💔 Winner Takes Most - Monzo, Revolut, Starling, Tide, Atom, Tandem, N26 🏦

It’s the Amazon/Facebook-strategy. Also, think P&G and Colgate-Palmolive:

“It’s not winner takes all, but it is winner takes most,” said Martin Mignot, a partner at Revolut investor Index Ventures. “If you try to be universal but don’t have the resources that the leaders have, it’s going to be very hard.”

Looks like Atom had the largest deposits in terms of £ at the end of 2018 but did not generate any net revenue, unlike its neobank competitors. N26 did not provide data.

Meanwhile, Barclays, Santander, HSBC, etc aren’t exactly asleep either.

The FT today:

Race to become UK digital banking leader hots up

Fintech scene ‘not winner takes all, but winner takes most’

4 hours ago

Revolut’s founders Vlad Yatsenko and Nikolay Storonsky © via REUTERS

The UK has become a competitive hotbed for digital banking in recent years, with Revolut last week claiming it had demonstrated its “viability” after the fintech reported a more than fourfold increase in annual revenues.

Revolut competes with a string of start-ups offering app-based current accounts including Monzo and Starling Bank. Atom Bank and Tandem, meanwhile, have built businesses focused on mortgages and credit cards.

Berlin-based N26, another millennial-targeting online bank, also competes in the UK but does not reveal financial information.

However, the struggles of earlier banking “challengers” — from supermarkets like Tesco to other start-ups like Metro Bank — have highlighted the difficulty of breaking the dominance of major lenders, and many industry figures believe there is not enough room at the top for all the digital contenders to succeed.

“It’s not winner takes all, but it is winner takes most,” said Martin Mignot, a partner at Revolut investor Index Ventures. “If you try to be universal but don’t have the resources that the leaders have, it’s going to be very hard.”

Despite gaining valuations higher than many established banks, the “neobanks” are all less than five years old.

Tandem chief executive Ricky Knox said the recent woes of WeWork showed how quickly investor sentiment can turn: “Only three months ago the [venture capital] markets were pricing in massive valuations, and that’s all blown down in a couple of weeks.”

As the economic outlook darkens, it will become increasingly important for firms to convince investors that sustainability is on the horizon.

Mr Knox cautioned that “the race is very much in its first lap — there’ll be a couple more phases where it becomes much clearer who is actually performing well.”

Nonetheless, the firms’ latest results provide a first look at where the different banks are starting to pull ahead, and where their biggest challenges lie.

Customer deposits

Atom’s more traditional model means it dwarfs its peers in balance sheet size, having gathered billions in deposits in fixed-term savings accounts. Tandem is following a similar approach but started later after acquiring Harrods Bank in early 2018.

Among the banks offering daily spending with debit cards, Revolut was comfortably ahead at the end of 2018 despite not operating with a full banking licence. In part, the figures reflect how Revolut has chased customer numbers by expanding in multiple countries. However it also had a higher average deposit than Monzo, which the company attributes to having an older, more affluent customer base. Starling benefited from the same trend and a push into business banking.


Higher customer numbers also helped Revolut generate bigger revenues. Starling and Monzo will hope to close the gap by doing more lending, but Revolut is likely to remain in the lead having forecast a tripling in revenue.

The majority of Revolut’s revenue came from interchange fees received when a customer used their debit card, but it also showed faster progress in developing less traditional sources of income such as fees for services like crypto trading.

Tandem’s revenues were boosted by a backbook of mortgages acquired with Harrods but it also benefited by being the first of the neobanks to launch a credit card that generates interest income instead of relying on transaction fees.

Operating expenses

Atom’s efforts to build a mortgage franchise during a sector-wide price war badly hit its net revenues last year, though it said it has since started making money on new loans.

However one bright spot in its 2018 performance was only a small increase in operating expenses. Spending rose just 10 per cent while lending almost doubled, which Atom said proves the scalability of its business.

In contrast costs have rocketed at rivals as their growing size brings increased staffing requirements to deal with customer service and regulatory issues, as well as a ramp-up in marketing to maintain growth rates.

Pre-tax losses

All five banks say they have stopped actively subsidising individual customers — that is, they now make more revenue from servicing each account than they spend running it — but rising investment and marketing costs mean losses are set to continue.

Read the whole article here - https://www.ft.com/content/9e004184-e68d-11e9-b112-9624ec9edc59


Not to be ‘that guy’ but the article is copyright of FT, I don’t believe they allow fully copying of their articles without permission. (People can google the article on their site)

It’s interesting to see starling are the only one to have a profit making target.


Fixed it :+1:


It may yet be a winner takes all market, not clear yet that isn’t the case. Some of the advantages of the new banks comes when your family or group are on the platform, at some point it may drive people to the de facto platform (i.e. from Myspace to Facebook). I think Revolut are trying to do the SuperApp thing but I sense the winner will be the network effect winner and my money currently would be on Monzo for that. Most people don’t need crypto or share trading, they can afford to have separate apps for that, but paying people easily and confidently, and reaping some of the benefits of the network is universal (unless you are single with no mates of course!).


The market is huge and is only growing, as oppose to being of fixed size.

There are tons of people who won’t trust startups with their money, that’s just normal.

And Rev is working on the network effect, invites people to share the address book, and, unlike Monzo, has presence all over Europe. It’s the machine-platform-crowd business model (the same as Amazon, Apple, etc etc).

I see more Monzo cards in the UK but N26 and Revolut when abroad. But I can’t look at everyone’s wallets :woman_shrugging:

My money is on millenials and Gen Z—and all the next generations

Gen Z don’t know what it was like to do finance pre-2008 (Hint: it was horrible in modern terms but normal back then—“just the way things work around here”).

