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Inteliace Research at Inteliace Researchhttp://www.inteliace.com/en/00171_01_Payment_apps_and_systems_in_Europe_2019.html http://www.inteliace.com/en/00171_02_Bank_challengers_in_Europe_2019.htmlAntworten -
Inteliace Research at Inteliace ResearchFunding & Valuation Challenger banks are increasingly attracting attention of investors including VC, crowdfunding platforms etc. In fact, according to industry representatives, the funding that investors are willing to pledge significantly exceeds the needs of quality projects currently available within the sector. As a consequence, owners of highly promising projects have the comfort of picking suitable investors and are able to consider multiple commercial and non-commercial aspects when selecting the right partner. Nevertheless, and fortunately for investors, funding needs of startups are growing inline with their business – which means very fast. As a consequence, more and more capital can be productively employed in new ventures and the herd of unicorns is growing. A good illustration of the recent pace of growth in financing of financial start-ups is the fact that major 7 European bank challengers have cumulatively received over US$ 1.8 billion in funding from investors through mid-January 2019. At the same time, the combined valuation of target projects (post-money valuation) topped US$ 6.7 billion, which implies the average valuation multiple over funding at ca. 3.7 times. Customer acquisition A brief look at challenger banks & fintech companies in Europe reveals an exceptional growth in their customer base during last few years. While the total number of customers for the sample of 7 key players was just 0.2 million in 2015, it surged to over 8 million in 2018. Attracting as many customers as possible is the key element in the current strategy of major financial startups, even despite the fact that their business models are not ultimately defined and many products are missing. The rationale is to win clients early and to divide markets faster than competitors. Nevertheless, the strategy of client acquisition would not work that well if challengers limited themselves just to few established Western European countries. On the contrary, the expansion in multiple markets at the same time, including less penetrated CEE and Balkan countries is an important element to boost the client base. So far, this was particularly true for e.g. Revolut which managed to acquire over 100k and 300k customers in Romania and Poland respectively through 2018. What do they offer ? In order to win customers, bank challengers pursue very different strategies in terms of product and pricing, typically attacking the areas where incumbents fail the most. However, it is also noticeable that most challengers start with one or few “hook” products, usually priced significantly below the market and then they build a strong case around it. For instance, Revolut focused on payments, transfers and fx exchange; N26 started with a free C/A with overdraft facility and deposits sourced from 3rd party partners; Monese focused on underserved groups with their free account available across entire Europe, and finally Atom or Tandem aspired to be product specialists in savings and mortgages, targeting more affluent clients in their home markets. The Monetization For most challengers, establishing a solid monetization framework is still far away. The first step in this direction is the introduction of premium / super-premium offers (e.g. Black and Metal tiers at N26) or charging of optional speed or size-related fees on transfers and fx exchange (Revolut). This helps in segmenting client portfolio and it allows to generate extra revenue from premium client groups. Nevertheless, most players are still struggling in making enough money to offset the costs as low- or zero-fees are central messages in their marketing campaigns. Future outlook The growth of banking challengers is still in an initial stage and the actual disruption of incumbents is very small. A closer look at Europe (EU) with the population of 430 million bankable individuals compared with 8 million customers of banking challengers indicates that less than 2 % of the