Neobanks are still looking for their business model

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France has more than 500 Fintech startups, a figure that shows a bubble of entrepreneurship but does not yet translate into financial success for the vast majority of these companies.
Indeed, more than 50% of these financial startups have actually made less than 300,000 euros in annual revenue, according to a study by Exton Consulting, which was deciphered at the end of 2018 by La Tribune. If we focus on banking services, despite some success stories, most NeoBanks are still looking for a solid business model, and do not hesitate to expand their B2C customer target to B2B to find new sources of revenue. . Let’s go back to the history of these neo-barbarians and their situation in France.
How old are the neo-bobs?
In October 2018, the Supervisory and Prudential Supervisory Authority (ACPR – integrated with the Banque de France) had questioned 12 of these banks and online and neo-banques to better understand their business model ( complete study ). The occasion also a reminder on the history of the development of NeoBanks in France and the strengths of their different business models.
The first wave of neo-banking dates back to the 2000s , with Banque COFEVI in 1997, ING Direct in 2000, Fortuneo in 2000 and Boursorama in 2002. These players mainly targeted urban individuals who were wealthy and active in the management of their assets.The second wave of the 2010s came in response to the structuring of the online banking market, with the launch of BforBank by the Crédit Agricole Group in 2009, and Hello Bank by BNP Paribas in 2013.The third generation of these new bankers is based on a “phygital” model that combines remote relationships (telephone, internet, mobile) and pre-existing physical distribution networks, capable of attracting new customers and building loyalty. For example, the Nickel Account launched in 2013 in partnership with tobacconists, the C-Zam account proposed by Carrefour Banque, or Orange Bank with the network of Orange and then Groupama / Gan stores.The fourth wave of these neobanks is driven by natively mobile offers focused on payment services. Like the British Revolut, since 2015 in France and the German N26 Bank since 2017 . These players aim for an international presence and base their growth on the virality of almost free offers.
Halfway between the 3 rd and 4 th generation banks, there are also my French Bank , a subsidiary of La Banque Postale, which will be officially launched July 22, 2019 after being authorized as a credit institution by the European Central Bank November 24, 2017. Presented to professionals last May, this new bank wants to be “100% mobile”, will be accessible without income conditions and will integrate community and solidarity services, from 2 Euros per month. Great strength of this new entrant among the neo-buccaneers, a network of 15,000 points of sale La Poste throughout the territory, as recalled by the specialized site Cbanque who has already passed this neobanque comb.
More market shares, but low net banking income
Focused on the offer offered to individuals, this ACPR study showed that 6.5% of French people today were Neobanque clients and above all a third of client conquests (1.3 million clients) had been realized. by these new players in 2017. But it also showed that, with a few rare exceptions, these new players had not managed to achieve positive results in 2017.
Conquering these customers involves high marketing and investment spending, especially for fraud control and trade security, investments that traditional banks can absorb on all their activities on an international scale. And these customers are not necessarily profitable! Indeed, the net banking income (GNP) measured by the ACPR was on average 7 institutions at 138 euros per year and per customer (with large disparities between banks). In fact, 20% of customers would account for 80% of the revenues of these neobanks,
The transhumance of neobanks from B2C to B2B
For neobanks, grass looks greener and margins more generous in the B2B market. Boursorama has launched an offer for individual entrepreneurs and autoentrepreneurs, ING Direct a business loan for SMEs, and Revolut targets “freelancers”.
Other diversifications are possible, such as the approach of Ditto Bank (British Travelex) with Ditto Services, a technology platform for digital banking services , which will be used by banks and third parties to provide their services under their own brand .

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