Neobanks expand Services, Driving Open Banking Adoption

The neobank sector started with a simple but very popular premise—to focus on easy-to-use, low-fee digital banking services that are readily accessible to anyone with a smartphone. Nonetheless, recent years have seen the sector mature rapidly, with leading players like Revolut, Chime, Starling Bank, and Monzo becoming sophisticated financial hubs. These companies are now adding an ever-wider range of services to their portfolios, allowing them to compete more directly with traditional institutions. As a result, digital-only banking is expected to reach a market size exceeding US$4 trillion in 2025.

Digital banks are now offering features like advanced budgeting tools, investment options spanning stocks and crypto, high-yield savings accounts, and comprehensive cash management solutions. With mobile apps now the primary interface for consumers, these solutions promise greater convenience, accessibility, and superior user experiences. Moreover, many neobanks are now being granted official banking licenses, granting the industry a similar level of trust and authenticity as that afforded to the established financial sector.

One of the key drivers for this maturation is the rise of Open Banking—a concept that makes it easier to share financial data between banks and third-party service providers through the use of application programming interfaces (APIs)—albeit with consent from the end user. This allows both neobanks and traditional institutions to provide additional value-added services like account aggregation, tailored loan offers, and integrated budgeting tools, all of which enhance the customer experience. Together, these innovations continue to place pressure on existing players to accelerate their own digital efforts.

Competing in the fast-moving neobank space

Continuous innovation, strategic focus, and agility must become top priorities for anyone wanting to compete in the ever-changing digital banking arena. As the market matures and leaders expand their offerings, differentiation and customer experience become vital competitive differentiators. The first step is to leverage open banking to aggregate accounts, thus making financial management far easier for customers.

Nonetheless, Open Banking offers far more than account aggregation. While that’s a critical first step in streamlining otherwise complex digital experiences, it also lays the groundwork for creating highly targeted experiences. For instance, with aggregated financial management, fintechs might offer new functions, such as delivering predictive insights based on spending patterns, automating savings goals, or providing tailored investment plans. By strategically and progressively expanding beyond the core banking functions, fintechs and financial services companies can identify, build, and deliver adjacent services that truly resonate with their target audiences.