target group has been penetrated so far. Nevertheless, major European challengers are already looking beyond Europe. For example, N26 is preparing for the North American rollout and Revolut is establishing a foothold in Asian markets, starting with Japan and Singapore. Considering their future expansion plans and available resources, major European challengers are likely to continue adding new customers fast and they are expected to attract at least 16 million clients by 2020 and 27 million by 2021. For more facts on bank challengers and payments industry in you might visit the website of Inteliace Research at: http://www.inteliace.com/Antworten
Digital banks, challenger banks, neo-banks, bank challengers in Europe
- 1. Inteliace Research PaymentsinPoland,2018 - Bank - Accounts - Payments - 24European markets - EMI - Bank (sinceQ418) - Payments - Accounts - FX - 32 European markets - Bank - Accounts - Deposits - Loans - Payments - The UK - Bank - Deposits - Loans - The UK - Bank - Accounts - Deposits/loans - Payments - Other (marketplace) - The UK, Ireland - EMDAgent - Accounts - Payments - 33 European markets - Bank - Deposits - Loans - Payments - The UK - AR*** - Payments - Loyalty - 27European markets - EMDAgent, EMI - Accounts - Payments - Loyalty - The UK - EMDAgent, EMI - Accounts (SME) - P2P, payments - The UK - EMDAgent - Accounts - Card payments - The UK - Bank licence application pending - Loans (lean) - Initiallythe UK * Or the last available valuation; ** Rough estimates – non market terms funding; *** Appointed Representative of other company , e.g. of a card issuer Source: Corporate websites, industry press, Crunchbase, Inteliace Research 1 2,700 1,700 1,200 585 200-350** 120 78 49 31 26 23 10 N26 Revolut Monzo Atom Starling Monese Tandem Curve Pockit Tide Loot Fiinu The valuationof a few bank challengers has already surpassedUS$1 billion 5.3 5.1 4.4 1.2 2.0-3.5 1.6 1.5 3.8 2.4 0.8 2.3 14.2 Valuation(postmoney) in US$ million,as of Jan 2019* Valuation to funding ratio,(x times) Focus KeyProducts RegionsCompany Company type, licence PARTIALLYESTIMATESSelectedEuropean bankchallengers/non-exhaustivelist/:Valuations
- 2. Inteliace Research PaymentsinPoland,2018 Payments,FX (for travellers) Universalbanking, Payments Universal banking, Payments Payments Universal banking, Payments Deposits,Cards,AIS Payments,Loyalty Payments– younger clients Depositsor Mortgage Payments- underbanked Payments- freelancers, soletraders Online/Discountlending * Or the last available figure; Source: Corporate websites, industry press, Crunchbase, Inteliace Research 2 3.3 2.3 1.1 0.8 0.3 0.3 0.3 0.18 0.10 0.10 0.06 0.00 Revolut N26 Monzo Monese Starling Tandem Curve Loot Atom Pockit Tide Fiinu Most bank challengersare valued between $150 and $1200 per single customer 515 1174 1091 150 1000 260 165 130 >5000 312 464 n/a Numberof customers, [no common definition] in million,as of Dec 2018*Company SelectedEuropean bankchallengers:Customers Currentfocus Valuationpersinglecustomer postmoney, in US$, as of Jan2019* PARTIALLYESTIMATES
- 3. Inteliace Research PaymentsinPoland,2018 Company Geo focus C/Aaccountor balanceholding Cards& payments P2Ppayments Deposits /Savings Consumer loan,overdraft Mortgage Europe ✓ ✓ ✓ Europe ✓ ✓ ✓ ✓ ✓ The UK ✓ ✓ ✓ ✓ ✓ The UK ✓ ✓ ✓ ✓ ✓ Europe ✓ ✓ ✓ The UK ✓ ✓ ✓ The UK ✓ ✓ Europe ✓ Source: Corporate websites, industry press, Crunchbase, Inteliace Research 3 There are significant differences among bank challengersin terms of product offer and coverage area As ofJan. 2019 Functionalityofselectedchallengerbanksandfintechfirms
- 4. Inteliace Research PaymentsinPoland,2018 0.2 1.0 3.1 8.1 2015 2016 2017 2018 Number ofcustomers - Top7 bankchallengersin Europe In million * including: Revolut, N26, Monzo, Starling, Monese,Tandem, Atom Source: Inteliace Research The number of clients of bank challengers has been growing rapidly recently 4
- 5. Inteliace Research PaymentsinPoland,2018 Major bank challengers are currently valued at 3.7 times of funding received 1.8 6.7 Funding Valuation * including: Revolut, N26, Monzo, Starling, Monese,Tandem, Atom Source: Inteliace Research, Crunchbase Funding& Valuation-Top7 * bankchallengersin Europe In US$ billion,as of Jan. 2019 3.7x (post money) 5