FUTURE FINANCE

from bricks to clicks

The impact of neobanks so far
 The upswing of neobanks like Monzo, Revolut, Alipay, Wechat,
Nubank, N26 and the likes are widely considered a revolution
in retail banking all around the world. This view is underscored
by unparalleled growth numbers that make traditional retail
banks look pale. Downloading a neobank app, however, is quite
different from actually using it… let alone turning it into one’s
primary bank. Such numbers are rarely, if ever, made available.

Kantar has therefore taken the initiative to bring these insights

to the table. We have conducted an international study in 10
markets: Brazil, China, France, Germany, India, Netherlands,
Singapore, Spain, UK and US. Building on the knowledge
of our local financial services experts, we have determined
what the actual market impact of neobanks has been so far
in these markets, and thus what the ‘global’ impact is.

Here we provide unique insights, covering the actual customer

penetration, share of wallet, trustworthiness and likeability of
this new category of banks. It provides indispensable information
for incumbents and disruptors in the retail banking market.

Reg van Steen

Senior Client Director - Financial Services
Kantar

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WE’VE ALL
SEEN THE HYPE.
But how much of an
impact are neobanks really
having on the traditional
retail banking market?
This study from Kantar
is the first to provide an
international view of what
neobanks are achieving, and
to reveal the reality behind the
advertised millions of users.
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PROPORTION OF CONSUMERS BANKING WITH A NEOBANK
China 93%
India 50%
Brazil 32%
Netherlands 4%
Germany 4%
UK 3%
The term ‘neobank’ is becoming increasingly
Spain 2%
familiar as a description for retail banks without
a physical network. These are the disruptors, France 2%
the innovators, and the new kids on the block
US 2%
when compared to traditional brands that
were established in previous centuries. Singapore <1%
The Banca Monte dei Paschi di Siena in Italy can
trace its history to 1472, whereas Revolut will be 0% 20% 40% 60% 80% 100%
celebrating its fourth anniversary this summer.
Base: consumers who have at least one bank account
Together, the neobanks – Revolut, Monzo, N26,
MARKET PENETRATION
Fidor, Alipay, WeChat and the rest – can boast
hundreds of millions of app downloads worldwide. Chinese consumers are the champions of Within other more traditional banking
And counting. So what impact are they having on neobank usage, as almost everyone (93%) markets, neobank penetration averages
the retail banking markets in which they operate, with a bank account does business with one considerably less than 5%: in the USA it is
and how are traditional banks being affected? or more of the local neobanks: Alipay, WeChat only 2%, and in Singapore, less than 1%.
Our 2019 study reveals that the neobank impact
and JD Finance. Admittedly, the integration
These results show that Chinese retail banking
of payment apps in social media platforms
on the retail banking market is remarkably differs significantly from the other markets:
strong in China, India and Brazil, but remains
plays a significant role here, but this does
on average, customers make use of at least
not explain it all – as the significant level of
limited (so far) in the US, Singapore and two of the three key neobanks, Alipay, WeChat
penetration enjoyed by Alipay and JD clearly
European countries we’ve featured in this study. or JD. And an impressive 91% of Chinese
shows. India has the second-highest market
consumers with a bank account will be using
penetration, at 50%, followed by Brazil at 35%.
Alipay. This level of use is unparalleled.
PROPORTION OF CONSUMERS BANKING WITH A NEOBANK BY COUNTRY

China India Brazil Germany Netherlands UK Spain France US Singapore

Furthermore, 42% of Chinese
2Gether Bank <1%
customers consider one of
Airtel 15%
the neobanks to be their
primary bank. This is way Alipay 91%
ahead of customers in Albion Bank 1%
Brazil (9%) and India (6%) Anytime <1%
according to our findings. Atom <1%

In the other markets in our Banco Inter 11%

study, there is no comparison to BNewt 1%
be made, with just 1% (or fewer) Bunq 1%
customers using neobanks
Fidor 3% <1%
for their primary account.
Imaginbank 1%
It is no surprise, then, that JD 54%
at the time of writing, UK Knab 3%
customers are being encouraged
Marcus <1%
to have their salary paid into
Metro 2%
their Monzo account, with a
bonus of £25 if they do so. Monese <1%
Monzo 1% 1% <1%
Finally, neobanks in the three
Morning <1%
prominent markets have been
Moven 1%
able to capture a noticeably
larger share of wallet than N26 2% <1% <1% 1% 1%
elsewhere: Brazil 40%, China Next 4%
39% and India 24%. Nubank 28%
Open <1%
PayTM 46%
Revolut <1% 1% 1% <1% <1% <1%
Simple <1% 1%
Starling Bank <1% <1%
Tomorrow Bank <1%

