Looks like (some) neobanks will be okay after all – gotechbusiness.com

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The fintech financing boom Recent years have seen huge amounts of capital flowing into so-called neobanks, digital financial firms that offer banking services to markets in general and niche markets.

The overarching idea behind the push made sense: Many traditional banks are IRL first and digital second, and their physical way of doing things caused costs that were passed on to consumers. So why not build a new sofa, a neobank, which uses technology to extend a meager staff, eschews buildings and continues savings to customers instead?

Using the systems of some existing regulatory-ready banks, neobanks could run cheaply and quickly start collecting revenue – thanks to the power of interchange fees – in the form of small slices of customer spend. It was honestly a pretty good idea, and like any other idea, it attracted a large number of founders and funders.

But after a period of epic fundraising and a few exits, sentiment against the model seemed to have shifted. How many neobanks could the market really support? Were a few gone at niche in their work to fine-tune the market and fine-tune their products?

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