Mobile banking development always requires the choice of a business model. When it comes to neobanks, there are five different business models that are leading globally:
- Interchange-led. This business model suggests that a neobank gets the biggest part of the revenue from interchange fees. Every time a customer uses the neobank’s card as a payment method a neobank gets paid. Such a business model is used by Chime and Neon, for example.
- Credit-led. Leverages a credit-first model, starting off with a credit card or similar offering, and later providing a bank account. Brazil’s Nubank is a prime example of using the credit-led business model.
- Ecosystem-led. Challenger banks with this business model at the base make money by integrating all services in one place. Most important and value-added services may be brought in-house with time, increasing profit potential. The best examples here are N26 and Monzo.
- Asset-led. In accordance with this model, neobanks gain money from offering savings accounts and acquiring deposits with competitive rates, like Goldman’s Marcus and Beam.
- Product extensions. This business model is centered around product extensions that remove the barriers between financial domains (Robinhood, Wealthfront). According to some forecasts, the biggest drivers here will come from product extensions from larger tech companies (for example, Square Cash App).
Currently, we are witnessing the second wave of neobanks emerging, which are less widely targeted and aiming at more specific opportunities. For example, for the agricultural community, freelancers, SMBs, or specific companies working in e-commerce.
Read more: https://www.eleken.co/blog-posts/banking-app-design