Anne Boden

Very interesting article in the Financial Times which sums the situation up perfectly. The new entrants have moved the market on with the services delivered, however despite being used for their "free" or innovative services, users still remain wedded to the incumbents. https://lnkd.in/eR3kaGXV

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NEO BANKS – UK IS TYPICAL OF NEO BANK FAILURE Start-up banks are not new – there have been five groups since 1990. The latest are Neo banks usually founded from 2014 onwards – the 2008/12 group have all but vanished… a big clue! UK new players Atom, Monzo, Starling and Revolut launched 2013/15 Today, none have scale so important in banking, none making consistent profits so important to ensure consumer Trust and keep a banking license “A decade after these fintechs burst on to the scene, they have arguably succeeded in their mission of setting new standards for digital banking…” “…consumers are using neobanks as a convenient payment management service, rather than as a replacement for traditional current accounts” Only 6% UK consumers use neo bank exclusively - no USP! SECURITY & COMPLIANCE RISKS “..the ability to quickly open accounts and make transfers has also proved a boon for criminals. Britons lost £1.2bn to financial fraud last year..” “…start-ups struggled to scale up their anti-financial crime capacities at the same speed they were attracting new users… new sanctions imposed..2021 increased the amount of due diligence banks had to conduct..” “There cannot be a trade-off between quick and easy account opening and robust financial crime control,” FCA “…compliance has also raised concerns” Revolut has more complaints than all other Fintech’s combined NEO BANK TEST “But they are now being tested in a downturn..” “The plentiful venture capital that financed their heady growth… — is drying up” “Global fintech investment has dropped by nearly 50% in 2023..” “Investors in fintechs are increasingly scrutinising the neobanks’ differing business models and assets, looking for proof they can be durably profitable and attract sufficient deposits to fund lending” “….high-street banks have raised their game by upgrading their own digital banking services, with the result that about 60% of adults living in Britain now use a mobile banking app, up from 33% in 2015 NEW ‘DIGITAL’ BANKS JP Morgan launched September 2021, has 2 million customers with avg deposits £27,000 (US$29,084) well above Neo Banks That’s more than Monzo Bank and Starling Bank togther Goldman Sacs another ‘legacy’ player launched in UK 2018, now has 1 million customers JP Morgan and Goldmans are growing at a much faster rate than Neo Banks at the same stage GLOBAL GROWTH In 2020 242 Neo-banks existed as VC's pilled in, the number swelled to 450 by 2022 – while 139 failed in 2022-24 A recent report questions the future especially profitability, so essential in banking. Simon-Kucher report is stark “Of 400 neo banks in the world, less than 5% are breaking even.....several are in the cash-burn zone losing as much as $140 per customer annually.” “..neobanks recognise they will not survive at scale and be sustainably profitable without a two-sided balance sheet.." https://lnkd.in/gT_je9Ux

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Time for Embedded Finance is NOW…… 1️⃣ Customers 💃🏻🕺🏼are keen and willing to consume financial services from Non FIs 2️⃣ Non FIs 🛍️ see multiple benefits of embedding financial services into their customer engagement strategies 3️⃣ There are a growing number of enablers who can make the magic 🪄 of embedding financial services a reality 4️⃣ Incumbent FIs 🏦 are seeing the ‘light’ as the see strategic economic benefits and are becoming increasingly supportive 5️⃣ Regulatory 📓environment is becoming more conjusive to the concept of embedded finance, beyond just payments (still some more work to be done here) 6️⃣ Investors 💰 are bought into this “mega trend” and are willing to put their monies into players who are making this happen 7️⃣ Emerging technologies such as AI 🤖, Cloud ☁️ and Blockchain 🧱, etc are further accelerating the shift towards embedded finance Despite all the “actors” progressively coming to the party 🎉 , realising the full potential of embedded finance is going to be hard…. and going to take some time! Be Patient; Continue to believe in it; keep chipping away and Stay the course…. #fintech #banks #insurance #bnpl #digitalassets #payments #evolution #innovation

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Monzo's new features for fraud are amazing 📍 Known locations or "leave your money at home". Places you're comfortable moving large amounts of money but fraudsters are unlikely to access 🤝 Trusted contacts. If a large transfer is requested your trusted friend must approve. Hugely helpful if your phone is stolen or for vulnerable populations. 🤫 Secret QR codes. Print out a QR code and keep it in a safe place to scan when needed. If these aren't available the fallback is step up KYC. 🧠 Thoughts - All of this is possible with smart device and user behaviour tech but the user education and experience is key - I love how these are announced to a community. Show me another large bank who does that well? - You never see the big banks innovating on these types of features even though they talk a lot about "trust" being their most - I give it a year before most other big banks have copied and pasted these features. Let's raise the bar

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