Neobanks outline their coronavirus response as fintech has a unique opportunity to help.
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 debit card and app are now available without a waitlist. Revolut has partnered with Metropolitan Commercial Bank for the banking infrastructure — deposits are FDIC insured up to $250,000.
Both banks have either requested volunteers for furlough or already placed some stuff on furlough. Monzo’s CEO will also be forgoing his salary for 12 months and other senior management are taking a 25% pay cut. Starling has said it will ensure its furloughed staff get 100% of their salary.
App usage has seen 20% growth due to the pandemic with Monzo and PayPal seeing the biggest increase.
The scheme allows customers to use a three month interest holiday for any overdraft balances, starting on April 1st. The holiday won’t be reported to credit agencies but is only available to those who have suffered a drop in income since March 10th.
New and upcoming feature releases
Indonesia, India, Malaysia, and the Philippines are now available for currency transfers without fees.
The company says its part of an overall maturing they see as a result of their wide-ranging proposition. Users should expect a cleaner look and new cards in coming months.
The feature was previously reserved for Premium and Metal customers. The change is said to be a result of Revolut’s Head of Crypto reminding the company of that cryptocurrency was developed following the 2008 financial crisis as an alternative during financial instability.
Recent reports and studies
The company worked with YouGov to test demand for 21 open banking use cases to understand if consumers would a) use the feature, b) download an app that offered the feature, and c) switch banks to get access to the feature.
The current global situation provides a unique opportunity for many well placed fintechs and neobanks. They should be doing all they can to demonstrate their versatility and flexibility, not just in supporting customers and businesses to survive but through propositional development to help them thrive. Revolut has taken steps to provide alternatives to their customer base; Starling and Monzo are focused more on vulnerable customers and their immediate needs. We need both over the next few months.