Reviewed by its’ target customer — Neo Financial , a neobank from Canada

Opinions expressed are solely my own and do not express the views or opinions of my employer or any other financial institution.

As one of the target customers of the many Neobanks or Challenger banks in Canada, here is a brief review of the products, banking app experience and related services offered by Neo Financial (Calgary, Alberta).

It is encouraging to such a venture launching in Canada by a founding team with repeated success in the tech landscape. It is not an easy undertaking to launch a fintech app in Canada and this healthy competition will ultimately benefit the customers.

Neo Financial — market positioning (or what do they want us to know about them)?

• They are a technology-first challenger financial institution
• They want to offer a better financial experience for all Canadians
• They are reimagining credit card spending, savings and rewards by using technology (this seems to be the differentiator)

Neo Financial Management -

A strong founding team that I would trust as a customer or as an investor. The insights and experience they gained from the success of SkipTheDishes are directly applicable to scaling a Neobank. The management team has a deep understanding of the 2-sided marketplace platform and scaling a B2C tech startup.

With Neo Financial, the team has successfully launched a rewards-driven minimal viable product (MVP) with a credit card and a savings account to test the market. The team is focusing on user behaviour, capturing user feedback and iteratively adding more related services. See here for upcoming features — https://www.neofinancial.com/coming-soon

Neo Financial co-founders

• Jeff Adamson — https://www.linkedin.com/in/jeffadamson/
• Kris Read — https://www.linkedin.com/in/krisread/
• Andrew Chau — https://www.linkedin.com/in/andrew-chau-1046749/

Key partnerships to offer financial products -

• Neo Cards — (Neo credit card & Hudson’s Bay credit card) are issued by ATB Financial (a full-fledged financial services institution, with banking services for the residents of Alberta) pursuant to license by Mastercard International Inc.
• Neo savings account is provided by Concentra — wholesale banking solutions, Mortgages, Capital, Trust and Wealth management.

Key differentiator -

• The two-sided market opportunity between Neo Financial cashback reward partners (local businesses, online consumer services) and Neo Financial customers who will use the financial products — credit cards, savings account etc.

A relevant (somewhat related) player with the focus on lifestyle partner rewards, financial products -

• Klarna Open Banking — https://www.klarna.com/international/business/open-banking/ — offerings vary by country (financial products not fully available in Canada yet)

What will potential target customers find useful in the Neo Financial app?

• Higher instant cashback rewards on credit card spending — ability to browse all in-store and online cashback reward partners from the banking app. Their cashback rewards are explained here — https://www.neofinancial.com/posts/best-cashback-credit-cards-canada
• User experience — ability to easily sign-up for new financial products via the mobile app with an integrated identity verification flow (using Berbix)
• User interface — appealing, user-friendly app interface

How did I find the sign-up experience on the iOS mobile app?

Account creation -

• Enter phone number & confirm with a code — understandable as I’m signing up for a financial app
• Enter email & confirm with a code — painful as it could be done during the credit card or savings account application step.
• Add 3 security questions and answers — really painful as I don’t have a clear view of the product offerings yet in the flow and I haven’t even decided if I want to apply for any of the services from Neo Financial in the app.

Landing page —

• Very helpful as it showed exactly what I can get started with — Credit card, Savings & Pick a rewards plan

Rewards page within the mobile app -

• Nice hook as it loads the “Plus” $4.99/month plan (by default) & not your current free plan (swipe left to see it). When you swipe right, you can see the “Max” $9.99/month plan. It also clearly shows what you will get as part of your plan which is a good sign of a customer-centric experience.
• Plan limitations apply as they are currently unavailable for the Hudson’s Bay Mastercard. It is visible in small letters.
• To see any real value from your Plus & Max plans, the app recommends that your spending should be more than $750 a month

Apply for a credit card

• Personal identification verification integration with Berbix (a Ycombinator tech startup based out of San Francisco)

Open a Savings account

• Personal identification verification with Berbix and SIN number required. The savings account is underwritten by Concentra Bank. Concentra Bank is a CDIC member institution and is eligible for CDIC deposit protection. Deposits are aggregately eligible for CDIC protection up to $100,000.
• You can pay bills, make deposits, withdraw, and transfer funds from the savings account.
• A savings account earns a 1.55% interest rate & you can get similar or better rates on savings account from other banks too

Key question — Would I become NEO Financial customer now?

My answer — NO, not at this moment but maybe in the future.

