Specialist
Former Head, Product at N26 Bank GmbH
Agenda
- User growth outlook – retail and business
- Customer and deposit base monetisation strategies
- Revolut's competitive dynamics vs Monzo, N26 and traditional banks
- CAC (customer acquisition cost) trends and gross margin outlook
Questions
1.
Would you say neobank adoption rates are increasing in Europe and the UK? What core customer use cases are emerging? I’ve always thought of Revolut as more a multi-currency tool than a savings or credit product. How might that evolve?
2.
What are your expectations for growth in new customers and new accounts being opened with Revolut and its neobanking peers?
3.
How would you expect the competitive dynamics across neobanks to evolve in different European markets? Obviously Revolut seems to stand as the largest, especially given the last fundraising round.
4.
Would you expect Nubank to expand in Europe?
5.
Might customer use cases differ between the UK and continental Europe, or across continental European markets? You’ve had experience in a number of those markets with N26. Would you say customers were using the products differently?
6.
Would you expect any neobanks to have particular success attracting SMEs and business accounts rather than retail accounts?
7.
How do you think neobanks have been incorporating know-your-customer and AML [anti-money laundering] into the account opening process? Monzo is reportedly under investigation for potential AML breaches. Do you think that’s a broader problem that the neobanking industry has to address? Could it impact the pace of account growth?
8.
How do you think incorporating an AML or know-your-customer process or safeguards more in line with traditional retail banks’ would impact neobanking apps, if the regulator required a stricter framework?
9.
Would implementing a more complex know-your-customer process slow down the onboarding process and increase the CAC [customer acquisition cost]?
10.
How much does it cost per account to go through all of the required know-your-customer checks?
11.
Is know-your-customer the most significant component of acquisition or onboarding cost?
12.
What range do you think is appropriate for a fully-loaded CAC for neobanks? Presumably, it would vary across banks and change as the industry matures.
13.
How common was it for neobank users to deposit their salary, considering salary active users as a share of the total user base?
14.
How do neobanks try and incentivise financially active users to become salary active users?
15.
What spending ranges were the financially active users you’ve mentioned in? What level of interchange revenue could a financially active account potentially generate?
16.
How much revenue would financially active accounts typically generate for neobanks?
17.
Would you say customers progressively spend more or have higher balances the longer they’ve had their account open?
18.
How do you think N26, Revolut and others will drive incremental revenue from accounts with additional services and products? Would you say any players are doing a particularly good job of driving incremental customer engagement with adjacent offers outside their primary or original beachheads?
19.
What would you say was the adoption of subscription plans and metal cards? Do subscribers to those plans hold over time or do you find that customers churn?
20.
What are the key challenges for Revolut, N26 and others around growing interest in credit products and lending to their customers or lending out their deposits? Would neobanks’ end goal be to become fully-fledged banks that lend to their customers?
21.
Is it difficult to get a banking licence in different European markets or a banking charter in the US? What are the main hurdles to rolling these products out, considering a lot of neobanks have decent-sized user bases?
22.
Would regulator caution be the major impediment? What would a neobank have to show the regulator around its ability to successfully and responsibly manage and use a banking licence?
23.
What are the pros and cons of passporting a banking licence or using a third party vs having your own?
24.
How do you expect revenue per account or LTV [lifetime value] to grow over time? If financially active users are spending EUR 800 per month on average with the interchange at around 0.15%, the neobanks are making just over EUR 1 per account per month. How would you assess LTV of customer accounts when these businesses are mature and have added more products?
25.
At what rate do you think customers would adopt premium or other plans? Could you quantify metal card penetration for N26?
26.
Revolut has its free standard, Plus, Premium and Metal plans. Do you think the company’s mix would be similar or would it have more free users vs Premium and Metal users?
27.
Do you think CAC would start to converge vs traditional retail banks as players compete for customers? Retail banks can spend a lot more because the LTV of their accounts is typically much higher.
28.
What developments are high street banks making to take on Revolut, N26 and other neobanks? The app experience for most banks seems to have vastly improved, with faster payments, better ID verification when logging in, spend trends and so on. How do you think the experience is evolving compared to that of neobanks?
29.
What do you think happens to neobanks if e-wallet providers such as Apple Pay and Google Pay start offering consumer banking products? Could payment processors or digital wallet providers offering a similar service change neobanks’ use case? Would neobanks have any inherent advantage in acquiring deposits?
30.
Presumably, e-wallets expanding into banking products would compete with neobanks’ use case, where people are putting not necessarily their salary but are keeping their walking-around money in there. Would customers find it easier to keep money in the e-wallet?
31.
Do you think neobanks will have to offer cashback in future to continue incentivising spending and account top-ups?
32.
Q: How long do you think it will be before neobanks scale their interest revenues and consumer banking propositions? Would this take five years?
33.
Do you think neobanks’ lower, leaner cost structure will offset traditional banks’ advantages in funding costs and so on? Would they be broadly on par in the offers they can give to consumers?
34.
Do you think any retail banks would be interested in acquiring a neobank? What would you say the ultimate end game is for neobanks? Is it to be acquired?
35.
What strategy should Revolut and others pursue when expanding outside of their home countries? How successful have neobanks been in launching in new countries? They always discuss new markets and international expansion. What do you think are the core challenges there?
36.
How do you assess the evolving know-your-customer requirements that may be needed, especially if neobanks want to move into more consumer banking products and lending? You mentioned EUR 7-8 per know-your-customer earlier. How much more expensive could these processes become for neobanks, if higher regulations bring them more in line with retail banks?
37.
What’s the cost of transaction monitoring? Is this costed per transaction or are they typically licensing a product to use?
38.
Q: Would you highlight any further components of cost structure and its evolution for neobanks? We mentioned the importance of ATMs and withdrawing physical money as a cost component as there was a fair usage cap applied, and customers could access more physical money in the different tiers. How expensive was that and might this become margin accretive as people move away from physical money?
39.
Q: How effectively do you think neobanks can compete with incumbent banks longer term? Could they be a sustainable market component in the next 10-15 years?
