【 Existing Market Analysis @ IBM iX 】 Global Digital-only Banks

Existing Market Analysis Digital-only Banks MFA Design Management Savannah College of Art and Design Alan Liu | Spring 2020

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(2015)

New Incumbents

US

• Simple is an American neobank based in Portland, Oregon.

• Since 2014, Simple has been part of the BBVA Group, one of the largest banks in Europe.

• In 2020, Simple announced that its automated, round up savings feature had saved customers 1.2 million dollars in less than 4 months since the feature was introduced.

• Simple allows customers to do banking and budgeting in one app.

US

1. Progress bar to show the recurring expenses

2. Safe-to-Spend: Tell you exactly how much money you have leftover to spend on whatever you want.

US

5. Set Saving Goals 3. Add photos and notes

4. Use hashtags to capture all your important (#freelance) and “important� (#carbparty) purchases.

6. Add #public to your Simple Goals and you can Give kudos to the Goal owners (Makes Reaching Your Financial Goals A Team Effort) 7. Round-up enables users to round up their debit card transactions to the nearest whole dollar amount and have the remaining value transferred to a savings account.

US

• Chime is an American technology company which provides financial services through a mobile app, without charging overdraft or maintenance bank fees. • It was founded at San Francisco, California in 2013 as an alternative to traditional banks and is considered the leader in the US challenger bank space. • In 2019, Chime launched SpotMe, a fee-free overdraft service as an alternative to the traditional $35 overdraft fee charge levied by traditional American Banks.

US

1. SpotMe: “spot� you whenever you want that little extra cushion to cover the cost of a debit card purchase.

(Customers can overdraw their accounts up to -$100 without incurring an overdraft fee.)

2. Chime Savings Round-Ups: If you make a purchase at the grocery store for $44.26, Chime will charge your debit card $45. The additional $0.74 will be transferred into your savings account automatically.

This is done for every single purchase you make.

US

3. Get paid early: a pre-filled direct deposit form that he can hand over to his employer.

4. In transactions, you can actually click on them to open them up in their respective apps.

5. ATM GPS tracking map for easy money availability.

UK

• Starling Bank is a digital, mobile-only challenger bank based in the London, founded by former Allied Irish Banks COO, Anne Boden, in 2014, and it is a licensed and regulated bank.

• In 2016, they announced the largest Fintech funding round of the year, raising £48 million.

• Starling's latest funding round was from Merian Global Investors, raising £75m in 2019.

UK

1. Set saving goals: Separate Moneybox for savings.

2. The debit card can be frozen immediately in case of loss as well as unfrozen it back.

3. Joint account: Both can deposit and withdraw.

UK

Set Saving Goals

Joint Account

UK

• Revolut was founded in July 2015, a British financial technology company headquartered in London, UK that offers banking services.

• In February 2020, Revolut completed a funding round that more than tripled its value, valuing the company at £4.2 billion and becoming the United Kingdom's most valuable financial technology startup.

UK

1. Hold and exchange up to 26 currencies in the app.

2. Hold, exchange and transfer in cryptocurrency.

3. Tracking of spending – view spending habits, categorize by types of transaction, merchant or by country.

4. Bill splitting functionality.

5. Easily lock/unlock the card.

6. Peer-to-peer loans ranging from £500 up to £25,000 repaid over 12 to 60 months.

7. Insurance at the touch of a button.

UK

Germany

• Fidor Bank is a German-based financial institution, founded in 2009 aiming to revolutionize the banking industry.

• Fidor Bank does not employ “financial advisors”, instead a key part of the business model is to allow and animate customers to interact with each other.

Customers that answer questions and act as advisors in the community get rewards from Fidor, in form of additional interest payments.

• In 2014, Fidor had 70,000 clients and approximately 250,000 community members.

The bank launched its business in the UK and the US.

Germany

Fidor originated from Latin, stands for trust.

Fidor puts in 3 levels to achieve this goal -

1. P2P lending 2. Building up a solid and client-oriented ecosystem 3. Customer Engagement: Provides an online community for people to provide and receive financial advice - incentivizing users to do so through rewards such as cash, or improved current account and savings bond interest rates.

4. Co-create and rethink with customers for the future of banking. For example: discussing the future interest rates, or naming the current account card that the bank will use.

