Finance:Neobanks in Europe

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Short description: Digital-only banks in Europe

The development of neobanks in Europe is a trend in the European financial landscape beginning in the 2010s. Neobanks are a type of digital-only bank that offer financial services primarily through mobile and web applications, with little or no reliance on physical branches. The trend was driven by advancements in technology, changing consumer preferences, and supportive regulatory frameworks. Neobanks provide a range of services, including personal accounts, loans, and payment services, with a focus on user-friendly interfaces, low fees, and innovative features.[1][2]

In 2024, as a part of Instant Payments Regulation, European authorities made a significant step to level the regulatory field for neobanks. Before that, many neobanks who didn't have a bank status (like EMIs or other non-bank financial institutions) couldn't access central bank-operated payment systems like TARGET. TARGET Services are essential to many money-transferring operations. With this new regulation, non-bank payment service providers (PSP) meeting certain requirements can connect to these systems.[3] The initiative should help neobanks and fintechs to provide instant credit transfers in euros and compete with traditional banks.[4]

Growth of Neobanks in Europe

The neobank industry in Europe has experienced rapid growth in the 2010s, with several new companies entering the market and attracting millions of customers. Key factors of their growth include:

  1. Technology advancements: The widespread adoption of smartphones and high-speed internet has made it easier for consumers to access banking services through digital channels, paving the way for the rise of neobanks.
  2. Supportive regulatory environment: The European Union's Revised Payment Services Directive (PSD2) has facilitated the entry of non-traditional financial players, such as neobanks, into the market by enabling third-party providers to access customer account data from traditional banks with customer consent. This has allowed neobanks to develop innovative solutions and compete with established banks.[1][5][6]

Some European neobanks

  • bunq (the Netherlands) was founded in 2012 and is currently operating in more than 15 European countries, offering services such as personal accounts, debit cards, joint accounts, currency exchange, and savings accounts.[7] Bunq is Europe's second largest neobank with 9 million customers.[8][9]
  • Finom is a digital business banking services provider based in the Netherlands. This challenger bank offers bank accounts to companies registered in Germany, France, Spain, Belgium, Italy and the Netherlands.[10]
  • Monobank launched in 2017 and serves more than 8 million customers in Ukraine.[11]
  • N26 is a German neobank that has expanded its operations across Europe with a focus on Europe.[14]
  • Qonto is a French neobank that specialises in freelancers and Small and medium-sized enterprises (SMEs) and operates in France, Germany and Spain.[15]
  • Revolut (United Kingdom) launched in 2015 is Europe's largest neobank with 50 million customers worldwide,[16] offering services such as personal accounts with local IBANs, debit cards, currency exchange, and investment products.[17]
  • T-Bank (Russia) launched in 2006, it is the second largest neobank in the world by number of clients and the largest in Europe, with more than 26 million clients and offering a full range of banking services.[18][19][20]
  • Vivid Money is a Germany-based neobank. It was launched with support from solarisBank and Visa.[21][22] In 2024, Vivid decided to stop onboarding new customers via solaris.[23] In the same year, Vivid acquired Luxembourg-based fintech Joompay, taking over company's license.[24]
  • Wise (United Kingdom) is a foreign exchange financial technology company.

