Neobanks across Europe are bulking up as venture capitalists demand profitability. These digital-only banks, including Monzo, Starling, and N26, are facing pressure to prove they can be profitable. Despite their rapid customer growth, many have yet to turn a profit. This is causing concern among investors, leading to a shift in focus from customer acquisition to profitability.
Monzo and Starling, two UK-based neobanks, have recently raised significant funding rounds. Monzo secured £113 million in Series F funding, while Starling raised £75 million in a Series C round. Both banks plan to use the funds to expand their services and reach profitability.
German neobank N26, on the other hand, has withdrawn from the UK market. The bank cited Brexit as a reason for its decision. Despite this setback, N26 continues to grow in other markets, particularly in the US.
The shift towards profitability is not limited to Europe. US-based neobank Chime recently raised $500 million in a Series E funding round. The bank plans to use the funds to expand its customer base and reach profitability.
In conclusion, neobanks across Europe are facing increasing pressure to prove their profitability. This shift in focus is likely to shape the future of the neobanking industry.
Go to source article: https://tech.eu/2023/03/22/neobanks-across-europe-fatten-up-as-vcs-demand-profits/