Some of Europe’s top challengers are dealing with a drop of digital downloads in recent months. This signs that the COVID crisis could mean a huge threat to them.
The big four: Monzo, Revolut, Starling, and N26 have their growth rate drop by between 18% and 36% in their native markets, according to an analysis by Priori Data commissioned by Sifted.
Previously, the challenger banks saw lockdown as a huge opportunity. With branches of traditional banks being closed, it was expected that people would tend to turn to companies that specialize in online banking as the challengers do.
These fluctuations are normal for digital banks. However last month showed a serious drop in new downloads compared to February and from the same time in 2019 (when the growth rate was positive across the board).
With that, some smaller neobanks like BNext have reported the drop as well.
But there is no reason to jump to some final conclusions. With regard to the graph, these challengers have more likely stopped thriving as fast as they were before the crisis. Most startups were also forced to cut their marketing expenses which is going to affect the number of downloads of their apps as well.
“The thesis around digital behaviour has long been that convenience trumps trust and security. But we’ll need to ask now if that is still the case,” Northzone’s Jeppe Zink told Sifted
“I imagine they [neo-banks] will lie low this year. They’ll want to take 2020 out of the calendar.”
Unlike in the US where local neo-bank Chime says claims a record day of signups this month, they claim a connection to their approval to distribute federal stimulus packages. See more about this in the link below.
Read also: Chime pilots $1,200 instant stimulus in forward
The drop of downloads in Europe is unexpected. Digital banks seem to have a disadvantage since their accounts are mostly ‘spending’ accounts and for example, Revolut’s premium service was mostly focused on benefits for travelers which is not as compelling since people essentially don’t travel.
Source: https://sifted.eu/articles/digital-banks-growth-corona/
