Published by Jessica Weisman-Pitts
Posted on July 20, 2023
4 min readLast updated: February 1, 2026
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By Andrew Grevett, co-founder and CEO of Market Dynamics
Neobanks have been one of the biggest disruptors of banking and financial services over the past 10 years. Offering a far more seamless digital experience than the traditional high street bank, the more established ones have already attracted tens of millions of customers.
The key benefits are clear: they provide a much faster, and more secure and efficient way of banking than ever before. And as people become increasingly familiar with the technology, so adoption is becoming more widespread.
As neobanks have sought to grow at a rapid rate, so they have gone primarily after customer acquisition and retention, and market penetration. However, as they have done so, many have expanded almost too quickly, spreading themselves too thin.
Some have missed key new trends that could impact their initial product or innovation, while others have tried to open as many accounts as possible in a bid to win new customers, without first working out how to make them profitable. The end result is that the overwhelming majority have failed to make a profit, with only less than five percent breaking even, a report by Simon-Kucher & Partners has found.
In order to reverse this loss-making trend, neobanks must first look at what value-added services they can sell to the customer. An obvious one is financial trading, which has peaked in popularity over the last few years, particularly during the Covid-19 lockdown, when people were stuck at home and looking to invest the money they had saved somewhere.
It’s a natural fit, considering neobanks already have access to huge amounts of customer data that they have built up over a sustained period of time. This provides them with rich insight into their customers’ spending patterns and behaviours, as well as their current finances, and, thus, be able to offer them a customised trading solution that fulfills their requirements.
Some digital banks have already made big strides in establishing their trading services. Revolut, for example, launched its commission-free stock trading platform in August 2019.
The bank, which calls itself the ‘financial super app’, is reaping the benefits of offering these additional services, reporting its first full-year profit in 2021. More than half of its revenues stemmed from foreign exchange and wealth services, and, subsequently, it has made the addition of new services a priority moving forward.
But the fact of the matter is that they are in the minority, as most don’t yet offer such a product. Even those that do provide it are limited, with half of them only offering one financial instrument.
That’s because, in the main, setting up the service is highly complex. First, they have to develop the right workflows, logic and financial infrastructure. Then, they need to secure the necessary regulatory licensing to remain compliant.
But by engaging with a fintech startup, neobanks can overcome this problem. It’s a trend that has already started, with 59% of neobanks choosing to partner with an investing-as-a-service provider to launch new offerings, according to our recent study.
With many neobanks now approaching maturity, so they have some big decisions that will determine their future direction. To stay on the same growth trajectory and remain competitive, they must implement long-term strategies that ensure sustainability and profitability moving forward.
To achieve this, they need to harness the power of technology. But it’s not just about using it to provide the customer with a seamless journey – it’s also about addressing critical problems that they may face.
To achieve profitability, neobanks need to keep converting customers. Technology enables them to do this by providing a truly personalised experience.
If the customer has had a good experience, they are more likely to remain loyal and continue to bank there. They will also be a greater advocate of using their products and services.
Longer-term, that ensures less churn and, therefore, higher revenue growth, translating into better profit margins. Moving forward, neobanks need to ensure that they are fully leveraging technology and partnering with fintechs to provide financial trading services, in order to maintain these profits.
About Andrew Grevett:
Market Dynamics unlocks systematic trading for retail traders, simplifying a formerly complex process. An intuitive drag and drop interface makes it easy for traders of all levels of technical expertise, to quickly transform their ideas into fully automated trading strategies without the need for any coding knowledge whatsoever.
A neobank is a type of digital bank that operates without physical branches, offering online banking services through mobile apps and websites.
Financial trading services allow customers to buy and sell financial instruments like stocks, bonds, and currencies, often facilitated through online platforms.
Customer acquisition refers to the strategies and processes used by banks to attract new customers and grow their client base.
Market penetration is the strategy of increasing a bank's share of existing markets, often by attracting more customers or increasing sales to current customers.
A fintech startup is a new company that uses technology to provide financial services, often aiming to improve or disrupt traditional banking processes.
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