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NEO - PERFORMANCE AND NEW IDEAS OCTOBER 2018 INTRODUCTION EXECUTIVE SUMMARY

Accelerated The ‘Neo Banks’ Growth Story expansion in • Neo & Challenger Banks are redesigning their models around customer-centricity, for significant user growth. A few of them such as customer base, Chime, , and Compte-Nickel have acquired a million- user base with total transactions value running into $4-$18 Bn. innovative • The Digital Banks are also leading on customer satisfaction metrics. US Digital Banks’ customers are 83% satisfied as against 76% satisfaction generation & rate for UK customers. In both the markets, customers report the lowest satisfaction with Top 50 Global banks. monetization models and Business Model & Competitive Levers increased M&A • Neo banks are challenging the universal banking model through a low-cost structure, feature-rich products/services and easy accessibility. activity would Their engine focuses on three key pillars – Customer experience, User convenience and Simplified processes. Platform-centric digital banks into a models via open banking and APIs is also enabling Neo banks to expand user base, growing commission income and in offering increased higher league potential for data monetization. • The Neo & Challenger banks have a strong cost efficiency driven by less complex IT systems, simpler product set, lower real estate and distribution costs and more streamlined operating models • Demand-pull for Neo & Challenger Banks is rooted in their ability to offer a faster and transparent model, lower , superior CX and a goal- oriented business aimed at improving household financial wellness.

Near-Term Strategic Threats to Mainstream Banks • In the near term, the disruption remains significant for and basic banking services, which are transactional in nature. For advisory services such as financial planning and , most of the existing robo-advisory platforms currently address only a part of the value chain, geared towards portfolio creation and execution. A full-fledged robo-advisory is likely to have a significant impact • For mainstream banks, the biggest threat comes from full-stack neo banks such as , Starling , N26, Tandem and . Armed with an asset-light model, platform-centric business, proprietary technology systems and a , they control most of the value chain from front-end to back-end

Neo-Banks: Performance and New Ideas—October 2018 2 CONTENTS Performance and Satisfaction Analysis 4 A Few Neo Banks are Attracting a Large User Base 5 Neo-Banks Feed on Low Satisfaction With Mainstream Banks 7 Innovation Themes 9 Neo Banks Focus Innovation on CX, Convenience, and Simplified Process 10 Customer Experience 11 Usage Convenience 12 Simplified Process, Time and Cost 13 Strategy and Business Model 14 Neo Banks Adopt Platform-Centric Models as against Product-Centric Models of Incumbents 15 Most Neo Banks Have Strong Cost Efficiency 16 APIs Are A Force Multiplier for Neo-Banks 18 Adoption Drivers and Attributes: Comparative Analysis 20 Attributes Influencing the Choice of Bank 21 Consumers Mostly Prefer Neo Banks for Speed, Transparency & UX 22 Impact and Outlook 24 Services Have High Disruption Risk 25 Full Stack Neo-Banks Pose Bigger Threat To Mainstream Banks 27 Strategic & Market Outlook for Neo Banks 28 Appendix 29

Neo-Banks: Performance and New Ideas—October 2018 3 1

Performance and Satisfaction Analysis

Neo-Banks: Performance and New Ideas—October 2018 4 PERFORMANCE A FEW NEO-BANKS ARE ATTRACTING A LARGE USER BASE 1 2

As big banks have been slower to adapt to new technologies and USER TOTAL DIGITAL BANK LAUNCH TOTAL USER BASE GROWTH TRANSACTION TRANSACTION ACTIVITY changing customer RATE VALUE needs, start- digital banks have Revolut 2014 Over 2 million 8,000 US $18 billion US $1,000 per user per month been amassing a large user base who 40 transactions per user are actively using Chime 2013 Over 1 million 3,500 US $4.5 billion per month their services. Chime, Revolut and N26, in particular, N26 2014 Over 1 million 2,500 US $10 billion US 1.17 billion per month have acquired a million-strong user Compte- 2010 Under 1 million 650 US $4.5 billion 40 million total transactions base with total Nickel* transactions amounting to *Compte-Nickel was acquired by French bank BNP Paribas in April 2017 billions of USD.

