Neobanked - 010 Emerging from COVID-19
The neobanks return their focus to growth and proposition development.
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
The feature, which lets customers switch the payment card of past transactions, has been extended from 14 days after purchase to 90 days.
Monzo applied for their license on April 20th, a key step to offering a full range of banking services. Their current beta product in the US was launched in partnership with community bank Sutton Bank. If successful (which can take as long as two to three years), Monzo will be able to take advantage of 6x higher interchange fees and a massive customer install base.
Bó launched in November 2019 and only six months later is being closed down. RBS cited the need for more focus during COVID-19 and steep competition in the digital banking space. Learnings from Bó are likely to be brought over to their digital business bank, Mettle.
The Current Account Switch Service’s new figures show that Monzo gained more customers than any other bank during Q1 2020. Typically Nationwide takes first place but recent changes to their their FlexPlus account made the proposition less appealing.
The Dutch challenger revealed that the demand for its SuperGreen card has increased by 250 per cent every day since its launch. The card was released earlier this month and allow customers to plant a tree every time they used their card.
Curve is now able to work more directly with Mastercard, take control of its own card issuing, and accelerate their global expansion (likely beginning with the US).
New and upcoming feature releases
All Starling customers, including businesses, can now deposit cheques of up to £500 using the mobile app. Customers can also continue using the free postal service for cheques of any value.
Recent reports and studies
The report explores the immediate impact of COVID-19 on financial services and its accelerating effect across a number of long term trends.
We’re now seeing many firms emerge from the initial COVID-19 shock, implement short term support to ease customer pain, and refocus their attention on future growth.
Many predicted this would be the year where the large banks begin acquiring the neobanks. So far the neobanks’ digital propositions have come out stronger and the sub-par digital outfits of the traditional banks not meeting immediate customer needs.