Neobanked - 012 Building on the new normal

Banks come to grips with the situation and turn back to product development.

Throughout 2020 I’ll be publishing a newsletter called Neobanked. Issue 012 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

Mastercard, Samsung, and SoFi team up for a digital-first debit card

The three companies have partnered to launched an everyday spending account with no fees, higher-interest earning cash management and both physical and digital debit cards (the latter in Samsung Pay’s wallet). The account is US only for now and is backed by The Bancorp Bank, meaning it will have deposit insurance.

Starling raises £40m from existing backers

Funding was raised from Harry McPike’s JTC and Merian Chrysalis Investment Company Limited, and adds to the £60 million raised in February this year. No mention if this funding came with a reduced valuation, like Monzo’s recent raise.

Starling’s faces backlash and complaints after limiting new business accounts

The app-based bank saw unprecedented demand for its sole trader account and Bounce Back Loans leading it to close applications and reject ~16% of of BBL applications.

Bunq’s APIs seeing strong uptake

Bunq revealed that 19 apps have been integrated into their marketplace as a result of their open APIs. A recent update to their developer documentation has brought the total accessible operations to 200, all free to use for personal use or building a business on.

New and upcoming feature releases

gohenry launches a biodegradable card

The app-only children’s’ bank now provides new customers with a biodegradable card made from renewable materials. The app recently surpassed 1m users.

Revolut’s business banking integrates with Clear Books accounting suite

The partnership will help Revolut’s business customers track paid and outstanding invoices, look at records and expenses, and automatically generate financial reports. This adds to the existing business integrations Revolut has with Xero, FreeAgent, and Slack. Revolut Business now has over 400,000 users worldwide and 10m retail customers.

Curve’s premium metal card comes to Europe

The card is now available in most European countries (Iceland and Liechtenstein are unable to join) and offers unlimited cashback, increase spending limits, access to travel lounges, and a higher tier of travel insurance. The card costs €14.99 a month.

Recent reports and studies

11:FS explore Jobs to be Done for US SMBs

The research looks at the key jobs small and medium US businesses are trying to achieve and the digital products / services available.

Business banking remains a key focus for many Neobanks - the pandemic may present a singularly unique opportunity to switch and acquire customers from traditional banks as they discover their existing digital offering isn’t able to deliver. They now must deliver additional value to build on the new customer behaviours and ensure high retention; government backed loans may in fact offer a strong 12 month commitment to provide the Neobanks with some runway to to so.

Written on May 31, 2020