continued… Neo-Banks: Performance and New Ideas—October 2018 5 PERFORMANCE 1 2

HOWEVER…

Not all neo-banks are enjoying performances that are as stellar:

DIGITAL BANK LAUNCH TOTAL USER BASE And not all reported sign-ups are

Lidya 2016 Over 120,000 indicative of ‘actual’ usage and activity:

Open 2017 Around 1,000 • Usage statistics reveal neo banks’ customers are at least as active** as those of legacy banks Countingup 2018 Around 1,000 (500 acquired within 3 weeks) • At Starling, 60% of customers use their accounts at Loot 2014 Over 100,000 least once a month with an average of £900 in deposits Tandem 2013 Over 100,000 • At Monzo ”more than 45% of customers are putting at least £500 a month into their accounts” Nuo 2018 20,000 (acquired within 2 days)

**most large UK high street banks define an “active” customer as one who has used their account in the last three months

Neo-Banks: Performance and New Ideas—October 2018 6 SATISFACTION NEO-BANKS FEED ON LOW SATISFACTION WITH 1 2 MAINSTREAM BANKS

US banking Customer Satisfaction by Bank Type—US consumers are most satisfied with 0% 5% 1% 3% 3% Unions and least 8% US satisfied with Top 50 22% 14% 16% members are the Global Banks. 28% most satisfied, while 32% customers from Top 35% 50 Global Banks are 44% least satisfied with 49% their banks 45% Direct Banks’ 60% customers are 83% 48% satisfied as against 37% 67% satisfaction 28% 22% rate for Top 50 Global Banks

Top 50 Global Regional Credit Unions Direct Banks Community Banks Banks Banks Extremely Satisfied Very Satisfied Somewhat Satisfied Not Satisfied

continued… Neo-Banks: Performance and New Ideas—October 2018 Note: Direct Banks are defined as 100 per cent online banks, with no physical branches 7 SATISFACTION UK DIRECT BANKS EARN HIGHEST SATISFACTION RATING 1 2

UK consumers Customer Satisfaction by Bank Type—UK report the highest satisfaction with UK customers of 3% 0% 2% 0% Direct Banks Top 50 Global Banks while they are least 18% 24% 30% are much less satisfied with Top 50 28% satisfied compared Global Banks. to Regional, and 44% 31% Direct Banks 39% 38% Direct Banks report the highest satisfaction among 45% customers, followed 36% 30% 32% by Cooperative Banks

Top 50 Global Regional Banks Cooperative Direct Banks Banks Banks Extremely Satisfied Very Satisfied Somewhat Satisfied Not Satisfied

Neo-Banks: Performance and New Ideas—October 2018 Note: Direct Banks are defined as 100 per cent online banks, with no physical branches 8 2

Innovation Themes

Neo-Banks: Performance and New Ideas—October 2018 9 INNOVATION NEO BANKS FOCUS INNOVATION ON CX, CONVENIENCE AND SIMPLIFIED PROCESS

Neo banks are 1 2 3 challenging the universal Customer User Simplified banking model with their Experience Convenience Process lower costs, personalized insights, predictive intelligence, user-friendly interfaces, easy accessibility and simplified processes

Some consumers feel that Consumers are demanding Consumers are willing to try their were better ever-more consistent and new banking platforms in understood, better guided convenient banking order to save and to and better managed by experiences, with an simplify financial alternative banking increasing preference for a providers, such as challenger mobile user interface instead transactions banks of a physical location and neo-banks or bank personnel

