Neobanks quietly became credit companies
The pitch was a better current account. The revenue increasingly comes from lending — and that changes what a customer is looking at.
The neobank proposition was originally about the account: better app, faster onboarding, honest foreign-exchange pricing, no branch network to pay for. Interchange revenue and subscription tiers were the model.
That description has aged. Across the sector, an increasing share of revenue comes from credit — overdrafts, personal loans, instalment products at checkout, and in several cases buy-now-pay-later offered directly.
This is not a scandal. Lending is what banks do, and a firm that started with an account and added credit has followed an entirely conventional path. But it changes what a customer is evaluating, and the marketing has not caught up.
What changes for the customer
Incentives. A firm earning primarily from interchange wants you to spend on its card. A firm earning primarily from credit wants you to borrow. Those produce different product design, different notifications and different defaults.
Where the money actually sits. This is the question we would put first. Whether funds are held by a licensed bank, held by an e-money institution, or safeguarded under some other arrangement determines what protection applies if the firm fails — and the answer is frequently different from what customers assume, particularly where a group contains several entities with different permissions.
What a credit product does to a credit file. An instalment feature inside a banking app is still credit, and whether it is reported is a matter for the provider’s terms.
The disclosure test
We would apply three questions to any app-based account:
- Which named legal entity holds my money, and under what permission?
- What deposit protection, if any, applies — named scheme, named limits, and which entity it attaches to?
- Which of the features in this app are credit, and which are reported to a credit bureau?
Firms that answer all three clearly in their published terms exist, and the answers are usually in the terms rather than the marketing. Firms that do not answer them have not necessarily done anything wrong — but the customer does not know what they hold.
What we do not do
We do not assert any firm’s regulatory permissions, and readers should not accept an app’s own summary as establishing them. Where a firm’s status matters, check it on the relevant register directly. We repeat deposit-protection claims only where a firm publishes them, and with the entity and limits it states.
Nothing here is financial advice.