Looking back and moving forward: How neobanks tackled 2023 and what they expect from 2024

Last year wasn’t the best for traditional banks, but were neobanks any better off? 

Despite the bank troubles last year, some report that trust in traditional banks has remained steady (66%) but trust in neobanks is still lower than these older institutions, hovering at 47%. These stats show that the headwinds that gripped traditional banks did not end up proving very beneficial for neobanks, for whom profitability in the US as well as trust still remains an issue. 

For example, Varo bank’s path to profitability has stalled and Chime’s growth has also slowed down. Aaron Plante, Chime’s VP of Lending Products and Banking Strategy adds that last year the bank’s focus was maintaining its history of releasing products that resonate with its audience and the company will continue to prioritize expanding its offerings going into 2024. 

“A recent survey showed that, of the 2,000 U.S. adults surveyed, 93% of Americans had financial goals set headed into 2023. Those goals included paying off debts, saving a certain amount, and monthly budgeting, to name a few. Macroeconomic trends are just one challenge Americans may encounter on the way to meeting their financial goals – Chime’s products are specifically designed to help our members navigate macroeconomic trends, like inflation. Our products were built for times like this with low fees to help keep more of our members’ money in their bank accounts. In terms of spend, we’re still seeing our members use their Chime cards for everyday non-discretionary items such as food, gas and groceries. We’re also seeing our members use Credit Builder to help build and improve their credit scores which can, in turn, help them qualify for better interest rates,” he said. 

Many proponents of neobanks applaud them for their ability to niche down and focus on particular consumer segments, in an industry where traditional banks feel like one-size-fits-all. For example, aimed at healthcare professionals, Panacea Financial is able to differentiate itself right out of the gate, but it didn’t necessarily translate into smooth sailing in 2023.