Neobanks: rapid growth or a slow burn?

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Neobanks: rapid growth or a slow burn?

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Neobanks: rapid growth or a slow burn?
Revolut’s recent Australian launch marks the first neobank taking on the local market, with several others waiting in the wings.
Despite a willingness to consider using neobanks, particularly among younger consumers, we expect market share growth to be relatively slow as a result of low churn, a lack of trust and strong offerings from the incumbents.
Neobanks are fully digital, typically mobile-first, branchless banks that provide a suite of financial products with a customer-focused approach. For an overview of the neobank proposition and an analysis of their opportunity to disrupt the banking landscape in Australia, please refer to Venture Insights’ October 2018 report titled “Neobanks – The David against banking Goliaths?”.
On 13th June 2019, Revolut, a leading European neobank, launched in Australia to significant fanfare, and has garnered over 20,000 registrations of interest to date. As the first major international neobank to launch in Australia, Revolut is well-placed to capitalise on a growing interest in alternative banks in Australia, particularly in light of the recent Banking Royal Commission. Within this context, in April 2019, Venture Insights conducted a survey of 1,009 consumers across Australia on their views on and willingness to use neobanks.

Contents

Key takeaways

A compelling proposition

  • A European ‘giant’
  • The customer proposition in Australia

Change is in the air

  • The year of the neobank?
  • Consumers are interested but uptake may be slow

The incumbents’ response

Conclusion

Post-script: What about the tech players?

List of charts/tables

Figure 1. Total funding raised by European neobanks (US$, to March 2019)

Figure 2. Comparison of Australian transaction accounts

Figure 3. Would you consider using a neo bank (digital only bank)?

Figure 4. Why would you consider using a neo bank (digital only bank)?

Figure 5. Would you consider using a neo bank exclusively (i.e. instead of your traditional bank)?

Figure 6. Why would you not consider using a neo bank (digital only bank)?