Neo-Banks: Performance and New Ideas—October 2018 10 INNOVATION 1. CUSTOMER EXPERIENCE 1 2 3 Interchange AI Credit Scoring Neo-banks prioritize customer needs and Based Model Enables Smoother circumstances – Minimizes Front-End Spending Analysis and Faster their Friction and Controls Decisions products and services in a way Use of Interchange Fee Focus on PFM with real- Use of AI models and that is empowering model to minimize time insights analytical engines to enable instead of punitive. customer-facing fees, such faster decisions as monthly fees, minimum balance fees, and Loot lets customers know fees how much they can spend Lidya uses nearly 100 data freely points to assess the credit worthiness of applicants. Chime earns ~1.5 percent N26 sends push Repayment schedules and in interchange revenue notifications on all account fees are agreed upon from Visa through its activity (e.g. card payments, upfront without the need to accompanying ATM withdrawals) visit physical . N26 generates Tandem and Personetics interchange fees from provide personalized insights on money management

Neo-Banks: Performance and New Ideas—October 2018 11 INNOVATION 2. USAGE CONVENIENCE 1 2 3

Digital banks are Location-Agnostic Automated Accounting creating convenient Banking Collaboration and -flows ways of accessing banking needs by Partnerships with tapping into local Anywhere, anytime models Targeting SMBs, local/global banks and ecosystem, Banking through Digital FinTechs for expanded Core features: Accounting, collaborating with Venues as against Physical cross-sell Tax, and Business reporting technology Branches specialist firms and Re-bundling services embedding AI- Round-the-clock through tight-knit OPEN offers automated based capabilities on-the-go integrations, Services bookkeeping and expense into their offerings. Integrator model management for SMBs Compte-Nickel’s Countingup enables instant, partnership with Lunar Way Travel Card’s automated expense tobacconists/newsstands app links to a pre-paid recording with real-time for deposits, balance multi- MasterCard insights into the health of updates, etc. Alior, Solaris, Raisin and the business. Mastercard together will create an open banking platform based on APIs.

Neo-Banks: Performance and New Ideas—October 2018 12 INNOVATION 3. SIMPLIFIED PROCESS, TIME AND COST SAVINGS 1 2 3

Digital banks are Low Cost Quick and Free ATM helping users save Paperless Sign-Up Withdrawals Savings money, especially on international transactions, Fast, secure, low-cost Seamless customer Secure and free cash ‘Zero fee-account’ and to better international onboarding withdrawals from a model to promote manage their purchases/transfers experience global network of savings finances, using the mid-market ATMs Open user accounts all without exchange rate via mobile or web physically within a few minutes , the Australia- transacting Chime has a network and with minimal based startup, will with a bank Revolut customers of 40,000 free ATMs requirements combine real-time can spend in over 90 payments with the at the best to save money exchange rate Revolute: 3 minutes for specific purposes available with no fees without having to Alior Bank will offer N26: 8 minutes open a separate multicurrency Countingup: 5 account accounts with minutes international transfers and deposits

Neo-Banks: Performance and New Ideas—October 2018 13 3

Strategy and Business Model

Neo-Banks: Performance and New Ideas—October 2018 14 STRATEGY NEO BANKS ADOPT PLATFORM-CENTRIC MODELS AS AGAINST PRODUCT-CENTRIC MODELS OF INCUMBENTS

Neo Banks are Incumbents’ Model Neo-Banks’ Model creating an PRODUCT-CENTRIC PLATFORM-CENTRIC ecosystem of BRANCHES MARKETPLACE COMMUNITY services around their infrastructure, • High verticalization of products • High community engagement with the product shifting the banking • No strong communities around the brand/product • Horizontalization of products with best-in-class apps value from branches • Large branch/network • Open banking through APIS to their API layer. • High customer acquisition cost • Mobile only (low customer acquisition cost) They are reshaping TECH INFRASTRUCTURE TECH INFRASTRUCTURE the business model by offering Banking- • Outsourced technology • Open architecture technology stack as-a-Platform. • Rigid legacy platforms of 1970s–1980s • Ability to ‘plug and play’ best-in-class tools/services • Non-modular architecture with limited scalability • Low dependency on 3rd party providers • Hard to integrate data from 3rd party providers • Open ecosystem allowing access to external developers