References

  1. ↑ 1.0 1.1 "Europe's neobanks are outpacing legacy banks in app adoption" (in en). 2023-02-21. https://fintechmagazine.com/banking/europes-neobanks-are-outpacing-legacy-banks-in-app-adoption. 
  2. ↑ "Neobanks across Europe fatten up as VCs demand profits" (in en-GB). 2023-03-22. https://tech.eu/2023/03/22/neobanks-across-europe-fatten-up-as-vcs-demand-profits/. 
  3. ↑ Bank, European Central (2024-07-19) (in de). Eurosystem sets policy on access by non-bank payment service providers to its central bank payment systems. https://www.ecb.europa.eu/press/intro/news/html/ecb.mipnews20240719.de.html. 
  4. ↑ "EU agrees game-changing deal for instant payments" (in en). 2023-11-08. https://www.finextra.com/newsarticle/43259/eu-agrees-game-changing-deal-for-instant-payments. 
  5. ↑ "Open banking in Europe: The impact of the Revised Payments Services Directive on Solarisbank and Insha". https://mpra.ub.uni-muenchen.de/110763/1/MPRA_paper_110763.pdf. 
  6. ↑ Padmanabhan, Arun (2021-10-07). "Explained: Neobanks, the next evolution of banking". The Economic Times. ISSN 0013-0389. https://economictimes.indiatimes.com/tech/trendspotting/explained-neobanks-the-next-evolution-of-banking/articleshow/86836735.cms. 
  7. ↑ McKenzie, Ian (2024-04-28). "bunq for Personal Banking: In-depth Review". https://fintechcompass.net/personal-bank-accounts/bunq/. 
  8. ↑ Pugh, Alex (May 6, 2022). "Dutch challenger Bunq becomes EU's second largest neobank with Tricount acquisition". https://www.fintechfutures.com/2022/05/dutch-challenger-bunq-becomes-eus-second-largest-neobank-with-tricount-acquisition/. 
  9. ↑ "bunq hits 9 million users across Europe, surpasses €4.5 billion in deposits". July 18, 2023. https://press.bunq.com/228171-bunq-hits-9-million-users-across-europe-surpasses-4-5-billion-in-deposits. 
  10. ↑ McKenzie, Ian (2024-02-06). "Finom Review: Business Banking, Expense Management & Invoicing". https://fintechcompass.net/business-banking-finom/. 
  11. ↑ "Дашборд monobank" (in uk). https://www.monobank.ua/dashboard?fb_locale=uk_UA. 
  12. ↑ Sawers, Paul (2022-09-20). "European neobank Monese nabs $35M from HSBC" (in en-US). https://techcrunch.com/2022/09/20/european-digital-bank-monese-nabs-35m-from-hsbc/. 
  13. ↑ O'Hear, Steve (2015-09-21). "Monese Launches In U.K. To Let Immigrants And Expats Get A Mobile Banking Account" (in en-US). https://techcrunch.com/2015/09/21/moneseasy-peasy/. 
  14. ↑ "An update from N26 US". 18 April 2023. https://n26.com/en-us. 
  15. ↑ "Qonto launches its digital bank accounts for small companies" (in en-US). 5 July 2017. https://techcrunch.com/2017/07/05/qonto-launches-its-digital-bank-accounts-for-small-companies/. 
  16. ↑ "Revolut hits 50 million customer milestone globally on mission to build world's first truly global bank". 19 November 2024. https://www.revolut.com/news/revolut_hits_50_million_customer_milestone_globally_on_mission_to_build_world_s_first_truly_global_bank/. 
  17. ↑ Thompsett, Louis (2024-08-20). "Revolut Reaches US$45bn Valuation After Successful Employee Share Sale" (in en). https://fintechmagazine.com/articles/revolut-hits-us-45bn-valuation-after-share-sale. 
  18. ↑ "What is Tinkoff Bank? The Russian disruptor targeting 20 million customers" (in en-US). 2019-08-19. https://www.nsbanking.com/analysis/tinkoff-bank/. 
  19. ↑ "Stocks Shares" (in en-GB). The Telegraph. 2023-08-31. ISSN 0307-1235. https://www.telegraph.co.uk/money/investing/stocks-shares/. 
  20. ↑ "TCS Group Holding PLC releases highlights for 3Q'22 and 9M'22 performance — Tinkoff news" (in ru). https://www.tinkoff.ru/about/news/23-11-2022-tcs-group-holding-plc-fin-results-3q-2022-eng/. 
  21. ↑ Lunden, Ingrid (2022-02-07). "Vivid Money, a financial super app, raises $114M at an $886M valuation to expand in Europe" (in en-US). https://techcrunch.com/2022/02/07/vivid-money-a-financial-super-app-raises-114m-at-an-886m-valuation-to-expand-in-europe/. 
  22. ↑ "Vivid Money taps solarisBank and Visa for launch in Germany" (in en). 2020-06-08. https://www.finextra.com/newsarticle/35965/vivid-money-taps-solarisbank-and-visa-for-launch-in-germany. 
  23. ↑ Hunter, John Stanley (2024-02-09). "Vivid zieht Hunderttausende Konten bei Solaris ab" (in de). https://financefwd.com/de/vivid-solaris/. 
  24. ↑ "Handelsblatt". https://www.handelsblatt.com/finanzen/banken-versicherungen/finanz-start-ups-berliner-neobank-vivid-uebernimmt-luxemburgisches-fintech/100005394.html. 



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