Neobanked - 013 Different trajectories

The three major UK neobanks continue to diverge.


Throughout 2020 I’ll be publishing a newsletter called Neobanked. Issue 013 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

Wired goes deep on Monzo’s history, leadership restart, and future

Tom Blomfield, now president of Monzo, has passed the CEO role to TS Anil, who was heading up the bank’s US efforts. The bank has also hired Sujata Bhatia, a former Amex exec, as their COO. COVID-19 has hit Monzo hard but pressure remains to demonstrate profitability in the short term.

Monzo expected to lay off 120 employees

Monzo’s business model, which relies on interchange fees and especially travel usage, is severely impacted as a result of COVID-19. This downturn in immediate revenues has led to an urgent need to cut costs, which is common to many banks. Monzo had already closed their Las Vega support office and furloughed 300 staff; now up to 120 staff are at risk of redundancy.

Elfin Market to launch P2P credit card

The UK peer-to-peer lending platform will launch a physical credit card that’s backed their technology, which removes intermediaries thus lowering fees.


New and upcoming feature releases

Revolut launches their new Super App

The new app builds on their ongoing strategy, which I’d describe as the Amazon of money. It’s hard to find a financial product Revolut is not willing to offer and this app makes it significantly easier to manage daily finances, wealth products, and payments. Additionally, Revolut will now provide personalised rewards and cashback.

Future features that are expected to launch in the coming months include:

  • Money pockets (pots)
  • Subscription management alerts
  • Improved stock information
  • Social trading
  • Social payments
  • Group shared tabs

Big Bunq app update available as beta

The app will soon have a simplified design and additional community-based features; common goals will allow users to save together for a shared charity or cause and tribes will allow users to compete against others and multiply their green impact.


Recent reports and studies

Survey finds 41% of businesses plan to switch banks due to poor service during COVID-19

40% of business decision makers also agreed that their bank’s online digital services and support around COVID-19 has been poor.

11:FS and Plaid explore the impact open finance could have across the industry

Open finance, the evolution of open banking, potentially provides even greater access to consumer financial data. The report looks at the challenges, market learnings, and consumer benefits.


The neobanks continue to face very different challenges and their strategies diverge more and more with every release.

  • Starling’s UK (and eventual EU) focus has done well with those expecting a more mature banking proposition and its focus on business banking will likely provide a stable route to profit.
  • Monzo’s ambitions have always been lofty (1 billion users was their original vision) but their business model continually hits speed bumps. The marketplace has not fully matured, their premium offering confused users, and global plans have been delayed. Perhaps they need to accept the role a large balance sheet plays for a traditional bank and move beyond the PCA only model.
  • Revolut’s scale of proposition and users has been impressive, yet their UK operations are not fully licensed and US growth has been slow. Of the three, they feel the closest to simply turning on the profit taps (much like Amazon’s growth strategy).
Written on June 14, 2020