PRODUCT-CENTRIC BUSINESS DATA-DRIVEN BUSINESS • Banking data divided into silos • Real-time data integration and management • Mix of paper-based and online data • Current accounts generate key data for 3rd parties • Difficulties in reconciling, monitoring data • Data powers business model through 3rd party affiliation fees

ORGANIZATIONAL DESIGN ORGANIZATIONAL DESIGN • Product-centric organizational design • Customer-centric organizational design • Products and verticals drive organization structure • Customer needs drive data architecture

Neo-Banks: Performance and New Ideas—October 2018 15 COST ECONOMICS MOST NEO-BANKS HAVE HIGH COST EFFICIENCY 1 2

Neo and Challenger banks have less Lower Customer Acquisition Costs complex IT systems, simpler product set, • Average ’s cost of customer acquisition ranges from $1 to $38 compared to lower real estate about $200 for traditional retail banks. and distribution • Monzo spends ~£6 ($8.37) per customer if a person uses it as their primary account. costs, more • Customer acquisition effort driven largely by viral marketing and social media. streamlined operating models and few legacy Back-End Outsourcing compliance issues compared to • Several challenger banks such as N26 and Tandem have outsourced back-end technology traditional banks. stacks resulting in lower capital expenditure and faster time-to-market. Achieving profitability, however remains a Price Competitiveness challenge, given rising pricing • UK challenger banks pay roughly twice the savings rate of traditional banks (0.92% versus pressure. 0.44% for the average easy access account). • In the US, rates on deposits are three times higher at online/digital banks compared to traditional banks (0.79% versus 0.27% for a 12-month CD).

continued… Neo-Banks: Performance and New Ideas—October 2018 16 COST ECONOMICS ACHIEVING PROFITABILITY REMAINS A KEY CHALLENGE 1 2

Operating Efficiency

• Neo and challenger banks have an average cost efficiency ratio of 46% compared with a range of 50-60%+ for most traditional banks. • The smaller challenger banks have achieved lower cost-to-income ratios due to rapid growth in total assets.

Distribution and Channel Costs

• Challenger banks adopt distribution models that do not utilize a branch network. • Distribution costs typically run at 6% of their overall cost base, compared to an average of 27% across the retail banking .

Profitability

• UK challenger Monzo’s prepaid loses around £50 per active customer per year. • Large volume of current accounts with their low average balances are inherently unprofitable. • N26 closed 160,000 customer accounts as users were making too many ATM withdrawals, pushing up costs for the bank.

Neo-Banks: Performance and New Ideas—October 2018 17 APIs APIs ARE A FORCE MULTIPLIER FOR NEO-BANKS 1 2

Neo-banks are Neo Banks are embracing APIs to create new financial products & services embracing open APIs as it enables Integration with Categorization them to offer a Marketplace seamless experience Third-Party Engine & Smart for their users and and Monzo’s Platforms Nudges also to explore partnership involves building a rd opportunities for marketplace of financial Monzo’s integration with 3 - Integration with Moneyhub, expanding their products and services, which party API platforms offers offers users of Starling and revenue and offers users with: additional functionalities: Monzo access to its proprietary customer streams. • A curated selection of the best • TrueLayer’s financial APIs categorisation engine and money-related apps enables business users to swiftly Smart Nudges towards making and securely request access to well informed monetary • Open APIs to allow other account data from Monzo decisions developers and FinTechs to build functionalities on top of • IFTTT’s automation platform their infrastructure allows Monzo’s users to connect to other apps & devices • Positive user experience and higher transaction activity

continued… Neo-Banks: Performance and New Ideas—October 2018 18 APIs APIs ARE ENABLING NEW REVENUE STREAMS AND 1 2 CUSTOMER ACQUISITION Three-Pronged Benefits to an API Model Earning Commission Inheriting API Increase in commission Users income by expanding their transaction activity and Expansion of user base by sign-up rate, contributing providing their services on a towards profitability. third-party platform or by offering third-party services on their platform. E.g.: Monzo’s integration with Monetizing TransferWise, yields it a percentage for each currency transfer made from its app E.g.: Spare change app Moneybox and Financial Data Starling can make a fixed or percentage PFM chatbot Plum’s Integration with Potential for data commission for new sign-ups made through its Marketplace Starling and Monzo will create a more monetization through unified approach to PFM for users access to a significant amount of financial data.

