+353-1-416-8900REST OF WORLD
+44-20-3973-8888REST OF WORLD
1-917-300-0470EAST COAST U.S
1-800-526-8630U.S. (TOLL FREE)


A Maturing U.S. Neo-Bank Market: Growing Pains and Opportunities

  • PDF Icon


  • 18 Pages
  • April 2021
  • Region: United States
  • Mercator Advisory Group
  • ID: 5310823
Neo-Banks Are Experiencing Both Profound Growth and Significant Challenges


  • Ally Bank
  • BVVA
  • Choice Bank
  • First Boulevard
  • N26
  • Synchrony

Since their inception, neo-banks have attracted large customer bases and significant venture capital backing. Their approach to the business of banking is markedly different than traditional financial institutions, and some are rightfully wary of the threat they represent. Still, neo-banks themselves face numerous challenges - regulatory, financial, and otherwise. This latest research report, A Maturing U.S. Neo-Bank Market: Growing Pains and Opportunities, discusses the neo-bank market in the U.S. and predicts what the future may hold for these companies. 

Figure 1: Assessing growth in deposits held by U.S. neo-banks

“The future is uncertain for neo-banks. Powerful new entrants are seeking a share of the neo-bank market. Venmo - owned by PayPal - is increasingly pursuing banking functions, and Walmart has expressed its intent to expand into the market as well. More important, neo-banks will need to find their own pathways to profitability. With their emphasis on limited fees and focus on bank accounts and debit products, neo-banks, for the most part, are not generating large profits,” comments Laura Handly, market research analyst and author of the report. 

Highlights of the report include:

  • Analysis of trends within the U.S. neo-bank market and discussion of the effect that the Covid-19 pandemic has had.
  • Mapping of five different segments of digital banking and examination of the ways in which neo-banks are distinct from the other four segments. 
  • Review of the banking charters available to neo-banks, with examples of companies that have chosen each type. 
  • Assessment of the primary threats facing neo-banks, including heightened competition, consolidation within the market, and stricter regulations.
  • Predictions for the future of the neo-banking market, including trends towards greater personalization and the pursuit of profits. 


  • Ally Bank
  • BVVA
  • Choice Bank
  • First Boulevard
  • N26
  • Synchrony

1. Executive Summary2. Introduction3. Trends in Neo-Banking
4. Five Segments of Digital Banking
  • Full service online banks
  • Premium deposit harvesters
  • Brokerage and insurance-owned online banks
  • Online divisions of diversified banks
  • Fintechs and bank partners

5. The Banking Charter Challenge
6. Different Charters Available for Neo-Banks
  • National banking charter
  • Individual state charters
  • Industrial Loan Company charter
  • Federal special purpose national banking charter
  • Payments charter
  • Purchase a pre-existing financial institution with its own charter

7. What Does the Future Hold?
  • Powerful new entrants
  • Consolidation within the neo-bank market
  • Trends towards greater personalization
  • Exposure to new regulations
  • Search for profits

8. Conclusion
9. References
  • Related Research
  • Endnotes

  • Figure 1: Assessing growth in deposits held by US neo-banks
  • Figure 2: Venture Capital Funding to Top Neo-Banks, 2018-2020


  • Ally Bank
  • Aspiration
  • Axos Bank
  • Bancorp Bank
  • Barclays
  • BVVA
  • CapitalOne 360
  • Charles Schwab
  • Cheese
  • Chime
  • Choice Bank
  • Daylight
  • Douugh
  • E*Trade
  • Evolve
  • First Boulevard
  • Golden Pacific Community Bank
  • Goldman Sachs
  • Green Dot
  • JPMorgan Chase
  • MetaBank
  • Middlesex Federal Savings Bank
  • N26
  • PayPal
  • PNC Bank
  • Simple Bank
  • SoFi
  • Synchrony
  • The Clearing House
  • Varo Bank
  • Venmo
  • Wal-Mart