The (Neo) Bank Bundle & Transition to Subscription Revenue

While this has largely held true, they don’t have a lower cost of capital, which is critical to a banks revenue potential under their existing business models. As some of these companies are looking to go public there will be enhanced scrutiny on monetization which, we believe requires innovation on the business model to a subscription model.

Whether it’s SaaS as the preferred delivery method for software products, monthly subscriptions for music / video streaming, newspapers, newsletters, podcasts, or physical products, subscriptions are infiltrating nearly every business model.

What’s notably missing from the existing subscription bundle is financial services. As Neo Banks look to compete with incumbents they have talked about their lower cost structure, and cheaper customer acquisition cost, leading to shorter payback period.

Robinhood has also dipped their toes into the subscription business with their Robinhood “Gold” offering. The main selling point of Robinhood Gold is the ability to invest on margin. In addition to that they provide access to “professional research”, Level II market data, instant transfers “up to your portfolio value” for $5.00/month. This does not... See more

As a result of that size / scale of deposit base it’s almost impossible for Neobanks to compete on cost of capital which means they need to follow suit & implement a subscription bundle.