So how do neobanks make their unit economics work?
Two U.K.-based neobanks, Monzo Bank and Starling Bank, announced they are introducing new fees for their customers this month.
Monzo will charge a fee for customers who take out more than 250 British pounds in 30 days, as well as those who need replacement cards.
Similarly, Starling will charge for replacement cards, as well as children’s cards and those who make payments via the Chaps system (a real-time payments system in the U.K.).
These new fees are partially a response to COVID-19 — as consumer spending has declined, Monzo and Starling receive less in interchange fees from debit card usage.
But these fees are also indicative of a broader trend we’re seeing across neobanks: a focus on unit economics.
In my previous post, I mentioned that for many consumer neobanks, customer acquisition cost (CAC) has increased over time.
This is partly due to the disappearing “acquisition arbitrage” that many neobanks once relied on.
What do they do now?
To boost revenue, neobanks can launch and charge for additional products, offer premium subscriptions, or start adding or increasing fees for features like ATM withdrawals and card replacements but it might not be the solution.