E.g.: Loot generates advertising based on target product offers Neo-Banks: Performance and New Ideas—October 2018 19 4 Adoption Drivers and Attributes: Comparative Analysis

Neo-Banks: Performance and New Ideas—October 2018 20 ATTRIBUTES ATTRIBUTES INFLUENCING THE CHOICE OF A BANK

UK Consumers Rank Trust & Digital Self-service The Highest US UK consumers YOUNG BABY YOUNG BABY overall value their GEN Xers (38- GEN Xers (38- RANK MILLENIALS BOOMERS (53- RANK MILLENIALS BOOMERS (53- needs for Trust and 52) 52) RUN (18-26) 71) (18-26) 71) Control most, but FACTORS Digital consumers in the 1 Trust Trust 1 Trust Trust Trust Trust, Self-Service Millennials segment Simplicity, Digital Digital Convenient see Digital Self- 2 Control Trust Control 2 Simplicity Locations service as more Self-Service Self-Service important. Digital Convenient Convenient CONNECT 3 Control Simplicity 3 Simplicity FACTORS US consumers value Self-Service Locations Locations Digital Trust and Simplicity Digital 4 Simplicity Human Touch 4 Control Simplicity Human Touch Self- the most, while Payment Service, Human young millennials Convenient Digital Digital rank Digital self- 5 Simplicity Recognition 5 Human Touch Touch, Locations Payment Self-Service Immediate service as more Convenient Convenient Access important. 6 Recognition Human Touch 6 Control Control Locations Locations GROW FACTORS Convenient Digital Digital Digital 7 Recognition 7 Human Touch Recognition Locations Self-Service Payment Payment , Digital Digital Digital 8 Human Touch 8 Recognition Recognition Recognition Payment Payment Payment, Control Immediate Immediate Immediate Immediate Immediate Immediate 9 9 Access Access Access Access Access Access

Neo-Banks: Performance and New Ideas—October 2018 Source: FIS Performance Against Customer Experience (PACE) Insights 2018: UK & US Consumer 21 CONSUMER CHOICE CONSUMERS MOSTLY PREFER NEO BANKS FOR SPEED, 1 2 TRANSPARENCY AND UX

Neo banks’ ability Choice Factor Description Relative Preference to offer faster and (Core) transparent model along with their SPEED ▪ Fast and simple account opening (3–7 minutes) low-cost structure ▪ Simple form filing, direct video call 0 1 2 3 4 5 and superior UX are key factors influencing TRANSPARENCY ▪ No hidden fees, monthly charges, minimum customers’ growing balances 0 1 2 3 4 5 preference for them over traditional banks. LOWER COSTS ▪ Minimum/No fees like overdraft and monthly fees 0 1 2 3 4 5 ▪ No foreign ATM fees

USER ▪ 100% digital and mobile platform EXPERIENCE ▪ Feature-rich apps and tools 0 1 2 3 4 5

Notes:

1. The relative preference assessment is based on Finnovate’s qualitative IMPROVED analysis of individual choice factor ▪ Smart ways to help households save FINANCIAL 0 1 2 3 4 5 2. Core factors are primary attributes ▪ Spending analytics and advice influencing customers’ choice of Neo-banks WELLNESS continued… Mainstream Banks Neo-Banks: Performance and New Ideas—October 2018 Neo Banks 22 CONSUMER CHOICE NEO BANKS ALSO OFFER VALUE-ADDED SERVICES TO 1 2 ATTRACT NEW CUSTOMERS

