Top 20 Neo-Banks of 2020
Updated: Feb 8, 2021
The Top 20 Neo-banks of 2020 research aims to highlight the exponential momentum in the neo-banking space through the most promising independent neo-banks across the world.
For the purpose of this research, we have defined 'Independent Neo-Banks' as digital banking startups with independent ownership, i.e. they are not a subsidiary of an existing enterprise such as incumbent financial institutions, e-commerce firms, telcos, social media firms etc.
The study ranks the neo-banks on the basis of valuation and compares them across various parameters such as user base, funding, investors and more.
Note: The data pertaining to this study is limited up to December 2020 and may not reflect recent changes in data points such as valuation, funding and user base numbers, etc.
Top 20 Most Valued Neo-banks
Valuation data has been taken from publicly available sources such as press releases, and estimations from dealroom.co, FintechLabs, etc.
The neo-bank phenomenon continues to go from strength to strength amid the coronavirus-fueled digital acceleration in 2020.
The Usual ✅ Suspects:
The top 2 Neo-banks on the list are Chime from the US and NuBank from Brazil.
The US and the EU (the UK included) contribute the maximum number of neo-banks to the list, 7 each.
The Unusual 😱 Suspects:
Tinkoff, a Russian Challenger Bank, takes the #3 spot in the rankings. Tinkoff is a true unique-orn on the list as it not just holds a billion $ valuation but is also profitable (Since 2009) and public (IPO’ed in 2013).
Latin America contributes 4 banks NuBank, C6Bank, Neon and Uala to this list, coming from Brazil and Argentina.
C6Bank is the fastest to join the list, taking just ~2 years to make it to the #top20 list.
Oaknorth and Judo Bank are the only SME-focussed neo-banks on the list.
Anticipating more 🚀 in the Neo-banking space in 2021.
Ranked As Per User Base
The Mega-Neobanks 🐋
Nubank takes the cake 🍰with a sizable 30 MM users, which it has doubled from 15 MM in 2019.
Revolut, currently at 13 MM, added 5 MM users in the past year, while Tinkoff (12MM) & Chime (10MM) have added 2 MM & 3.5 MM users, respectively, to reach their current standing.
The Next Growth Frontier 🚀
New Segment: Nubank, Neon, Monzo, Revolut have introduced business banking products in recent years with a specific focus on micro-#entrepreneurs & freelancers.
New Products: Nubank & Starling Bank bring investment with the acquisition of Easynvest and partnership with Nutmeg respectively.
New Regions: Nubank expands to Mexico & Colombia, Revolut is on a global expansion spree and Starling has plans for Ireland & the EU in 2021.
New Niches: AspirationBank strives for green financial services 🌱, while @Uala aims for #financialinclusion 🌐. @Varo & @current both have a GenZ focus🤳🏼, while @dave presents a holistic approach to personal finance for the masses. 👩🏼🤝👨🏽
Ranked As Per Funding
Funding amounts for Judo Bank have been converted to USD from AUD.
Neobank fundraising bandwagon 💵
These Top 20 Independent #Neobanks have raised total funding of $15.2 Billion in the last decade.
Top 3 Neo-Banks by Funding 📊
Sofi, Judo Bank and Ttinkoff raised a total of $5.8 Billion since its launch.
Sofi topped the chart with total funding of $2.5 Billion, Judo came second with a total of $1.7 Billion, raising $215 MM in 2020 and Tinkoff had a total of $1.6 Billion in 2012 and listed in London Stock Exchange in 2013 with a $1.1 Billion IPO.
Geographic Diversity 🌐
Top US #neobanks have raised total funding of $5.3 Billion: Sofi, Chime, Varo, Moneylion, Upgrade, Aspiration, Current, and Dave.
Top UK neo-banks have raised total funding of $3.5 Billion which includes @oaknorth, Revolut, Atom Bank, Monzo and Starling Bank.
Nubank, Neon, C6 and Uala have raised a total of $2.3 Billion in LATAM.
Top Investors of the Neo-Banks
It takes money to change money - That’s the mantra of Ribbit Capital, one of the leading investors in the Neo-banking space. We explore the funding powerhouses partnering with the Top 20 independent #Neobanks, who have managed to raise a mind-boggling 🤯 amount of over $2.5 billion just in 2020:
A Global Community 🌐
Like the neo-banks, their #investors are widespread around the world. The most prominent investors in the top 20 neo-banks are from the US 🇺🇸 (7), the UK🇬🇧 (3) and China🇨🇳 (2).
The Investors 🤑
Top 5 investors which include Ribbit Capital, Tencent Holdings, GoldmanSachs, Future Fifty and Softbank have 3 or more top 20 neo-banks in their portfolios.
Nubank, Uala, Chime and Revolut emerge as the most recurring neo-banks on the portfolios of these investors.
Top 5 Funding Rounds 💰
Chime, the #1 on our Top20 list, was valued at $5.8B in December 2019. With the biggest neo-bank #funding round of the year ($534M), it more than doubled its valuation to $14.5 Bn in 2020.
