The neobank sector is currently challenged by a global funding squeeze. But incumbents must realize that neobank competition is not going away. New data point to the factors that will lead to neobank (and incumbent) success as the next round of competition heats up.
Neobanks weren’t what you’d call an instant hit in the U.S., but they’ve slowly but surely gathered considerable momentum overall.
The number of U.S. neobank customers rose to 20 million at the end of 2021, according to Insider Intelligence, and is projected to reach 39 million — about 19% of the U.S. adult population — by 2025.
It’s true the turbulent state of the global economy over the past year has made fintech funding much harder to come by, and some neobanks are struggling. Case in point: Varo Bank, which could run out of money by the end of 2022 according to some reports.
Yet despite the bumpy financial road ahead, digital banking competition will continue to be fierce with more customers open to taking the plunge and switching to digital-first banking.
Digital banking competition will continue to be fierce with more customers open to switching to digital-first banking.
So which neobank competitors are best placed to catch the ongoing wave and win the bulk of this new business? And what can incumbent banks and credit unions learn from neobanks’ approach to digital?
To answer those questions, we used our digital banking research platform FinTech Insights to compare leading U.S. neobanks and see how their offerings stack up.
Our findings were surprising, to say the least.
Discover more about FinTech Insights and what it has to offer today.