Challenger banks are digital-only financial institutions that aim to compete with traditional banks by offering innovative services and lower fees. They typically operate without physical branches, relying on mobile apps and online platforms to provide banking services such as checking accounts, savings accounts, and loans. These banks often focus on user experience, providing features like instant notifications, budgeting tools, and easy account management. Examples of challenger banks include Monzo, Revolut, and N26, which have gained popularity for their customer-centric approaches and streamlined processes.