Banking on Status

But what if one bank would target multiple, different in-groups?

Interestingly though, neobanks still use one very traditional banking element: physical cards.

For example, what if N26 had dedicated cards for soccer fans, hip-hop enthusiasts and gamers? Instead of focusing on just one signaling audience, their total addressable market would massively increase.

At first glance, this might seem counterintuitive. If you are building a mobile-first bank, why not offer virtual cards and let users pay with their phone? Why go through the hassle of producing and shipping physical cards?

there is no software equivalent of a Rolex watch or a Louis Vuitton handbag. People aren’t willing to spend money on things other people can’t see they spent money on.

But it doesn’t have to be that way. As software is eating the world, the lines between physical and digital products are becoming increasingly blurry. As I have pointed out in my original essay, one way for software companies to solve the signaling distribution problem is to add a physical element to their software product.

You may have noticed that the credit card number has moved from the front to the back of the card. This makes it easier for users to share photos of their cards on social media as an additional signaling distribution channel.

The answer is – you guessed it – signaling.

The premium subscriptions neobanks offer usually don’t win on features but solely on nicer looking cards. The N26 or Revolut Metal plans, for example, don’t offer any additional features that really justify the ~€15 / month price tag. They do include a nice looking metal card though – that’s what people pay for.