Germany

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(2015)

Niche

UK

• Osper is the new Prepaid Debit Card and mobile banking app launched 2014 in London, reinventing the world of money management for under 18’s.

• Osper proposes that there is a need to reinvent banking for young people; they should have the tools to build self-confidence to manage money from a young age.”

UK

Mobile banking for Young People

1.

2.

3.

4.

Your child’s name embossed on their card.

Prepaid, so you can only spend what you load.

Instantly lock the card if it’s lost or stolen.

Decide if your child can shop online.

US

• Aspiration Partners, Inc. is an online financial institution based in Marina del Rey, California, offers banking and investing products and services. As of June 2019, Aspiration had 1.5 million customers • In April 2017, the company launched a feature on its mobile app called Aspiration Impact Measurement (AIM), which examines 75,000 data points and shows scores for companies where Aspiration customers shop, based on how those companies treat people and the planet

US

1.

2.

3.

4.

Bonus rewards for spending at socially-conscious businesses Your deposits don't fund fossil fuel projects We commit to donating 10% of profits to charity You choose your monthly fee “We trust you�

US

• The Long Game is the gamified personal finance app that features a savings account, cryptocurrency, “coin” earnings and other rewards for playing games within the app. The app lets you create virtual jars with designated saving purposes. Since its founding in 2015, Long Game has raised $2.6 million in funding, according to Crunchbase.

• The Founder Holden says: they are “trying to create a really fun engaging experience around your finances.”

WIN THE FINANCE GAME - The rewarding banking experience 1. Save For Your Goals 2. Get rewarded for saving with Coins to play games in the app.

3. Win real cash & crypto prizes.

US

Market Growth %

New Disruptor

New Challenger

Average

New Incumbent

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(2015)

New Challenger

HK

(ZA)

• ZA International, the Hong Kong’s first virtual bank, was founded in 2017 as a base to bring the ZhongAn brand to an international scope. ZhongAn is an onlineonly insurtech giant in China.

• In 2020, the bank hosted an “Account Opening Race”– in which people could win a chance to open an account. They have been offering up to a very juicy 6.8 per cent interest rate on deposits.

HK

(ZA)

1. Time Deposits Setting 2. 5 seconds recall your wrong action 3. Rate-up Coupon

HK

• Mox is the new virtual bank in Hong Kong to be launched by Standard Chartered in partnership with PCCW, HKT and Trip.com.

• The development of Mox Bank Limited by Standard Chartered started around 2 years ago, with preliminary research in ethnographic research to understand the market. Ethnographic research helped with understanding the needs of the market and the consumers’ behavior. Güven, CEO of Mox said, “If we can understand the real behavior behind it, we can build new services.”

• “We aim to empower Hong Kong customers to grow and unlock more possibilities by providing a truly digital and personalised banking experience.”

HK

1. Mox Card – Asia’s first numberless all-in-one bank card, taking privacy and security to the next level.

2. Use the Savings Calculator and other tools to automate your saving habits

UK

• Monzo was one of the earliest of a number of new app-based challenger banks in the UK, founded in 2015. The team had met whilst working at Starling Bank.

• In 2016, Mondo set the record for "quickest crowd-funding campaign in history" when it raised £1m in 96 seconds via the Crowdcube investment platform.

• Monzo announced on 2019 that it would begin offering services in the United States.

UK

Banking made easy

1. Use Shared Tabs to actually keep track of who owes you money (Ex, going on a group holiday or splitting household bills with your flatmates.)

2. Save your spare change automatically (We’ll round up your purchases to the nearest pound and put the spare change in a Pot. )

UK

3. Pick your own app icon 4. Set budgets to track your spending.

5. If you pay your bills through Monzo, we’ll give you a heads up if they increase.

Singapore / Thailand

• TMRW empowers the digital generation with a full suite of banking solutions through a smart, mobile-only app. On 14 February 2019, UOB (United Overseas Bank, a Singaporean multinational banking organization) announced that it will launch TMRW (the first mobile-only bank) with Thailand the first country to get this service. More ASEAN countries will get this service in the coming months.

Singapore / Thailand

1. Push simplicity to the limit and engages them in new ways beyond the standard digital banking functionalities 2. A money management game to help customers meet their savings goals in funsized, achievable steps.

