The XXI century is all about IT and speed, we used to think. Now it gets more and more obvious that when it comes to B2C products it is also about UX/UI and no barrier services. The paradigm of the millennials clearly involves super-apps and customized (and personalized) products that employ all essential features and require no offline communication, or a minimum of those.
Solutions like Revolut were able to demonstrate the magnitude of this demand: initially, the company went out with a monoline proposition offering low-commission currency exchange and cross-county swaps. And later, as its client base expanded, the company went further offering an extended list of services. In 2020 alone Revolut managed to bring its client base to 12 million customers (doubling from 2019). And bear in mind that Unlike Monzo and Starling, Revolut is far more Euro-centric.
The case of Robinhood is even more illustrative: the company today went to become a brand name for the Z-generation approach to investing. For this group, formalities don’t matter much, and their investment decisions are ‘crowd advice’ based, unlike 30 years ago when investment research papers were a key to making the stock bet.
Robinhood users are led by key opinion leaders who treat the stock market purely as a casino, cashing on trends and measuring things like hype level. However, big money talks the opposite: according to industry surveys, biggest asset management firms tend to see more and more value in the in-depth research and company profiling.
Neobanking is all about connectivity and mobility. The pandemic has fueled this trend, however, long before the COVID-19 emerged fintech companies were primarily focused on apps rather than web-sites. If you look up roadmaps of key startups, mobile platforms are usually placed ahead of desktop ones, and in many cases the latter are simply ignored.
It is easy to spot another trend here: financial professionals moving to neobanking. One fine example is Orbyt Corporation, a fintech startup with an SME focus, that has applied for a banking licence. The company’s CEO Angus McBean previously worked as CFO at G&C Mutual Bank, and there have been dozens of career shifts like that over the last year.
Venture capital favours the sector as well. Literally every week we spot a news that another neobank has raised a significant round. Just days ago Mexican digital bank Albo got funded by Valar Ventures, Greyhound Capital, Mountain Nazca and Flourish Ventures. Investors provided $45 million to the project, which offers consumers a digital account and smart budgeting app alongside a prepaid Mastercard to receive, transfer, and spend their money.
Nothing fancy of particularly new, one may say? It may be the case… Yet, traditional banks are extremely slow and fail to catch up with current fintech trends, and this opens room for new players targeting millennials who no longer want queues and offline offices per se. This tendency is not limited to any country or continent, and neobanks find their clientele everywhere around the globe, from Sweden to Australia, through the Middle East to LatAm.