100% 50% 5% 1% <1%

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 NEOBANK VS. TRADITIONAL BANK APP USE (OUT OF THE PAST 10 TIMES) CUSTOMER APPEAL AND TRUST

NEOBANK APP USE TRADITIONAL BANK APP USE

When it comes to being trusted But longevity could be a factor The notable difference in
China 3.4 6.6 and liked by their customers, in trust: neobanks have not customer attitudes may
neobanks in Brazil, China and been in existence for long, so explain why traditional banks
India 2.4 7.6 India have established an their proven track record is short in the Netherlands, UK, France,
Brazil equal footing with traditional compared to that of the much Germany, Spain, Singapore and
2.1 7.6
banks. The situation is different older traditional banks. And USA are not yet experiencing
US 0.4 9.6 in other countries, where for some of their customers in any major impact from
Germany traditional banks clearly put Europe and the US, neobanks’ neobanks in the retail market.
0.3 9.7
neobanks in the shade. lack of bricks-and-mortar
Netherlands 0.3 9.7 presence may also be a factor,
It is interesting, but perhaps not
France although with branch closures
0.2 9.8 surprising, to see that neobanks
continuing apace across
UK are liked more than they are
0.2 9.8 Europe this is likely to become
trusted by their own customers.
less of an issue in future.
Spain 0.1 9.9 Neobanks invest strongly in

Singapore brand building and are overt

0 10
in their efforts to deliver an
engaging, innovative and often
0 2 4 6 8 10 responsive customer experience.

Base: Bank app users

BANK APP USAGE NEOBANKS TRADITIONAL BANKS

of neobank clients On average, a neobank Brazil, China Other markets Brazil, China Other markets
Our findings showed that, on
average, two out of three retail 86% make use of a customer will use their neobank
and India studied and India studied
banking app app for 40% of interactions. In
bank customers in the study
(from any bank)​ Brazil, this is slightly higher,
markets will use a banking app
to manage their financial at 50%.
Customers‘
completely like’ 57% 28% 54% 47%
affairs, with the exception
of traditional bank So, while millions of people
of the USA, where just 25% 60% clients will use a may be downloading apps and
use a banking app.
banking app opening neobank accounts,
there’s still a long way to go
before neobanks achieve the
Customers‘
completely trust’ 53% *19% 58% 47%
numbers of transactions,
balance levels and regular use
enjoyed by traditional banks. *Minus percentage

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 1. What makes China
so different?
Since the advent of the smartphone, Chinese Customers tend to stay put, and this stability
people have embraced technology in all kinds prevents the Dutch market from being an
of innovative ways. For many consumers, it has attractive proving ground for neobank brands.
become embedded into their lifestyle, as the In Spain, where there are 10 neobanks, the
‘codeconomy’ flourishes. For example, people total market share is no greater than that of
begging on the streets are seen using QR codes the Netherlands where there are only three
and eWallets; QR codes have been seen on (one of which, N26, has less than a 1% share).
waiters’ shirts (for tipping purposes); The total number of players is currently
a significant proportion of neobank users only increasing competition and dividing
(as previously ‘unbanked’ customers) will the as-yet small overall market share.
have completely bypassed traditional banks
So will neobanks be able to copy the success of
to go straight to mobile. In comparison, the
their Chinese counterparts in the European or
Netherlands, for example, has a retail banking
American markets? It is questionable whether
market that has consolidated to such a degree
integration with social media will be the way to
that there are only four traditional banks.
do this. A disruptor like Cashapp may be gaining
ground in the US, but you still need a debit card
(and therefore a traditional bank account) to
become a customer. Neobanks will most likely
gain ground in markets where there are relatively
more unbanked and under-banked consumers.

