Startups are crushing the big banks by using freebies and loyalty points
That's according to Warren Mead, the head of challenger banking and alternative finance at KPMG.
In an interview with BBC's Today programme, Mead said that upstart lenders from retailers such as Sainsbury's and Marks and Spencer, as well as small to medium enterprises (SME) focused firms like Shawbrook and Aldermore, have increased their lending by 16% in the last year.
Meanwhile, Britain's biggest banks, such as Barclays, Lloyds Banking Group and the Royal Bank of Scotland, have reduced their lending by 5%.
"Although these banks only make up 5% of the overall banking market, and bank account switching is still low, when people do switch to these smaller banks, what they're really looking for is freebies and loyalty points," said Mead, to the BBC.
"If you're a small business, challenger banks work better for you, as you have better access to credit products like invoice financing and small business loans. In particular, the peer-to-peer market is really interesting. It's much less regulated than the banking sector and growing by about 200% a year."
Supermarket Sainsbury's offers customers discounts on food shopping and loyalty points in exchange for a customer signing up to its banking services or by taking out one of its loans or home insurance.
Elsewhere, SME focused upstart lenders such as Aldermore and Shawbrook have become so popular that they both launched an IPO earlier this year.
Aldermore unveiled a 4% rise in total customer deposits to £4.7 billion ($7.4 billion) in the first quarter this year, compared to the whole of 2014.
Deposits from small to medium enterprises (SME) also rocketed by by 10% to £1.1 billion ($1.7 billion).
Shawbrook currently lends to just over 60,000 SMEs and consumers in the UK. Shawbrook increased customer loans by 70% to £2.3 billion ($3.6 billion) in the year to December 31, 2014, and reported a 191% surge in underlying profit before tax for that year.