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How financial trading services can boost neobank profitability

Neobanks have burst onto the scene in the last decade. Targeting rapid growth, market penetration and new customers, they have shaken up the banking industry, taking with them tens of millions of customers who have been drawn in by their smart digital solutions.

Providing a far more efficient, secure and quicker service than traditional banks, they are the future of banking. As the technology continues to evolve, so does their capability to provide a host of new services that will improve the customer’s banking experience immeasurably.

The problem, however, is that many neobanks have grown too fast and too far, spreading themselves too thinly across the geographies they serve. Some have simply tried to open as many new accounts as possible, without a moment’s thought as to how they can deliver a profit. Others have come unstuck because they didn’t consider emerging trends that may affect them when they put together their initial product.

The bottom line is that the vast majority of neobanks have struggled to turn a profit. Indeed, less than five percent have broken even, a study by Simon-Kucher & Partners has revealed.

Trading service platforms

So, what do they need to do to move out of the red and into profit? The answer comes in the form of financial services trading.

Neobanks already have unique knowledge and insight of customers’ spending habits and financial situations through the vast amounts of data that they have gathered on them over many years. Therefore, they are perfectly placed to provide them with a bespoke trading platform based on their needs and desires.

Neobanks such as Revolout are already doing this. The self-styled ‘financial super app’ launched its commission-free stock trading platform in August 2019 and others have followed suit.

Providers in the minority

But they are only a small number so far. The majority don’t have such offerings. And those that do are restricted, with half only giving access to one financial instrument.

That’s because they are extremely complex to set up. Digital banks have to put in place the financial infrastructure, logic and workflows, as well as seeking regulatory licensing to stay compliant.

Working in partnership

Despite all this, there is help at hand. One solution is for neobanks to partner with fintech startups that provide trading services to deliver their own offering. Many have already gone down this route, as reflected in our recent study, which found that 59% of neobanks had teamed up with an investing-as-a-service provider to launch new products.

Providing new services is the key to neobanks ensuring profitability. Revolut, for one, has made such an addition a priority., following the success of its first full-year profit in 2021, where more than half of its revenues came from foreign exchange and wealth services.

Maintaining growth

Now is a critical moment for many neobanks that are reaching maturity. They need to introduce new strategies for profitability and sustainability that will maintain their growth and competitive advantage.

But these strategies can only be delivered effectively through the use of technology. Technology enables neobanks to get to the heart of the matter and address customers’ pain points, while ensuring that they continue to receive a seamless experience.

Harnessing technology

Ultimately, what neobanks want is more customers and less churn. That means greater revenues and, thus, higher profit margins.

To achieve this, they need to convert customers by giving them a highly-personalised service that makes them want to use their services more often and advocate their offering. This is enabled through the use of digital tools and services.

Providing financial trading services adds merely another string to neobanks’ bow. If they can deliver it well, they can drive profit and greater growth.


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Andrew Grevett

Andrew Grevett

CEO and Co-founder

Market Dynamics

Member since

11 Jul 2023



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