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2. What must neobanks
do to break into the
wider retail banking
market?
In Brazil, India and China, customers tend to
use their neobank fairly often, not least because
many people do not have a traditional bank
account. In other markets we see customers
making relatively less intensive use of their
neobank, as they either signed up just to check
it out (it’s free), or because they are cherry-
picking for a particular benefit that the neobank
offers (such as free ATM use when abroad).
Brand appeal is also involved. ‘Free and easy’ isn’t
really a term associated with banking, but in the
case of neobanks, with their exceptionally user-
friendly app interfaces, this is usually the case.
They’re perceived as contemporary and innovative,
making them attractive to young people and
anyone keen to embrace a digital lifestyle.
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However, existing banks are closely following
what the neobanks are doing and are quick
to imitate app features and benefits. A good
example of this is Barclays’ promotion of their
gambling block; which allows customers to
block payments to certain categories of a
retailer, such as gambling services in a bid to
help vulnerable customers, was adopted just
months after Monzo introduced this feature.
Another example is the Dutch neobank Bunq, who
introduced a P2P instant money transfer in early
2016, which the traditional banks started copying
within a matter of months. This means many
consumers could be excused for adopting a ‘wait
and see’ approach before committing to change.
Generally speaking, although bank account Neobanks could use some help when it comes
switching rates are rising very slightly, they run to growing their share beyond the un(der)
at only a couple of percentage points or less banked. It is all about further improving and
in Europe and the US. Even when incentivised, innovating their portfolio. But how should
people are reluctant to change their primary they go about this? Kantar offers a range of
bank, although they may still be keen to give products in supporting innovation from our
a neobank a try as a secondary account. Opportunity Identification tool to our Idea
Optimisation platform, both of which help
For neobanks to grow not just their client numbers
brands identify and optimise their portfolios.
but also their share of electronic wallet, it is
important that they extend their portfolio more
widely. For as long as customers see them as one-
trick ponies (regardless of how adept they may be
at doing that one thing), neobanks are limiting
their potential for increasing market share. To put
it bluntly: relying only on P2P payment services
alone will not be enough for neobanks to achieve
and sustain growth over the longer term.
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 3. So traditional banks
needn’t worry, then?
Far from it – the low penetration of neobanks
in these European countries, Singapore and
the US should not be a case for complacency.
The trends seen in Brazil, China and India
could extend into other markets, and future
customers everywhere are likely to engage with
the user-friendly approach of neobanks.
The market is now all about growing share of
electronic wallet, and taking advantage of
delivering an excellent customer experience,
especially in the markets and disciplines where
some traditional banks may not be keeping pace.
Inevitably, any retail bank that is lagging
behind in digital transformation will already
be feeling some pain. Now they stand to lose
customers on two fronts: to the neobanks
themselves, and also to those traditional
banks which are truly invested in delivering
an enhanced digital customer experience.
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Both traditional banks and neobanks need
to determine how to position themselves
in the dynamic retail banking market, as
consumers increasingly have a wider array of
financial services suppliers to choose from.
This is not just about functional needs but
also, in large part emotions. Irresistible
brands have a magnetic appeal that
evokes in the moment, powerful consumer
desires. It makes choosing them inevitable
and competing with them impossible.
Kantar’s unique NeedScope model and tools,
unlock the layers of needs in order to unveil
the position of a bank and what is needed to
obtain a stronger position for the future whilst
helping to build an irresistible brand that drives
a strategic and competitive advantage.
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Next steps for
banking brands
At Kantar, we can help you build your user base and increase engagement amongst your customers.
We can also help you build a profitable, sustainable business.

BUILD YOUR USER BASE BUILD A PROFITABLE,

AND INCREASE ENGAGEMENT SUSTAINABLE BUSINESS

SEGMENTATION & TARGETING CHARACTER DEVELOPMENT BRAND PURPOSE & INNOVATION BUILD IRRESISTIBLE
POSITIONING BRANDS

There is a multitude of people interested While using clear language is important, We can help you establish Consumers appreciate the There are many popular
in neobanks, it’s not just millennials. some feel being too light-hearted downplays a clear brand purpose and regular functional innovation brands, but only a few
Segmenting consumers will help you to the importance of money, leading some positioning. The market is taking place, with app have the magnetic power
understand the different types of people customers to feel uncomfortable, and other, crowded, with consumers updates based on customer of irresistibility. Irresistible
that can be targeted to increase user older consumers to feel alienated. We can struggling to understand the feedback and tensions. But brands evoke a powerful desire
numbers and their level of engagement. help you hit the right balance between differences between brands. many of these upgrades are that makes choosing them
Speak to us about our segmentation tools. accessible and serious, young and grown-up. You need to have a clear easily copied, both by other inevitable and competing with
point of view on what you neobanks and by the “legacy” them impossible. Irresistibility
stand for to help you remain brands. By understanding drives real strategic and
distinctive in an increasingly needs (both met and economic advantage. At the
crowded market place. unmet) across existing heart of irresistibility is a deep
and potential customers, understanding of consumer
we can help you to build needs including the underlying
sustainable differentiation emotive needs driving choice.
with a targeted mix of That’s where Kantar can help.
product, service, experience
and brand innovation.

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NOTES
BACKGROUND ON THE KANTAR STUDY: WHAT NEXT?

From bricks to clicks: To find out more about the details of this
The impact of neobanks so far study,and how we can help please contact:

Fieldwork for this study was conducted in June Reg van Steen
2019. We conducted online interviews with Senior Client Director- Financial Services
Reg.van.Steen@kantar.com
3,000 consumers that have at least one bank
+31 (0) 630 830 07
account. We interviewed 300 consumers in each
of the following markets: the US, Brazil, UK, or email us at:
Financialservicesteam@kantar.com
Netherlands, Germany, France, Spain, India,
Singapore and China. Unbanked and offline www.kantar.com
customers were not included in this study.