According to one tally, there were around 250 neobanks in the world as of August 2022. How many might be there a year later remains to be seen.
Like their brethren in the buy now, pay later space, the past several years has seen a wave of neobanks enter the market accompanied by a seemingly never-ending hype cycle. Now, it seems as if many may not survive into the future.
Even the most well-known and established neobanks are dealing with headwinds. Varo Bank laid off around 10% of its workforce in July. Starling Bank pulled its application for a banking license in Ireland. Revolut last month saw a glut of resignations in its risk and compliance department. MoneyLion is facing investor skepticism as it burns through cash, the Financial Times reports. BNPL platforms Affirm, Klarna and Robinhood have all seen their valuations crater in recent months.
Still, it’s not all bad news. Starling, for example, despite its pullback from Ireland, posted its first annual profit, becoming part of an exclusive club of neobanks to achieve profitability. It’s clear that when the dust settles, there will be winners and losers among the current crop of digital neobanks.
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