NEOBANKING
Moving Ahead in the Game With foresightful thoughts on Neobanking, Neale Croutear-Foy CTO at Securrency Capital describes how this fast-evolving sector will shape the financial services landscape
When one looks at the offerings across sectors there is still a heavy weighting to traditionally serviced retail customers but beyond this segment, the unbanked, the Corporate and SME market and the UHNW sector would suggest there is still a lot to play for even in a fairly saturated market.
How long, will it take Neobanks to reach profitability from their launch date?
Neale Croutear-Foy, CTO at Securrency Capital
C
an we expect to see more “greenfield” Neobanks star t operations in the region?
As Non-Bank “TechFin’s” such as Apple enter the ring, only regulatory restriction will limit their spread. The incumbent banks’ Digital spin-offs will be a given, so, what then of the Standalones? Strategy will be everything; take the Zand approach and go all out for a new fully licensed
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Neobank? I don’t think we will see many new contenders do this that are not already in flight or unless they have major government backing. Which leave us with new unlicensed Neobanks and the evolution and pivoting of other FinTech’s already in the market including Digital Wallets, FX, Crypto Exchanges etc expanding their product or seeking full bank licenses after time, like Revolut.
Banking and Finance news in the MEA market
The challenge of when Neobanks reach profitability is gaining a lot of attention as the excitement and valuation hype subsides. In general, the independents have used large amounts of venture capital to maintain their growth trajectories but have a long way to go before they start to eat heavily into traditional banks’ customer bases and their cost of acquisition becomes sustainable. Given the customer demographic they are currently attracting, this feels like a tall order with the current product offering. Are we going to see the incumbents’ Neo-subsidiaries outlast the new p l a ye rs b e c a u s e t h ey h a ve a n established trust, an existing license and profitable parent channels to fill the coffers? Or are they going to continue to lose customers to the new players who understand them better, in a more innovative and congruent way and have supportive VC funding with a business model to support it? The truth will as ever lie somewhere in the middle with closures on both sides. Lessons from European Neobanks would suggest that focusing on existing markets and widening their product offering to monetise their existing client base via more profitable channels is the