In tough times, a neobank (finally) makes money.
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
Starling was the first neobank in the UK and is now the first neobank in the UK to escape loss-making. Anne Boden anticipates that they’ll remain profitable going forward.
As the neobank nears 2m customers and sustained profitability, sources say this round may be used for further expansion in Europe ahead of an IPO.
As the ongoing executive reshuffle continues, Lisa Nowell has moved on after only 12 months in role. Analysts report Monzo’s loan book may in fact be riskier than traditional peers, further impacting their route to profitability.
New and upcoming feature releases
As the savings and investment app expands to include rewards, cashback, and financial analytics, their European expansion also continues. Customers of five major Irish banks can link accounts and begin saving instantly.
Starling’s road to profit has been a long one, but their traditional approach to underlying banking products and consistent brand image has led to steady growth in vanilla customer segments. They haven’t launched metal cards, confusing premium tiers, or even cryptocurrencies - whilst Monzo and Revolut continue to post annual losses of more than £100m. I believe it’s still too early to call the winner; each continues to have unique challenges and tides can change quickly. But seeing one finally achieve a profit gives hope for them all, and may start to quiet some of the naysayers.