Page 102 - Forbes - USA (November 2019)

LEADING THE NEOBANK PACK

IN 20 YEARS, THESE VENTURE CAPITAL-BACKED STARTUPS COULD DOMINATE CONSUMER
BANKING, BUT THEY’LL FACE PLENTY OF COMPETITION ALONG THE WAY. FINTECH COMPANIES
THAT ORIGINALLY OFFERED INVESTING ARE RUSHING TO ADD BANK SERVICES, WHILE THE FALLING
COST OF LAUNCHING A NEOBANK IS ATTRACTING AN ARMY OF ENTIRELY NEW ENTRANTS.

VALUATION FUNDING USERS YEAR BANKING FEATURES
98 COMPANY (BIL) RAISED (MIL) (MIL) LOCATION FOUNDED (IN ADDITION TO CHECKING ACCOUNTS)
Nubank $10.4 $818 15.0 São Paulo 2013 Savings accounts, personal loans, credit cards
2011
SoFi $4.3 $2,300 8.5 San Francisco 2011 Student loans, personal loans, mortgages,
SoFi
$2,300
Student loans, personal loans, mortgages,
8.5
San Francisco
$4.3
0
savings accounts, investing, insurance
5 savings accounts, investing, insurance

H N26 $3.5 $670 3.5 Berlin 2013 Personal loans, money transfers, insurance,
C overdraft protection

E
$2.6
T Monzo $2.6 $400 3.3 London 2015 Savings accounts, personal loans, overdraft
$400
London
Savings accounts, personal loans, overdraft
2015
3.3
Monzo
N protection
protection
I
F
Revolut $1.7 $345 8.0 London 2015 Money transfers, investing, insurance
•
n
v
i
g
a
3.3
s

S
San Francisco
2012
$1.5
Chime $1.5 $307 3.3 11 S a n F r a n c i s c o 2 0 1 2 Savings accounts, money transfers, ,
a
Chime
$307
c
t
r
a
e
y

e
r
s
n
s
f
n
t
u
c
o
s
o
n
m
,

D

overdraft protection
N overdraft protection
E
R Atom Bank $1.3 $372 0.1 Durham, U.K. 2014 Savings accounts, mortgages
T
2016

Overdraft protection
$1.0
Angeles
Los
Dave
$186

4.5
Dave $1.0 $186 4.5 Los Angeles 2016 Overdraft protection
E
H MoneyLion $0.7 $200 5.7 New York 2013 Personal loans, investing, credit monitoring
T
1 FORBES ESTIMATE BASED ON 5 MILLION TOTAL ACCOUNTS AND AN AVERAGE OF 1.5 ACCOUNTS PER USER. SOURCES: THE COMPANIES; PITCHBOOK; CB INSIGHTS.
ment banking, where he remained for the next decade. days. Customers were unable to see their balances, and
From an insider’s vantage point, he saw that traditional some were intermittently unable to use their debit cards.
banks were excruciatingly slow to respond to the preferenc- Chime blamed the failure on a partner, Galileo Financial
es of their customers and exploit the power of smartphones. Technologies, a platform used by many fintech startups to

That, plus a never-ending series of bank scandals, convinced process transactions.
him that there was an opening for a digital “private banker.”
In 2013 he walked away from his near-seven-figure salary to n a warm fall day Tim Spence speed-

start MoneyLion. O walks his 6-foot-3 frame through the
Choubey raised $1 million in seed funding and started out towering, 31-story Cincinnati head-
offering free credit scores and micro-loans. But he struggled quarters of his employer, Fifth Third, a

to raise more money. Forty venture investors turned him 161-year-old regional bank with $171 bil-
down, deeming his vision impractical and unfocused. “I was lion in assets. Clad in a plaid sport jacket with no tie, Spen-
laughed out of a lot of VC rooms in our early days,” he recalls. ce doesn’t look like a traditional banker. And he’s not.
While Choubey banged unsuccessfully on VC doors, Mon- A Colgate University English literature and economics
eyLion putt-putted along, bringing in a little revenue from major, Spence, now 40, spent the fi rst seven years of his
loan interest and credit card ads and collecting a bunch of career at digital advertising startups. He then moved into
data on consumer behavior. Finally, in 2016, he persuaded consulting at Oliver Wyman in New York, advising banks
Edison Partners to lead a $23 million investment. That en- on digital transformation. In 2015, Fifth Third lured him
abled MoneyLion to add a robo-advisor service allowing to Ohio as its chief strategy offi cer and then expanded his
users to invest as little as $50 in portfolios of stocks and mandate. He now also oversees consumer banking and pay-
bonds. In 2018, it added a free checking account and debit ments, putting him in charge of $3 billion worth of Fifth
card issued through Iowa-based Lincoln Savings Bank. Third’s $6.9 billion in revenue. Last year, he brought home
Managing rapid growth, while striving to keep costs low, $3 million in total compensation, making him the bank’s
has proved tricky. MoneyLion was hit with a deluge of Better fourth-highest-paid executive.
Business Bureau complaints over the past spring and sum- Fifth Third has 1,143 branches, but today Spence is fo-
mer. Some customers experienced long delays transferring cused on Dobot, a mobile app the bank acquired in 2018 and
their money into or out of MoneyLion accounts and, when relaunched this year. Dobot helps users set personalized sav-
they reached out for help, got only computer-generated re- ings goals and automatically shifts money from checking to

sponses. Choubey says the software glitches have been fixed, savings accounts. “We reached 80,000 downloads in a mat-
and he has bumped up the number of customer-service reps ter of six months, without having to spend hardly anything
from 140 to 230. on marketing,” he says.
Other neobanks have had operational growing pains too. Scooping up new products is one part of a three-pronged
In October, San Francisco-based Chime, with 5 million ac- “buy-partner-build” strategy that Spence has helped devise
counts, had technical problems that stretched over three to combat the neobank challenge. Partnering means both
F O R B E S . C O M N O V E M B E R 3 0 , 2 0 1 9