Meet The New Breed Of Neobank… The ‘Neolender’
What is a neolender?
Over the last 5 years, we’ve seen the rise of the neobank with Monzo, Chime, N26, NuBank, and others attracting tremendous growth and raising large capital rounds from venture capital and other sources of investment. The majority of these new entrants have focused on retail banking in general, with some offering SME accounts as a supporting product.
During COVID, some of these neobanks are finding it incredibly difficult to continue to grow and attract more venture capital. Their revenue streams and growth have often been reliant upon deposits, transactions and payments. As users have stopped traveling and their incomes have suffered, the neobank’s revenues have taken a downturn. For some neobanks, there is also a heavy reliance on venture capital to provide the capital resources necessary to survive and grow. This reliance on venture capital has placed into question their sustainability should venture capital markets continue to be timid during the pandemic.
The neobank market is segmenting
As the neobank sector has matured, naturally there has been segmentation within the banking space to focus on specific verticals to drive revenue growth.