Digital-only banks, also known as challenger banks, are raising big bucks to compete with traditional banking institutions not only in developed markets but all over the world.
Excellent client service, user-friendly interfaces, transparent fee structures, competitive pricing, spending stats, and even Instagram-like stories… these mobile-first banks are taking the banking industry by storm, signing in thousands of young customers daily.
So far this year, these customer-centric fintech companies have raised over $2.5 billion. A figure already higher than the record haul reached in 2018, CB Insights shows in a new study.
In line with this fact, Lindsay Davis, a senior intelligence analyst at CB Insights, outlined that upstart digital banks are currently the fastest-growing sector among fintech start-ups, with 25 mega-rounds totaling $100 million raised in Q2 2019 alone.
As this sector continues to gain momentum worldwide with new players entering the market every month, it is vital to understand which are the best challenger banks in 2019. In this list, we’ve compiled the top 10 neobanks in the market to keep an eye on. Take a look!
Available: United States
Chime has one of the slickest mobile apps out there, no wonder why they have over 50K five stars in app stores. Earlier this year, this San Francisco-based fintech startup was blessed with an additional $200 million investment by DST Global, leaving its valuation at $1.5 billion.
But Chime isn’t just a pretty face. Its minimalistic-looking app includes some pretty innovative features that help customers save money effortlessly. For example, rounding up purchases to save the change or automatically setting aside 10 percent of your salary and placing it into a Chime’s savings account. Chime clients can also get paid up to 2 days early without extra fees.
“If you look ahead five years, there’s no way there will be a financial services industry that is charging consumers $30 billion a year in overdraft fees,” Chime Co-founder and CEO Chris Britt said in a The New York Times article.
In this regard, Chime does not charge monthly fees nor foreign transaction fees. At the time, clients can access more than 38K commission-free ATMs across the United States.
- No monthly fees, no foreign transaction fees
- Automatic savings
- Early paycheck
- Only available in the United States
- Slow customer service
- No loans
Available: Europe, United States
N26 is a mobile-only bank. That’s right. No physical branches whatsoever. Their mobile banking app is well-positioned in the European market, with a solid presence in Germany, the United Kingdom, Spain, the Netherlands, and a few other nations. In July 2019, the company also introduced its services in the United States.
This mobile bank is a master of partnerships. To date, N26 leverages several fintech services such as TransferWise, Raisin, Vaamo, Clark, Auxmoney, and others. As for customer service, it is available in English, French, German, Spanish and Italian.
One of the most popular features of the N26 bank account is the ability to create multiple Spaces — sub-accounts so that you can easily organize your spendings and financial goals.
While most challenger banks offer a single, sometimes-free account, N26 has opted for a “freemium” model. An entry-level free basic account with upgrade versions You, Metal and Business adding some additional perks to the mix.
- P2P transfers by phone or email (to N26 users only)
- Money transfers via TransferWise
- Loans, savings account for selected destinations (Germany)
- Limited services outside Germany
- Monthly maintenance for premium account
Available: Europe, United States, Australia, Singapore
London-based neobank Revolut is one of the hottest players in the digital banking sector. The company is growing rapidly not only in Europe, where it already serves over 30 countries but in the Americas and the Asia-Pacific regions.
This challenger bank has amassed over 6 million customers over four years and raised $344 million in private investments. And that’s not stopping any time soon as the fintech startup is heading for an additional $500 million inflow.
Among the basic features of the Revolut account you may find push up notifications, spending categories, round up spare change, and recurrent payments.
Since Revolut is focused on serving multiple countries, it lets you send money in over 150 currencies and spend abroad using the real interbank exchange rate.
Revolut doesn’t like to be called a bank for a good reason: it doesn’t feel like one. Apart from mobile banking services, the app also integrates multiple cryptocurrencies, as well as commission-free stock trading for premium customers.
- Auto-saving features
- Cryptocurrencies for premium accounts
- Commission-free stock trading
- Limited to no-access on emerging markets
- Low ATM limit: fee-free up to €200/month
- System interruptions for updates/maintenance
Available: United Kingdom, United States
Transparency and fairness seem to be at the core of Monzo — a challenger bank initially launched in the United Kingdom and now also available for US customers.
Monzo offers basic, plus and business accounts. All of them grant you access to a contactless Hot Coral debit card that’s fee-free for paying in the UK and abroad but adds a 3% charge to each withdrawal made overseas above the £200 limit.
The app includes features designed to smooth your financial life, such as splitting bills, instant transactions to other Monzo accounts, pots and in-app support chat.
Monzo is one of the best challenger banks in the UK not only because of its app, but also its flexibility. Anyone above 16 years can easily open an account.
- Regulated by FCA & PRA
- Spendings divided into 16 different categories
- A 1% interest on savings above £1,000
- Daily ATM withdrawal limit £400
- International ATM withdrawal fee of 3% above £200
If you believe in the power of digital currencies, Crypterium is what you need. A challenger bank that lets you store, buy, spend, cash out and exchange cryptocurrencies with ultimate ease.
