Hussein Ahmed, CEO and founder of Oxygen Bank, and our latest guest on the Fintech Growth Talk. For Ahmed, much of the growth in challenger banks is attributable to design. Traditional banks often treat the mobile experience as an afterthought, but challenger banks are taking a mobile-first approach that isn’t just translating an existing web experience to mobile. They’re designing the entire banking experience with a native mobile user in mind.

Of course, that means they’re targeting specific users. Oxygen, for example, believes their core market is heavily skewed to people aged 18-35 who essentially have grown up with a phone in their hands. These users are also generally heavy social media users and mobile-first banks seek to emulate their experiences from other digital platforms with the goal of making functionalities feel natural to them.

Challenger banks also look at their customers differently. Gen Z, in particular, is a group that’s often overlooked by traditional banks. Approximately half of Gen Z is employed in the gig economy, though most of them work gig jobs part-time to supplement full-time work or to support themselves as they complete college and internships. To traditional banks, these individuals are often considered unemployed, and thus their value to the bank is lower.

On the other hand, challenger banks, and Oxygen specifically, see these individuals as aspirational entrepreneurs. “They may have a full-time job, but they have a YouTube channel…or an Instagram Influencer account,” says Ahmed, which is blending the line between personal and business. As a result, their banking needs reflect not only the digital nature of their lifestyle, but also the new ways in which they earn a living.

That gives a distinct advantage to challenger banks, who are responding to those needs by aligning with them wherever they are in their life or business development. Simply put, traditional banks lack the tools these customers expect to see.

Of course, business banking is far more complex and regulated than personal banking, but Ahmed sees this as an opportunity to make business banking as simplified as much as possible without sacrificing compliance. The result is that big banks, who are somewhat still stuck in the branch on every corner model, are falling behind because that very model is no longer economical.


Originally from Egypt, Hussein came to the US for a PhD in Computer Science at Virginia Tech in 2005. After graduating, he led a number of engineering teams, most recently at Amazon, but felt the entrepreneurship itch and went on to found and head Transpose Technologies, a holistic information management platform that had users spanning 169 countries and 100,000 MAU. After a successful exit, Hussein embarked on an MBA at UC Berkeley’s Hass School of Business, taking part-time freelancing roles as an engineer, where he realized how broken the financial services sector was for this segment. That experience led to him founding Oxygen in 2017. A graduate of incubator Y Combinator, Oxygen is well-positioned to disrupt traditional financial services.

Listen to our full interview with Hussein Ahmed here: