16th October 2020

Neo-banks in Europe compel traditional banks to “up their game” on the digital front says Moody's
Trend

Neo-banks compel traditional banks to “up their game” on the digital front and are driving changes in incumbents' business models, Moody’s Investors Service said in a report published this week.

The startup banks examined in the report are Revolut, Monzo, N26, Lunar, Starling, Orange Bank, Atom, OakNorth, and Tandem. All based in Western Europe, they are among the largest digital banks in Europe and do not have operational links to any incumbent banking group.

“Neo-banks do not currently pose an existential threat to incumbents' because their business models are under pressure as a result of the coronavirus crisis. The ongoing poor economic conditions have resulted in fewer payment transactions and reduced demand for neo-banks' offered services,” says Petr Paklin, Vice President–Senior Analyst at Moody’s Investors Service. “That said, they have shaken up traditional banks and drive them to adapt their business models to a more digitally focused operating environment.”

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