PaymentsJournal
SUBSCRIBE
  • Analysts Coverage
  • Truth In Data
  • Podcasts
  • Videos
  • Industry Opinions
  • News
  • Resources
No Result
View All Result
PaymentsJournal
  • Analysts Coverage
  • Truth In Data
  • Podcasts
  • Videos
  • Industry Opinions
  • News
  • Resources
No Result
View All Result
PaymentsJournal
No Result
View All Result

Europe’s Digital Banks Got a Wake-up Call in 2020. and Consolidation Could Be Coming.

Ken Paterson by Ken Paterson
December 30, 2020
in Analysts Coverage, Banking, Digital Banking
0
Europe Digital Banks, payments data

Europe’s Digital Banks Got a Wake-up Call in 2020. and Consolidation Could Be Coming.

0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

Fintech/challenger banks have cast a longer competitive shadow in the European banking industry, compared to the U.S., where new entrants have perhaps encountered more pressure to produce results in a shorter time period. This article suggests that with the pressures of the COVID era, patience in Europe may be waning:

But many of the so-called neobanks have stumbled in 2020, with the likes of Monzo and Revolut revealing deepening losses and getting hit with a multitude of complaints from customers about service.

Monzo, whose founder Tom Blomfield stepped down as CEO earlier this year, caused concern after flagging “significant doubt” about its ability to continue “as a going concern” due to disruption from Covid-19.

Now, neobanks are under tremendous pressure to show they mean business. Investors are pushing the fintech challengers to demonstrate that they’re able to monetize their products, and eventually make a profit. Experts say the space is ripe for some consolidation.

One roadblock to neobank success, suggested by a number of observers, is an over-reliance on transactional revenues related to interchange. With appealing online interfaces and perhaps more affinity from younger, less affluent consumers, revenue growth opportunities tied to payment services alone can be limited without adding user fees or a broader array of financial products with higher margins.  For some challengers with innovative technology IP, an opportunity to sell to a legacy institution interested in leveraging that IP could be particularly compelling.

As we sometimes note in the U.S. experience, new banking entrants also may mis-judge the scale of the compliance commitment they will need to fill.  Similarly, legacy institutions may be under-valued for the compliance capabilities that they have already built and their ability to operate and grow in a highly regulated industry.

It’s not easy being an incumbent financial institution. And neobanks can’t stay “neo” forever, even in supportive markets like Europe.

Overview by Ken Paterson, VP, Special Projects and Director, Customer Interaction at Mercator Advisory Group

Tags: BankingCovid-19Digital BankingEuropeEuropeanFintechtechnology
0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

    Analyst Coverage, Payments Data, and News Delivered Daily

    Sign up for the PaymentsJournal Newsletter to get exclusive insight and data from Javelin Strategy & Research analysts and industry professionals.

    Must Reads

    “You’re a Fintech, I’m a Legacy Bank – How Can We Collaborate?”

    Investing in Fintech: Opportunities and Challenges in the Payments Industry

    September 20, 2023
    real-time payments across the globe

    In 2023, Real-Time Payments Expanding Across the Globe

    September 19, 2023
    AI

    AI in EBPP: Small Changes, Huge Impacts

    September 18, 2023
    Amazon

    How Tech Is Changing the Checkout Process

    September 15, 2023
    fraud risk models

    Consortium Approach Dramatically Improves Fraud Risk Models

    September 14, 2023
    Disrupting the Disruption: Where Banking Is Heading Next

    Disrupting the Disruption: Where Banking Is Heading Next

    September 13, 2023
    cybercrime

    As Cybercrime Increases, Financial Institutions Must Remain on Guard

    September 12, 2023
    metaverse, emerging payments

    Gauging Interest in Emerging Payments Is Trickier Than it Seems

    September 11, 2023

    Linkedin-in Twitter

    Advertise With Us | About Us | Terms of Use | Privacy Policy | Subscribe
    ©2023 PaymentsJournal.com

    • Analysts Coverage
    • Truth In Data
    • Podcasts
    • Videos
    Menu
    • Analysts Coverage
    • Truth In Data
    • Podcasts
    • Videos
    • Industry Opinions
    • Recent News
    • Resources
    Menu
    • Industry Opinions
    • Recent News
    • Resources
    • Analysts Coverage
    • Truth In Data
    • Podcasts
    • Industry Opinions
    • Faster Payments
    • News
    • Jobs
    • Events
    No Result
    View All Result