Optichannel Choice Factor Description Relative Preference experience, (Add-on) value-added services and MICRO ▪ SMBs, gig , lower-income households, SEGMENTS next-generation women 0 1 2 3 4 5 INCLUSION customer support ▪ Socially-conscious banking/impact lending are other factors driving customers’ NEXT-GEN ▪ Chatbots, video banking, and interactive content CUSTOMER 0 1 2 3 4 5 adoption of ▪ Real-time customer service Neo-banks. SUPPORT

▪ A-la-carte model catering to lifestyle and LIFESTYLE preferences 0 1 2 3 4 5 BANKING ▪ Network of tools to help achieve financial goals

OPTICHANNEL ▪ Optimal channel-mix designed to each customer 0 1 2 3 4 5 EXPERIENCE ▪ Data integration engine for unified customer view Notes:

1. The relative preference assessment is based on Finnovate’s qualitative ▪ International payments analysis of individual choice factor VALUE-ADDED ▪ Multi-currency accounts 0 1 2 3 4 5 2. Add-on factors are secondary attributes SERVICES influencing customers’ choice of Neo-banks ▪ and gamified banking Mainstream Banks

Neo-Banks: Performance and New Ideas—October 2018 Neo Banks 23 5

Market Impact and Outlook

Neo-Banks: Performance and New Ideas—October 2018 24 NEAR-TERM IMPACT RETAIL BANKING SERVICES HAVE HIGH DISRUPTION RISK 1 2

In the near-term, The Disruption Continuum the disruption risk COMPLEX HUMAN KNOW-HOW remains significant for retail banking services which are largely transactional Corporate in nature. & Institutional Relationship Services Banking

Wealth and Asset Management

Transactional Services Retail and Basic Banking Services

STANDARD AUTOMATION continued… Neo-Banks: Performance and New Ideas—October 2018 25 NEAR-TERM IMPACT DISRUPTION IMPACT CAN BE SIGNIFICANT FOR SME 1 2 BANKING & WEALTH MGT. Disruption: Impact v. Probability Matrix The Digital banks are mastering most of the banking value HIGH Payments/Remittances chain from back- end to front-end in order to deliver Savings/Current A/C High Probability superior customer- Consumer Lending centric product based on Personal Management a lean approach, Medium asset-light and Probability platform-based model. /Wealth Mgt. Low Probability

PROBABILITYDISRUPTION OF SME Banking

LOW LOW HIGH POTENTIAL IMPACT ON BANK Neo-Banks: Performance and New Ideas—October 2018 26 STRATEGIC THREATS FULL-STACK NEO BANKS POSE BIGGER THREAT TO MAINSTREAM BANKS

Full-stack Neo Full-Stack Neo Banks FEATURES Banks are building the entire • Built on Platform model Asset-Light Platform technology stack • Have a banking license from scratch • Control most of the value chain from front-end to in-house, leveraging back-end data and analytics • Use a lean/asset-light approach for fuelling • Have their own/proprietary CBS Full Services (In-house) innovation and are • Leverage unsoiled data to gain customer employing a lean insights/offer personalized services model, thereby offering greater control and Front-End Focused Neo Banks FEATURES flexibility to respond • Do not have a banking license B2C B2B to customer needs. • Partner with a larger/established bank Targets Young People SMB Focus • CBS/tech systems are off-the-shelf or sourced externally • Control only front-end of the value chain (customer interface) • Support B2C and B2B apps Basic Banking Services Solo Entrepreneur • Target niche segments (young millennials, SMBs, Entrepreneurs)

Neo-Banks: Performance and New Ideas—October 2018 27 OUTLOOK STRATEGIC & MARKET OUTLOOK FOR NEO-BANKS

