PUBLISHER: GlobalData | PRODUCT CODE: 1441154
PUBLISHER: GlobalData | PRODUCT CODE: 1441154
Digital-only banks have become commonplace across the world, offering a digital-first approach to banking that focuses on an improved customer experience. Historically, these banks have focused on customer acquisition at all costs, placing doubt on their ability to turn a profit in the long run. However, the tide seems to be changing, with a number of the neobanks examined in this report seeing their first glimpse of profitability. This review focuses on some of the most interesting neobanks (including Monzo, Revolut, Nubank, and KakaoBank) and covers a range of categories, such as financial performance, product offering, and funding. It also examines two notable neobank failures and what other challengers can do to avoid such a fate.
2023 saw a remarkable transformation in the fortunes of digital challenger banks, particularly in the context of surging interest rates driven by global efforts to tackle inflation through monetary policy. In our preceding report, Digital Challenger Banks: The Quest for Profitability, many neobanks were still on the journey towards generating a profit. However, a notable shift unfolded in 2023, with a significant majority of digital players not only anticipating but also realizing a full year of profit. This trend was largely propelled by a substantial increase in net interest income. The shift underscores a pivotal turning point for digital challengers, marking their increasing financial sustainability and resilience in an ever-evolving market landscape.