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FINTECH

Europe’s neobanks search for elusive profit in SMEs and the US

Europe’s online-only challenger banks are still losing money, despite millions of retail clients in their home continent.

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Europe’s neobanks are switching their attention to small business banking and expansion in the US, as they strive for global scale and profitability.

Business banking will soon be a bigger revenue earner for UK neobank Revolut than retail clients, which already number about 10 million, according to its head of business Vaidas Adomauskas.

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Vaidas Adomauskas,
Revolut

“We are the profit-generating side of the business,” he says, adding that Revolut will increase its number of business clients by four or five times by 2020, reaching well over a million.

Among the other UK-based neobanks, Monzo launched business accounts in March.

Meanwhile, Starling Bank – which has a longer-standing focus on business banking and lending, but targets smaller firms than, say, OakNorth Bank – is also seeing its growth in that segment fare better than in retail since the coronavirus, in part thanks to its launch of television advertising targeting small and medium-sized enterprises (SMEs) in February.