Neobanked - 009 SME banking

A quiet week; most of the focus goes to supporting UK businesses.


Throughout 2020 I’ll be publishing a newsletter called Neobanked. Issue 009 is below and you can subscribe here. Any thoughts or ideas are always welcome, get in touch!


Welcome to Neobanked, a newsletter focused on the quickly evolving UK digital banking market. I hope to gather enough interesting tidbits and news to share this every two weeks.

For me, Neobanks are digital-only offerings that apply internet economics (i.e. zero marginal costs) to the banking sector. My focus will be on companies such as Monzo, Revolut, and Starling.

Through this newsletter I hope to cover each of these companies as they continue to grow within the UK and beyond. Some of the regular features will include user number growth, new product/feature releases, and links to relevant interviews and analysis.


News this week

UK N26 accounts formally closed

N26 customers in the UK were notified that their accounts would be formally closed as of April 15th.

BCR to re-open Capability & Innovation Fund

As both Metro Bank and Nationwide have returned £50m of their funding, a total of £100m will be redeployed to ensure all funding goes towards the development of SME banking services. The application process will be outlined by the end of April.

Starling accredited as Coronavirus business lender

Starling has joined a number of large banks and lenders as an accredited member of the Coronavirus Business Interruption Loan Scheme (CBILS). The scheme is designed to support the continued provision of finance to UK smaller businesses (SMEs) during the Covid-19 outbreak.


New and upcoming feature releases

No major announcements from the main neobanks. Instead a quick note about Plum’s new cashback feature.

Plum launches cashback for Pro users

Plum, the savings and investment app, has announced its cashback feature, a system that rewards you whenever you shop with their partner merchants through the Plum app. Initial partners include ASOS and Trainline with more to be announced.

Plum currently has little involvement in customers’ transactional spending; this might signal a shift in strategy to broaden their offering.


Analysis

I’ve personally written a couple of pieces recent looking at current accounts (aka checking accounts) and potential models for the future.

Thinking About Current Accounts

Digital doesn’t replace cash; it replaces card - the app is now your product.

The Current Account Plus Marketplace Business Model

The model makes sense in theory but faces challenges in reality.


A much quieter week as a result of the Easter holidays during a pandemic. I’d welcome a slight strategic shift from the BCR to instead push for the £100m to be used to support small and medium sized businesses more directly; awarding fintech lenders and loosening the restrictions on capital would go a long way to doing so.

Written on April 18, 2020