I would have signed up for Neo Financial -

• If Neo Financial offered a debit card with no annual fees, no hidden charges, no monthly plans, and still offered the same cashback rewards.
• If I could then load my Neo Financial debit card instantly with funds from any other Canadian financial institution & credit union.
• If I didn’t have to go through any credit checks, as to open a chequing account with a debit card would only require personal ID verification and social insurance number (SIN).

As a target customer, I compared Neo Financial offerings to my existing banking service or credit cards in the following way —

NEO Financial — Create rewarding experiences

• The key offering — “Rewards” with the in-store or online partners is currently limited in my area. I live In the GTA (Greater Toronto Area) and the list of reward partners seems very limited. See the image from my phone that shows a list covering 2 of my neighbouring towns.
• NEO Financial cashback of avg. 4%-6% is higher than other credit cards from the top 5 banks but the list of reward partners is also limited. Also, you have to pay $4.99 a month for Plus and $9.99 a month for Max plans to get Avg. 5% and 6% cashback respectively. We can typically get a lower cashback (1%-2%) credit card at no annual fees with our current large bank, so why share personal information with a startup Neobank that may also lead to a credit check. I didn’t apply for the credit card but assuming the credit check will be part of the ATB financial issued Mastercard application flow. If I didn’t have any other credit cards, I would still wait until more cashback reward partners are available in the Neo Financial ecosystem.
• The app experience of browsing many in-store and online partnerships is certainly appealing as shown on this page — https://www.neofinancial.com/rewards-credit-card. But it is not compelling enough when compared to existing offerings from other banks. I understand that large banks do not individually sign-up small retail stores as partners but they could easily offer similar or better user experiences within their app under the “rewards” tab. Currently, when spending with other credit cards, you automatically get reward points or cashback. It might not be as high as Neo Financial but customers are not missing out on rewards.
• Partnerships with online merchants and services such as Disney+, Netflix etc. are appealing as traditional banks rarely offer such rewards for their customers. But I felt the entire Neo Financial rewards experience is driven by the “spend more” message just like all other financial institutions -

Earn rewards on everyday purchases when you use your credit card.

Access exclusive offers when you shop at participating in-store and online locations.

Redeemed offers are instantly added to your rewards balance

NEO Financial — A technology-first financial institution

• The only technology experience that is different from all other top 5 banks is the “rewards” listing of in-store and online partners but it is not enough to switch my credit card from the bank where it is available with my regular banking services.
• The credit card and online savings account are no different from my current bank. Many of the banks now offer similar
• All the top 5 banks need to work on customer-centric experiences and value-driven products but when it comes to the necessities of our day-to-day banking, I’m covered by my existing bank.
• I think that all our top 5 banks in Canada (RBC, TD, CIBC, BMO, Scotia) are now caught up on all the necessary “mobile” banking features in their apps. So I would say they are all technology institutions as well. They all have huge resources to keep our financial data safe and offer customer service via different channels (Branch, online, phone).

Opportunities for NEO Financial to explore further -

• Debit card with a spending account that encourages financial wellbeing — with simple features like no monthly account fees and minimum balance requirements. Spending account that encourages automatic savings. For e.g. round up to the nearest dollar and transfer the round-up from your Spending Account straight into your Savings Account.
• Encourage financial literacy, not just spending — the way the business model is positioned, it is all about encouraging credit card users to spend more to earn higher cashback rewards so how is it different from any other financial institution? Neo Financial could also consider the approach to responsible spending, education, budgeting and rewarding customers.
• Credit builder credit card — believe it sounds similar to “Secured credit” here — https://www.neofinancial.com/coming-soon. It could offer something similar to Chime’s credit builder visa — https://www.chime.com/credit-builder/
• Community-building in the 2-sided marketplace — the only good evidence of community building is that customers have an incentive to spend with local stores but all other large retailers are also listed in the app (e.g. Sobeys). If the customer is price sensitive then it is not much of a community-building incentive yet. How can Neo financial ensure that local small businesses can offer attractive rewards, build loyalty, and compete with the larger retailers? With the experience that the founding team has with SkipTheDishes, they may explore incentive tiers or plans driven by customer spending behaviour to help uplift the small local retailers.
• Surface local business stories to grow support — Neo Financial could explore ways to strengthen retailer and customer relationships with compelling stories about the retailers’ background, products and services that could align with the interests, passions of their customers. Think of experimenting with the “get to know your community” concept.
• Some others — social features like pay friends & family from the app, buy from local stores near you for your friends & family etc.