Firstly, challenger banks or ‘neobanks’, the digital-only disruptors that have often attracted high valuations and investor interest.
A recent report from global consulting firm Simon-Kucher reveals that just 5% of these firms are breaking even with many earning less than US$30 dollars in annual revenues per customer.
Despite a collective client account total of nearly 1 billion, the estimated 400 neobanks around the world includes 94 that started in 2020, a record year for launches, fuelled by stay-at-home customers.
Last year, launches slipped to 59 with one in three new neobanks launched as a venture by a larger financial services group or incumbent bank; a trend that is set to continue according to the report.
Canada in top 10
The UK leads the market, based on rankings that consider the level of neobank activity, digital banking readiness, customer penetration, and valuation and funding.
