This report provides comprehensive and current information and analysis of the neobanks market including neobanks market size, anticipated market forecast, relevant market segmentation, and industry trends for the neobanks market in the US.

Current market landscape

A neobank is a financial institution that has only been in operation for a short time and offers banking services exclusively online. Examples of popular neobanks include Chime, SoFi, Revolut, Current and Varo.

For most of these neobanks, their value propositions center on a fee-free banking experience, competitive rates, an intuitive mobile app, as well as customer-centric offerings such as money management tools and early paycheck access. As such, neobanks have been able to capture the affinity of many, with nearly 85% of neobank customers saying that they are satisfied with their providers. For neobanks, there is still room to capture non-adopters, with nearly 40% of consumers willing to open an account with a neobank. For these consumers, better prices, rewards/incentives, as well as a user-friendly mobile app are the main motivators that would push them into opening an account with a neobank. The types of accounts consumers are willing to open with a neobank are mainly the entry-level products, with over 50% interested in getting a checking or savings account with a neobank, while nearly half would be interested in a credit card offering as well.

Market share and key industry trends

  • The majority of consumers solely bank with a traditional bank, while 21% of consumers use both a traditional bank and a neobank.
  • Price and incentives are the two main motivators that would get consumers to open an account with a neobank, while 44% are outright not interested in using a neobank.
  • Interest is high among all generations, with 69% of Gen Zs interested in getting a checking account from a neobank, while 58% of Boomers are interested in savings accounts.

Future market trends in neobanks

While neobanks have been able to capture market share from traditional players, one of the biggest challenges facing this sector is the lack of trust and brand awareness that neobanks have compared to traditional FIs, with 46% of consumers saying that they would not open a neobank account due to them not trusting that their money will be safe. A further 62% of consumers are also more trusting of traditional banks than neobanks when it comes to the safety of their personal data. As more players continue expanding their financial services footprint (eg Apple), many neobanks will have an even more difficult road ahead given the higher trust levels consumers have in these incumbents. Neobanks have shown that they are able to compete on price; in order to sustain the loyalty of their customers, they must find ways to cater to the growing financial needs of their customers, as well as seek diverse revenue streams to ensure their long-term survivability amid a heated market.

Read on to discover more about the neobanks consumer market, read our Switching in Financial Services – US – 2022 report, or take a look at our other Financial Services research reports.

Quickly understand

  • Neobank adoption and satisfaction.
  • Motivators for using a neobank.
  • What would push non-adopters into using a neobank.
  • Products consumers are interested in opening with a neobank.
  • Attitudes toward neobanks.

Covered in this neobank market report

Brands include: Current, Chime, SoFi, Upgrade, Facebook, Monzo, Bank of America, Citibank, Discover, Chase, Ally.

Expert analysis from a specialist in the field

This report, written by Amr Hamdi, a leading analyst in the Finance sector, delivers in-depth commentary and analysis to neobank market strategy, to highlight current trends and add expert context to the numbers.

Neobanks have a tough road to navigate going into next year. Recessionary fears only loom larger, which will have adverse effects on the profitability and survivability of many neobanks. Growing competitive threats from industry behemoths such as Apple and Amazon continue to loom as well, as these incumbents continue to grow their financial services footprint and seek to steal market share. While neobanks have shown that they can compete with traditional FIs at their game, the winners in this space will ultimately be the ones that look to diversify their product offerings in order to remain agile and aligned with their young customers’ evolving financial needs.
Amr Hamdi, Finance Analyst
Amr Hamdi
Finance Analyst

Table of Contents

  1. Overview

    • What you need to know
      • This Report looks at the following areas
        • Market context
        • Executive Summary