3. Be able to text TMRW’s virtual chat assistant through the app itself 4. A call function within its digital chat service. This enables the Bank to continue the conversation seamlessly with the customer without them having to exit or to toggle away from the app.

Singapore / Thailand

Market Growth %

New Disruptor

New Challenger

Average

New Incumbent

Niche

Market Share %

(2015)

New Disruptor

Germany

• N26 (known as Number 26 until July 2016) is a German neobank, headquartered in Berlin, Germany. The name is derived from the 26-sided Rubik’s Cube.

• In 2019, N26 raised an additional $300 million in a series D round led by Insight Venture Partners with Singapore's sovereign wealth fund GIC and a few existing investors also participating at a valuation of $2.7 billion. With its new valuation of $2.7 billion, N26 overtook Revolut as the most valuable mobile bank in Europe.

Germany

1. Spaces for all your goals 2. Shared Spaces: create a subaccount known as a “space� that you can transfer money between your main account and your space. In addition, you can invite up to 10 participants into a space to add and withdraw money between your shared space and their own N26 accounts.

3. Insights on your spending habits 4. in-app LiveChat

Germany

South Korea

• Kakaobank went into public in July 2017 in a spotlight due to its simplicity and unique and intuitive UI and UX. • The bank attracted more than 240,000 customers within the first 24-houroperation. The mobile app-based lender has achieved more than 10 million customers in 2019, which is the largest in terms of customer volume among peers in the world, except for the Chinese's.

South Korea

1. Group Account: All members can check the deposit and withdrawal in real time.

South Korea

2. Time Deposit: You can join at least one month and up to 36 months by choosing your own due date.

Australia

• Xinja Bank is one of the newest, independent neobanks set to change the way people manage their money and do their everyday banking.

• Founded in 2017 and located in Sydney, Xinja Bank is 100% app based and offers the latest features and benefits to suit the banking needs of young and tech-savvy Aussies.

• Xinja have already launched both a transaction account and savings account and they also have grand ambitions for the future, including offering products like home loans and personal loans.

Australia

100% digital + latest technology = low costs for us & competitive rates & low or no fees

Australia

Australia

• 86 400 is the Australia's first Smartbank - There are 86,400 seconds in a day and the name represents that they are helping Australians feel in control of their money, every second of every minute of every day. • Customers will now be able to open up to three separate 86 400 Save Accounts to diversify their savings structure, all of which will be able to receive the maximum interest rate of 2.25%.

Australia

1. A read-only view of all your accounts in one place, you’ll get greater insights into your full financial picture.

2. Stay on top of your expenses with automatic predictions of any regular payments, bills and subscriptions 3. Help you save by giving you a nudge each month if you’re not on track to earn bonus interest.

China

• WeBank is a private Chinese neobank, founded by Tencent, Baiyeyuan, Liye Group, and other companies. Tencent is the single largest shareholder, with an estimated 30 percent ownership share. WeBank's estimated valuation is approximately US $21 billion. Headquartered in Shenzhen, China, WeBank began its operations in 2015. • Eschewing traditional bank practices, WeBank bank has no physical branches or outlets, and does not rely on property guarantees. Instead, it grants loans through face recognition technology and big data credit ratings. In mid-May 2015, WeBank launched Weidilai, its "micro-loan" suite of inclusive financial loan products.

China’s first online-only bank To target small borrowers with most loans expected to be less than Rmb 1m.

China

1. SME Loan 2. Investment Advices 3. Links users to QQ and WeChat apps through QR codes and provides information about the set up of the bank.

4. A “social credit rating” based on a borrower’s online activities has proven successful in China but controversial due to privacy and data collection. Facebook’s own attempt at a similar project failed due to regulatory blocks. (Third-party data sources, such as telecom operators, financial institutions, and government departments)

China

China

• Mybank is a neobank in China, established by ANT Financial Services Group. Ant Financial Services Group, formerly known as Alipay, is an affiliate company of the Chinese Alibaba Group. Ant Financial is the highest valued FinTech company in the world, and the world's most valuable unicorn (start-up) company, with a valuation of US$150 billion. • In 2019, The Wall Street Journal reported that Ant's flagship Tianhong Yu'e Bao moneymarket fund was the biggest in the world, with over 588 million users of Ant's mobile payments network Alipay contributing, more than a third of China's population.

