3 ms·

How would you define the difference between neobanks and regular challenger banks. Agree with this comment "the data that we receive to learn about customers b

by kunle 7y ago

How would you define the difference between neobanks and regular challenger banks. Agree with this comment "the data that we receive to learn about customers becomes worse and worse"

tixocloud 7y ago
Sorry - perhaps there is little difference if any between neobanks vs regular challenger banks. Neobanks would be digital-only type banks while regular challenger banks are heavily skewed digitally but have the backing of an existing incumbent bank. Where we see and place all our analysis efforts are on companies like Google, Amazon, Apple, etc. From what we can see with Alibaba, since they own the contact points for the both the customer and retailer, they have data to gauge financing needs and more importantly risk. You see banks like RBC starting the conversation earlier in the journey with their investments in various startup spinoffs where it's focused on the 'why' behind the financing (i.e. finding a home, buying a car, starting a business, etc.) before becoming involved in the financing portion later down the line.
- kunle 7y ago
  Got it. In that frame, Square and Varo Money would be challenger banks (that got started as neobanks) because they now have licenses. Chime, Sofi and others would be neobanks, correct? Never thought of this distinction, but I don't hate it. I think a material distinction between Apple/Amazon etc and Alibaba is that in Alibaba's operating environment there wasn't a strong digital financial ecosystem to compete with (not to mention that they were a national champion). I'm not convinced they all can do exactly the same thing Alibaba did. Apple is edging it's way there and doing it in an original way, but they're not doing it in a way that is in line with what I described at all (for example, if Apple were pursuing a vertical neobank strategy, they would launch a banking service for appstore developers, who AFAIK are the only customer segment for whom Apple is an income driver). For Amazon it could be sellers, for Google it could be Adsense advertisers, and I'm not sure what the equivalent would be for Facebook. I also think a reason these folks havent gone the lending route (other than Amazon) is because I don't know if its believable that their data could be differentiated for lending purposes. Just a thought.

by kunle 7y ago

How would you define the difference between neobanks and regular challenger banks. Agree with this comment "the data that we receive to learn about customers becomes worse and worse"

tixocloud 7y ago

Sorry - perhaps there is little difference if any between neobanks vs regular challenger banks. Neobanks would be digital-only type banks while regular challenger banks are heavily skewed digitally but have the backing of an existing incumbent bank. Where we see and place all our analysis efforts are on companies like Google, Amazon, Apple, etc. From what we can see with Alibaba, since they own the contact points for the both the customer and retailer, they have data to gauge financing needs and more importantly risk. You see banks like RBC starting the conversation earlier in the journey with their investments in various startup spinoffs where it's focused on the 'why' behind the financing (i.e. finding a home, buying a car, starting a business, etc.) before becoming involved in the financing portion later down the line.

kunle 7y ago
Got it. In that frame, Square and Varo Money would be challenger banks (that got started as neobanks) because they now have licenses. Chime, Sofi and others would be neobanks, correct? Never thought of this distinction, but I don't hate it. I think a material distinction between Apple/Amazon etc and Alibaba is that in Alibaba's operating environment there wasn't a strong digital financial ecosystem to compete with (not to mention that they were a national champion). I'm not convinced they all can do exactly the same thing Alibaba did. Apple is edging it's way there and doing it in an original way, but they're not doing it in a way that is in line with what I described at all (for example, if Apple were pursuing a vertical neobank strategy, they would launch a banking service for appstore developers, who AFAIK are the only customer segment for whom Apple is an income driver). For Amazon it could be sellers, for Google it could be Adsense advertisers, and I'm not sure what the equivalent would be for Facebook. I also think a reason these folks havent gone the lending route (other than Amazon) is because I don't know if its believable that their data could be differentiated for lending purposes. Just a thought.