Crypterium is a global solution, meaning you can use most features no matter where you are based. Getting started with the Crypterium App only takes a couple of minutes and the verification process is remarkably smooth compared to other solutions in the market.
The Crypterium App is a hub for both crypto-to-crypto and crypto-to-fiat services. The company raised over $51 million in an Initial Coin Offering back in 2017 and since its launch has amassed nearly half a million users around the world.
Apart from being a one-stop solution, Crypterium has developed something no other company in the industry could… A global cryptocurrency card. The few alternatives in the market are only available in specific countries or regions, a frustrating reality for many cryptocurrency holders. The Crypterium Card is fully-integrated to the app and it’s delivered in under 3 business days.
- Buy cryptocurrencies with a debit/credit card
- Cash out in minutes to any MasterCard worldwide
- Crypterium Card for a fixed $10, express delivery available
- Store multiple crypto in one wallet (Bitcoin, Ethereum, Litecoin, USDC, etc.)
- Best exchange rates; service integrated to top exchanges
Challenger banks in Latin America? Yup. There are some pretty great neobanks growing in this emerging region. Nubank is the best example. This digital bank is headquartered in São Paulo, Brazil and it’s been serving clients with an appetite for financial simplicity since 2014.
Now… if you think that Revolut is big, think again. Nubank has over 9 million accounts and its valuation exceeds $4 billion. Back in 2018, this mobile-first bank counted on a $180 million cash injection from Chinese tech giant Tencent, following prior investments in excess of $420 million.
Nubank has a wide range of features, from a free account with 0% maintenance fee, a fully-integrated international debit card, a credit card, rewards, and even loans.
- Free account and transfers to Nubank clients
- Credit card and loans available
- Fixed fee applied to each cash withdrawal
- Only available in Brazil
Ualá is another digital banking solution focused on Latin American clients, specifically those in Argentina. The company claims to have over 1 million accounts as of 2019, but it falls short in comparison with Nubank — Brazil’s go-to neobank.
This mobile-based bank presents itself as an innovative solution in the country, but the services aren’t impressive nor competitive. Ualá offers a free international debit card to account holders but charges a substantial fee to each domestic and international cash withdrawal.
The app allows you to control spendings real-time by category and subscribe to online services such as Netflix, Spotify, among others.
- Lifetime-free account
- Smooth virtual identity verification
- Only available in Argentina
- Up to $6 per cash withdrawal
- Takes 15 days to delivery the card
Neon is another leading digital bank in Brazil. Last year, it raised $22 million in a series A round. Among major investors were Propel Venture Partners, Monashees, Quona Capital, Omidyar Network, Tera and Yellow Ventures.
Services are pretty similar to the ones offered by Nubank, but with a stronger focus on savings and investments. For example, the app lets you round up the spare change, as well as to set aside specific amounts from your regular income and earn interest. Neon also offers a debit and credit card without maintenance fee.
- Lifetime-free account
- No credit card maintenance fee
- Only available in Brazil
- A single fee-free monthly ATM withdrawal
- International purchases fee 4%
Are you tired of bureaucracies in traditional banking? Monese too. This challenger bank defines itself as a solution to the long-dated bureaucracies in the banking sector.
Surprisingly, Monese lets anyone within the European Union register an account without proof of address or a credit report. This mobile-first bank divides clients into two regions: the United Kingdom and the European Union.
As some of the above-mentioned challenger banks, Monese also offers a free basic account plus two paid options available for €4.95 and €14.95 per month. All three plans include a free contactless card that you can connect to Apple Pay or Google Pay.
However, Monese does fail to deliver good solutions for those planning to spend money abroad. If you’re not a Premium account holder, you might end up paying a 2% fee on some transactions made overseas. The same fee applies when you send money to non-Monese accounts.
- Apple Pay & Google Pay
- Dual currency account (GBP + EUR)
- Multilingual support center
- Not available outside Europe
- Low fee-free ATM withdrawal limit
- 2% for sending money to non-Monese accounts
Available: United Kingdom
Atom Bank is different. Not only because it focuses entirely in the United Kingdom, but also in their approach to money management. When you think of challenger bank, you think of millennials. And that’s just natural. In fact, millennials and generation Z hold most of the accounts.
While auto-saving and spending round ups are good enough to get a new MacBook, those features are simply not enough to purchase a new home or set up a business. And that’s exactly where Atom Bank stands out, with flexible and competitive savings accounts, mortgages and business loans. All done digitally, without visiting any branches.
Atom Bank is all about the long term. Their accounts are not current accounts and therefore you can’t use them for day-to-day purchases. They don’t even offer a debit card.
- Access to mortgages, loans digitally
- Competitive interest rates on deposits
- PRA and FCA certified
- No debit card
- Limited baking services