The year 2023 may be considered the fintech winter, when the list of failed start-ups lengthened as banks pulled out of BaaS, venture capital funding dried up and promising new markets such as buy-now pay-later (BNPL) saw consolidation across the board. But since then, even despite continuing headwinds, many fintechs and neobanks have focused on the longer-term goal of challenging legacy providers through truly user-centric experiences. In the process, they’ve managed to carve out sizeable chunks of deposits and lending.
Revolut, for example, has launched advanced fraud controls to shore up perceptions on security as institutions on both side of the Atlantic grapple with payments fraud (see example left). Intuit and Dutch fintech Bunq have developed GenAI chatbots, offering more sophisticated natural conversations boosted by financial-management education and even travel recommendations (see example right). And Monzo has made its BNPL product much more accessible by adding it to Apple Pay. Still others have reached into complementary spaces, such as offering travel SIM card options to help customers combat soaring data roaming bills.
At the corporate strategy level, Klarna’s acquisition of Laybuy and Revolut’s UK-banking license approval suggests we’re likely to see many more product updates online, in-app and elsewhere, as providers vie in new markets.Â
Digital banking leaders, whether incumbent or challenger, are increasingly focusing on building opportunity across the entire value chain for their users. (Case in point: Chase acquiring Figg to develop media solutions.) They’ve learned that many of the fintechs and neobanks in their midst are no longer just start-ups working from a short-term playbook. Rather, they’re part of a quickly maturing market that knows what’s important to its customers and will move fast to fulfill their needs.