Brazilian neo-banks Nubank and Neon, each raised $300M in 2020. Nubank retained its decacorn valuation from 2019, while Neon finally crossed into #unicorn territory.
Aussie SME neo-bank Judo Bank had quite an eventful 2020 with two equity funding rounds, first of which valued it at $1B in May, followed by another $215M round in December which boosted its #valuation to $1.6B.
Founding Team Trends
55 founders of Top 20 Most Valued Independent Neo-banks have been considered for the study. It includes founders who are no longer a part of the company (Ex.: Companies like SoFi, Varo, Monzo, etc.)
Previous industry experience before starting up respective neo-banks is subjective of the previous company segmentation and type of role. The calculations are supported by data from publicly available LinkedIn profiles of founders/co-founders.
Apart from the product-market fit and launch timing, the founding team is considered as one of the key constituents to a startup's success. What best place to look for #empirical evidence of the founding teams' traits: The top 20 Independent Neo-banks.
Here's our analysis of the hustlers, the growth-hackers, the visionaries behind the success of top neo-banks.
Starting-up Strong 💪🏼
Some founders passported their domain knowledge from incumbent financial institutions to neo-banks - such as founders of Judo Bank (from National Australia Bank), Starling Bank (from Allied Irish Bank), C6 Bank (from BTG Pactual)
Upgrade was the brainchild of the founders & employees of Lending Club, with its former CEO Renaud Laplanche at the helm.
The Stereotype Breakers 💥
According to a 2018 Boston Consulting Group study, female-run startups were found to generate more revenues per dollar raised as compared to male-run startups.
It's often seen that new fintech ideas emerge from places completely unrelated to finance. The founders of the US neo-bank Dave are the perfect example - all of them from non-finance domains like Design, Tech and Internet Platforms.
Another such example is Joe Sanberg of Aspiration Bank who brings his social entrepreneurship experience to the green bank.
This lot fairly inspires us, and we can only imagine the multifold inspiration they bring to the fintech community. More power to them all 🙌🏼
The regulatory cogs that run behind the neo-banking scenes determine a lot about the business model of the new-age banks.
Licensed to Challenge:
The UK led with the challenger bank licensing boom from 2014 onwards. Atom Bank was the very first digital-only bank to be granted a full banking license in 2015.
Since then regulators have given out 22 fresh licenses.
Banks at the Back:
In the Americas, where there was all of the fintech boom, but not so many regulatory reforms, the Sponsor Bank model emerged as a key play.
European challengers like Revolut, Monzo & N26 that expanded to the US followed in similar footsteps by partnering with local banks.
Some Recent Frenzy:
Varo was crowned the first-ever fintech company to gain a banking charter in the US, soon followed by SoFi getting conditional approval for its banking charter.
Revolut has applied for a UK banking license as well as a bank charter in the state of California. In 2020, it also started utilizing its Lithuanian Specialized Banking License to start offering credit products
N26 has secured a Direct Credit Company license in Brazil to broaden its western foray.
With a new year ahead and regulators warming up to fintech, there are sure to be some interesting developments in the space.
Time To Unicorn
Ask a startup fellow what their favourite animal is and the answer is sure to be #Unicorn🦄.
We're kidding 😂
This infographic presents a look at the time taken by the Top 20 Most Valued Independent #Neobanks to reach the coveted unicorn status. 🏆
Stats & Facts 🧮
The median time taken by the Top 20 Neo-banks to reach unicorn valuation stands at 4.4 years.
In comparison, the median time taken by global #fintech unicorns as of H1 2020 stood at 5.3 years.
The Unicorn Express 🚂
OakNorth, C6 Bank and Dave are the fastest of the lot to reach this milestone in under 3 years.
Dave set some heads turning by being crowned unicorn with only $73M in the bag, but a promising user base of more than 4 million.
The Class of 2020 🏛
Judo Bank & Neon both clocked in 2 funding rounds in the pandemic-ridden year, raising $362M and $300M respectively.
One of the primary characteristics of what makes a neo-bank 'neo' is their technology infrastructure. Core Banking & middleware providers like Banking-as-a-Service & Card processors are two of the most important tech stack components.
Here’s a look at the technology choices of the Top 20 Most Valued Independent #Neobanks:
✍️ Build From Scratch
Wave 1 Digital Challenger banks such as Tinkoff, Nubank, Revolut, Monzo etc. chose to build their own tech stack to ensure they keep the focus on customer experience without any technical debt.
Starling Bank has spent over £20 million in developing its banking technologies, which it now monetises by offering BaaS to other financial institutions.
📦 Procure Off-the-shelf
4th generation cloud-native core banking provider Mambu is a popular choice for challenger banks including N26, OakNorth and Uala.
Atom Bank has switched over from FIS Profile to a new-age core platform Thought Machine.
Temenos, a traditional core provider, offers Transact platform (earlier known as T24) to multiple neo-banks.
🤝 Partner with BaaS Providers & Processors
BaaS provider Galileo powers 55% of the Top 20 Neo-banks - these include American neo-banks as well as European neo-banks operating in the States. Galileo has also enabled Uala's expansion into Mexico.