If there are inefficiencies and high charges for mundane stuff, disruption will come. And it’s here. It takes time though.

Banks such as Metro, NatWest and HSBC are not agile, they are highly inefficient and are unlikely to change in 1 year. That means the market pie is even larger.

We use mobile phones more than ever. What do top 20-50 apps have in common?

  • Online onboard
  • Online customer support
  • Seamless experience within the app
  • Low cost/no cost
  • No hidden fees
  • Extra stuff
  • Cool brand

That’s just off the top of my head.

Most banks don’t even have git branches, just physical branches. Their customers could be neobanks’ customers in 5-10 years.

Will top engineers go work for NatWest? Probably not, because Wall St is also hiring them and top investment banks have huge wallets—startup life is not for everyone.

For customers in the UK, switching between banks is now easier than ever—switching used to be a major obstacle back in the day.

This L2 report suggests such dinosaurs as Barclays and Commerzbank are offering the online onboarding :clap::

Fyi I hear there’s another European e-bank trying to launch in the UK.

The market pie is huge for everyone.

I think we agree on most of these things but I’m not convinced that ultimately it isn’t a market of one (and that may end up being market of one per country). I remember when everyone went from FriendsReunited to Bebo to Myspace and then landed on Facebook. I imagine the Facebook of neo-banks isn’t even a twinkle in anyone’s eye yet, I just need Monzo to IPO so I can cash out before it happens though!


Missed a perfect opportunity to drop a pic in there…

Official Monzo merch:



There’s just so much “market share” to tap into for all kinds of fintechs. Social networks are about having a place to hang with others—there’re Discord team chats and Slack team chats for investors (that’s social) and FB and Instas and Snapchat, while all things financials that have to do with dealing money are quite personal.

Well-off individuals all have different wealth advisers, despite the abundance of choice—fees haven’t been much an issue for people with money. So in response, for years and years there have been all kinds of wealth managers. After 2008, that field became even larger.

With money, it’s each to their own, because of preferences. It’s to do with our relationship with money.

Which is why the market pie is only getting larger for fintechs. Somehow, Schwab, ETrade, TD Ameritrade all managed to co-exist with each other. Not to mention Barclays Stockbrokers and AJ Bell and many many more.


When is Monzo launching in :us:?

They are entering a territory where local startups Chime, SoFi, Varo, and even Square and RH are trying to expand into (cash/debit cards).

As Charles Schwab has shown, a lot of interest income can be earned on deposits. On top of that, it’s the data :oil_drum:.

Monzo have already launched in the US with their US Beta product.

Their strategy is the same as what made them so popular in the UK, start slowly, hand out cards at events, and eventually spread by worth of mouth.

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Monzo has a cool brand among millennials and Gen Z.

Source - https://www.telegraph.co.uk/technology/2019/10/20/big-banks-couldnt-beat-monzo-building-instead/ (paywall)

They are moving fast but should move faster on the other side of the pond—some (fintech) startups over there have deep pockets and are used to deploying things swiftly.

In addition, unlike in the UK/Europe, doing new banking is harder there post-2008 thanks to differences in regs. It would be awesome to see all kinds of app-based solutions to pop up—more “innovation” and choice.

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One of several key components of a successful tech company in this century is having bundles or “rundles” (recurring bundles?) for the user base. It takes care of the recurrning revenue, helps with user stickiness, adds that loyalty thing, provides value to users - but only if done right.

In banking, the closest thing is:

but more affordable and for everyone.

Monzo’s other competitor has Premium and Metal with insurance, multiple card options including temporary card numbers, and other perks.

In a post on its community forums, the digital bank said it was ‘going back to basics and starting from the beginning’ on Monzo Plus, and that ‘for a number of reasons, things just haven’t gone the way they should have with Monzo Plus so far this year.’

The companies mentioned in this report include: Aspiration, Chime, Goldman Sachs’ Marcus, JPMorgan Chase’s Finn, N26, and Revolut.

Here are some of the key takeaways from the report:

  • Despite lagging behind Europe, recent developments suggest that neobanks are finally ready for the spotlight in the US.
  • Three distinct influences are responsible for creating the fertile ground for this evolution: regulation, shifting consumer attitudes, and the activity of incumbent banks.
  • Among those driving this evolution in the US are foreign neobanks including Germany’s N26 and UK-based Revolut.
  • Meanwhile, two notable incumbent-owned outfits have deployed amid great fanfare: Marcus by Goldman Sachs and Finn by Chase.
  • In this increasingly competitive landscape, incumbent banks have a range of strategic options at their disposal, including overhauling their entire business for the digital era.

Paywall - no access :frowning: https://www.businessinsider.com/evolution-of-the-us-neobank-market

Next year:

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I’d like to add that the UK population is generally regarded as patient, polite a love a good queue - lol.

I wouldn’t necessarily say the same for our counterparts across the pond. I’d expect a bit more of a nudge may be needed, something a bit more… “in your face” if you catch my drift.

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I read there’s 20,000 on the waiting list

N26 is advertising on buses that go through the heart of Silicon Valley.

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For Monzo is this? I’m a Monzo shareholder from early on so am following obsessively and haven’t seen this written anywhere. They’ve certainly slowed down acquisition in the UK which I can only assume is deliberate (I think they’re struggling to handle the amount of customer service requests). Would love to think that they’re going to rocket in the US. I just need them to grow another 20 times and float and I’m good for retirement!


Yep, Future of Monzo event.


Ciraca 24 mins in


Must have been hard in the UK with competition like Starling, Monzo and Revolut…