China

1. Lends to small businesses with lower rates.

2. The whole process takes 3 minutes.

3. Involves zero human bankers.

4. Analyzes real-time transactions to gain insights into creditworthiness.

China

Others

UK

• Atom Bank is based in Durham, North East England. Atom Bank is the UK's first bank built for smartphone or tablet, without any branches. Atom has a growing team of over 300 people drawn from across the country, working with partners to bring pioneering technology to Europe for the first time. • In December 2019, Atom ranked second in business analyst Beauhurst's list of 50 top fintech UK startups and scale-ups.

UK

1. Personal, intuitive and fun with 3D graphics, voice recognition and security via selfies.

2. Built on a game-design platform called Unity.

3. “Gamey” way & Personalization: • Rebrand the bank itself, calling it, for example, by your own name.

• Personalized color scheme.

• Personalized animated Atom "A" logo.

UK

• Atom employs a 3D carousel which you can spin to bring your chosen element into the foreground, and where the app automatically places your most-used features.

4. Biometrics: • Using face and voice recognition.

• Take a selfie for authorize future transactions.

• A blink at random to provide an extra failsafe.

Australia

• Up, also known as Up Bank and Up Banking, is an Australian neobank based in Melbourne, Victoria. Founded in 2018, the bank is a collaboration between software development company Ferocia and Bendigo and Adelaide Bank. An invite system was introduced in 2018 to allow existing users to "invite a friend" through their mobile number.

• Up then qualified and won "Digital Disrupter of the Year", "Best Tech Innovation" and "Best Banking Innovation" awards from the annual Finder Awards in 2019.

• By 2020 they had grown to over 185,000 customers.

Australia

1. Multiple Savers for your life goals instantly.

2. Round-up your spare change with every purchase. Boost your Round-ups to supercharge your savings.

3. Automatically track everything you spend at specific brands and shops.

4. Voice banking with Siri

Australia

• Volt Bank is an Australian consumer neobank that was founded in Sydney, 2017. • Volt Bank has closed a $70 million capital raise and has its hand out for more as the ambitious digital banking upstart confirms plans to list on the Australian Securities Exchange this year and take on the big four.

Australia

1. Our saving challenge will get you into the saving habit.

2. Spending categorization.

3. Customised alerts: Notify users about the progress of any savings goals or budgets they’ve created.

4. Richer spending insights: Provide more comprehensive information on individual transactions and provide weekly or monthly reports on spending.

5. Another savings features like round up tools.

Australia

UK

Tander, the new dating app by digital challenger bank Tandem hopes to lessen the number of money-related divorces in the UK in 2019.

The dating app works by monitoring user spending and matching people based on salary, spending and savings habits, encouraging users to be more open about their financial health and find love with their true financial match.

A user says: “We were just so much more relaxed when we went on our first date because we didn’t have to ask each other questions like: are you a big spender or do you prefer to keep within your budget? "

Africa

Barter or Getbarter is a lifestyle payments service that offers you a cheaper and seamless way to send, request, and receive money, pay merchants and bills and from the convenience of your mobile phone.

1. Near you feature 2. Virtual Visa card 3. Creates a network for clients on multiple financial platforms

Function-oriented

Africa

the world's first behavioural bank 1. Vitality Money status: Based on how you manage these 5 financial behaviours.

2. Boost your Vitality rewards with Dynamic Discounts

Chatbot-based Innovation

US

is a chat-based money management app that uses easy-to-understand graphs and emojis to help users save and spend better.

US

Your money-saving prodigy penguin

1. Reduce your bills

2. Avoid extra charges

3. Track your spending

4. Save for something

UK

The Fastest Growing Fintech App in History – a money management app with a sense of humor (Your AI friend for all things money)

1. Use the power of AI to save more, control your finances and stick it to the banks.

2. Get roasted/Hyped about your spending, money horoscopes, and more.

UK

3. Stay on top of your money with a custom budget that tracks your spending and gives you a clear path to any goal.

4. Play games and get quizzed to build financial awareness and potentially win some cash.

5. Cleo can automatically set money aside each week based on your spending.

Trends of Innovation • • • • • • • • • • •

Personalization Credit card management Empathetic chatbots AI advices for investment TECH Voice payments Budget & money planner Context-aware notifications Gamification Biometrics Advanced geolocation (ATM or branches…)

Combining with other fields (Daily life/ Ecosystem)

TRUST