Accelerated growth Trend Current Scenario Outlook/Forecast in customer expansion, • The U.S. accounts for ~4/5th of the global • Customer base expected to grow at CAGR of innovative revenue AGGRESSIVE neo bank market in terms of customer 51% from 2017–2020. base in 2016 generating & EXPANSION • Global market to reach $356 million by 2025 • UK holds one-fifth share monetization models, increased • Most banks in a net loss-generation phase • Monetization of key services (E.g.: N26 SHIFT IN M&A activity are • Current focus on customer acquisition monetizes new users on card issuing, ATM FOCUS TO expected to catapult • Growth supported by VC funding withdrawals) PROFITABILITY digital banks into • Freemium model expected to grow the next league • Partnership strategy and co-branding • Expansion of non- income through: INNOVATIVE model • 3rd party partnerships REVENUE • Moven has teamed up with CBW Bank, TD • value added services beyond banking MODELS Bank, and NZ propositions

• Heightened consolidation among UK’s • Wider focus on boosting growth through larger challenger banks driven by: purchase of specific assets CONSOLIDATION • rising costs, increased competition, and • Falling valuations to provide additional a sluggish economy. catalyst for deal making

• Traditional full-service banks buying into • Accelerated pace of M&A, giving incumbent ACQUISITION BY new banks (E.g.: BBVA’s acquisition of banks quick time to market LARGER BRANDS Finnish neo bank Holvi and US neo bank • Product focus to lean towards Simple) entrepreneurs, SMB lending and consumer mortgages

Neo-Banks: Performance and New Ideas—October 2018 28 6

Appendix

Neo-Banks: Performance and New Ideas—October 2018 29 BLIND SPOT IBANKS: FOCUSED ON STRONG TECH & DATA MONETIZATION

iBanks have a strong technology platform Business Model and generate • Offers better and more customized services revenues from targeted marketing • Generate additional revenues from targeted marketing through data monetization through data monetization • Need to pay a partner bank Examples

• Loot (Loot.io) which caters to university students offers promotional offers, automated discounts and other personalized offers on its mobile app • Makes money through advertising • Lower banking fees for customers

Key Challenges

• Customer acquisition • Dependence on partner bank (IT/costs) • Data monetization in

Neo-Banks: Performance and New Ideas—October 2018 30 SOURCES

• Monzo, revolut and other challenger banks are shaking up the industry • UK startup bank tandem partners with personetics to deliver ai-powered everyday banking that puts customers first • UK digital challengers beating high street banks on customer satisfaction • Why big UK banks are worried about open banking • 1 million customers: inside chime’s growth strategy • Sony’s adorable new aibo comes to the US • N26 now has 1 million customers • Full-stack neobanks are taking the retail banking market to the next level • The digital disruption battlefield • How much scale does your business need? • Fintech start-up revolut grabs 2 million users and plans to launch commission-free trading service • No-fees mobile bank chime raises $70M series C, valuing its business at $500M • German challenger bank N26 reaches 1 million users on the heels of U.S. Launch • The most successful neobank is french, but it is (still) mostly unknown in the rest of • Digital neo-bank start-up loot secures £2.2m in series A round • Challenger bank tandem lands 100,000 users in just five months, sets sights on lloyds • What is lidya? • The digital disruption battlefield • Neo and challenger bank customer base to grow by 50.6%, globally, by 2020 • Finding a business model for challenger banks • Neo and challenger bank market by type of bank (neo bank and challenger bank) - global opportunity analysis and industry forecasts, 2016-2020 • The business models of banking 2.0 • CHALLENGER BANKS: LOOKING AHEAD TO EXPANSION AND EVOLUTION IN 2018 • How Many Customers Do Fintechs Really Have? • KPMG: Challengers surge ahead, but obstacles remain • Neo Banks aim to improve consumer financial health • Neo banks might destroy traditional banks or launch the next wave of growth • Neo banks - tomorrow's banking has arrived • Who wants to bank with a Digital Bank? • 2018 PACE Insights: UK consumer

Neo-Banks: Performance and New Ideas—October 2018 31 Knyvett House, Watermans Business Park The Causeway, Staines TW18 3BA www.Finnovate.com

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