            • Top takeaways
              • Usage of both traditional and neobanks is split among financially healthy and struggling consumers
                • Figure 1: Traditional bank vs neobank adoption, by financial situation, 2022
                • Figure 2: Chime Checking Account fees vs traditional banks, 2022
              • The types of accounts consumers would open with a neobank differ by generation
                • Figure 3: SoFi credit card email, 2022
                • Figure 4: Accounts consumers would open with a neobank, by generation, 2022
              • Older generations are less interested in using a neobank but there is still opportunity to capture share among Gen Xers
                • Figure 5: Interest in opening an account with a neobank, by generation, 2022
                • Figure 6: Varo savings APY, 2022
              • Market overview
                • Figure 7: Neobanks outlook, 2022-27
              • Opportunities and challenges
                • Competitive threats will only loom larger for neobanks
                  • Figure 8: SoFi life insurance, 2022
                • Reaping higher trust and loyalty through a community-focused approach
                  • Figure 9: Majority website, 2022
                  • Figure 10: Daylight website, 2022
                • Key consumer insights
                  • 66% of consumers only bank with a traditional FI; Millennials most likely to use a combination of both a traditional and neobank
                    • Figure 11: Traditional bank vs neobank adoptions, by generation, 2022
                  • Traditional banks and neobanks match closely on satisfaction
                    • Figure 12: Satisfaction with traditional banks and neobanks, 2022
                • Understanding Neobanks

                  • What is a neobank?
                    • Figure 13: Chime partner bank, 2022
                  • How do neobanks offer fee-free products?
                    • Figure 14: Current paid Facebook ad, 2022
                  • How do neobanks provide customer service?
                    • How do neobanks make money?
                      • Figure 15: Traditional bank vs neobank, 2022
                  • Market Factors

                    • Current economic outlook spells trouble for many neobanks
                      • Chime, among other neobanks, announces layoffs amid many cost-cutting measures
                      • Competitive Strategies and Market Opportunities

                        • Upgrade launches new high-yield savings account boasting one of the highest APY rates in the industry
                          • Figure 16: Upgrade Premier Savings account, 2022
                        • SoFi ramps up personal loan messaging
                          • Figure 17: SoFi personal loan paid Facebook ad, 2022
                        • Chime continued to promote its secured credit card, highlighting the lack of fees and interest
                          • Figure 18: Chime Credit Builder paid Facebook ad, 2022
                        • Subscription bundles present a way for neobanks to diversify their revenue sources
                          • Figure 19: Monzo premium account, 2022
                      • The Neobank Consumer – Fast Facts

                        • Reasons for Opening Neobank Account

                          • A convenient mobile app and affordability are the two main neobank selling points
                            • Figure 20: Reasons for opening a neobank account, 2022
                          • Older consumers more likely to bank with a neobank due to better prices, while younger are more swayed by the mobile experience
                            • Figure 21: Reasons for opening a neobank account, by age, 2022
                        • Motivators to Using a Neobank

                          • Price and incentives the two main motivators to getting consumers to open a neobank account
                            • Figure 22: SoFi credit monitoring reward, 2022
                            • Figure 23: Motivators that would get consumers to open a neobank account, 2022
                        • Interest in Financial Accounts with Neobanks

                          • Savings and checking accounts are the two products consumers are most willing to open with a neobank
                            • Figure 24: Types of accounts consumers would open with a neobank, 2022
                        • Most Valuable Banking Features

                          • Direct deposit, fee-free overdraft protection are the two most valuable banking features
                            • Figure 25: Most valuable banking features, 2022
                          • Multiculturals place a higher importance on fee-free overdraft protection
                            • Figure 26: Importance of fee-free overdraft protection, by race and ethnicity, 2022
                        • Attitudes toward Neobanks

                          • Trust in traditional banks trumps that of neobanks
                            • Figure 27: Trust in traditional banks vs neobanks, by generation, 2022
                          • Seven in 10 consumers are more engaged with their finances after using a neobank
                            • Figure 28: Engagement with finances due to using a neobank, by age, 2022
                          • 73% of consumers predict lifelong relationships with their neobank
                            • Figure 29: Loyalty toward traditional banks and neobanks, by age, 2022
                        • Appendix – Data Sources and Abbreviations

                          • Data sources
                            • Consumer survey data
                              • Marketing creative
                                • Abbreviations and terms
                                  • Abbreviations
                                    • Terms

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