Challenger brands, stream jumping and the super app dilemma

Why Octopus and Revolut will take the world of mobile by storm. 

It’s every brand’s nightmare. And every entrepreneur's dream.

A category beset by underserved customers, disconnected ecosystems and legacy mindsets. One that’s screaming out for disruption. 

Two peas in a pod

And that’s exactly what Octopus and Revolut did. One focusing on energy. The other on banking. Both smashed it. And despite going after very different categories, the two businesses have commonalities in their DNA.

Possessing a challenger mission

A single-minded thought that challenges all that is wrong with the market norms.

• For Octopus, this is ‘making energy fair, clean, and simple for all’.

• Whereas Revolut’s is, ‘for every person and business to do all things money… in just a few taps’.

Outcome - a unifying rallying call that, if delivered well, will upend the category, driving differentiation, growth and business value.

The right tech for the problem

Rather than rely on existing ecosystems, both developed their own

• In 2023 Revolut’s CTO and co-founder, Vlad Yatsenko, revealed that 99% of their tech was crafted in-house. A huge achievement in the fast-paced fintech world.

• Octopus took the same approach when creating Kraken, their energy management platform. A solution so good that major competitors put their fears aside and signed up to become customers.

The outcome - Total control, ownership and IP = maximum value.

A focus on the customer

• Building a business (and tech platform) from the ground up provides the perfect opportunity to overcome long-standing customer frustrations and, through ongoing community engagement and active listening, both have involved customers in product innovation and feature development and both are lauded for their superior customer support.

The outcome - High advocacy = high retention and lower acquisition costs.

An entrepreneurial mindset

• Both businesses remain founder-led, and the entrepreneurial mindset they have in common is driven, restless, and relentless. Always seeking a better way and not constrained by a career in the category.

The outcome - The appetite to challenge, defy category conventions and see simple solutions to problems dressed with complexity.

Stream jumping

The other similarity is that in recent weeks, both have announced they’re launching mobile offerings. 

While stream jumping isn’t solely the domain of challenger brands, they certainly make this shift into adjacent/new categories easier. 

They’ve successfully disrupted one category by creating simple-to-use products, listening to their customers and putting their needs first, and continually looking for new ways to bring greater value to them. 

And in a sea of sameness, this means everything. 

Trust has been earned, advocacy has been built, and the promise of revolutionising another overly complex and frustrating-to-use product is a compelling one.

So why mobile?

In the modern-day equivalent of Maslow’s hierarchy of needs, energy, money, and connectivity are all pretty key to our daily lives. As such, the shift from one of life’s utilities to another doesn’t feel like such a big leap when viewed through that lens.

A stagnant market

Added to this, mobile is a category that fits the bill when it comes to an open door for disruption. A market that is dominated by a handful of legacy players, where complexity, a lack of customer-centricity and where constant obfuscation are rife. 

As Hadi Nasrallah, telecoms general manager at Revolut says,

“In our view, consumers are suffering with traditional network offerings due to a lack of transparency with hidden fees, painful customer experience and old, difficult to navigate [design]. We’re looking to solve all three”. 

Ready-made infrastructure 

The barriers to cracking mobile aren’t quite as high as you might expect. 

Big four - EE, Virgin Media O2, Vodafone and Three. Soon to be the big three, with the latter two in the process of merging. Allow others to piggyback there network infrastructure, creating mobile virtual network operators, or MVNOs.

This allows new entrants, think Tesco and Sky Mobile (the two dominant MVNOs), to bring new offerings to market at pace.

MVNOs are conflicting for the bid incumbents. Yes, they bring in a new revenue stream, but there’s huge potential for self-defeating cannibalisation of their customer base. Added to this, the fact that MVNOs are getting increasingly good wholesale deals from the network operators, due to their growing levels of spare network capacity, allowing them to go to market with more compelling propositions.

Headroom for growth

Despite Octopus and Revolut not being the first into the MVNO category, the mobile market is still ripe for disruption and offers massive potential.

Before the two brands announced their intentions, Industry experts had already predicted more than 25% of all consumers could be using virtual providers by 2028, up from 16.5 per cent in 2024. A figure that could rise further if these two entrants get their GTM strategies right.

To superapp or not

This appears to be where Octopus and Revolut move forward with different strategies. 

It sounds like Octopus’s mobile offering will be managed by the Octopus Fund and its subsidiary Fern as opposed to the eponymously named energy company. In contrast, mobile will become another string to the bow of Revolut’s burgeoning app that already facilitates spending, saving and trading. 

The superapp approach is one that’s been successfully deployed by a number of brands in Asia, including Alipay, WeChat, AirAsia, etc, often centred around payments or in some cases, mobility. When buying Twitter, Musk made no secret of his plans to take X in this direction however, that’s yet to materialise, and he won’t be the only brand that’s failed to deliver on this strategy.

It’s an ambitious approach, especially in highly competitive marketplaces like the UK; however, with Revolut’s high level of advocacy, successful track record in up and cross-selling, and consistent approach to innovation and CX, they’re perfectly positioned to pull it off.

And if they do, it will be fascinating to see which stream they may jump next.