EMEA Neobank Weekly: UK grants new licenses

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In this week’s EMEA neobank news, the UK is set to get two new neobanks, with Ashman and Kroo getting licenses.

Ashman has been issued a “restricted” banking license by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA). It announced on its website that it intends to obtain full regulatory approval to take deposits and begin lending towards the end of 2022.

Meanwhile, e-money startup Kroo has been granted a full banking license by the Bank of England, the first company to receive one since Cashplus in February 2021.

However, the new banks will face an uphill battle as they seek to grow their customer base in an increasingly crowded UK market. With Monzo, Revolut and Starling all vying for customers in the country, any new entrant has to offer something different if they want to stand out.

So how do the newcomers intend to differentiate themselves?

The sustainable lender for real estate SMEs

Ashman is a future digital bank that aims to address a market currently underserved by existing neobanks.

See also: Commercial property lender Ashman obtains UK banking license

Once commissioned later this year, Ashman will provide services to small and medium-sized enterprises (SMEs) in the real estate and property sector. It will offer sustainability-focused loan and savings products using a digital delivery model.

According to the company’s website, the new bank has developed “proprietary digital tools to help businesses understand their environmental and societal impacts and to help them realize the benefits of becoming more sustainable.”

Kroo obtains a full banking license from the Bank of England

Founded in 2016 as an e-money debit card and funding app, Kroo has obtained a full banking license from the Bank of England (BoE) and will now begin offering personal current accounts to new and existing customers.

Read more: UK Digital Bank Kroo obtains banking license

In order to obtain a license from the BoE, a bank must demonstrate that it has met the authority’s standards for business management, commercial viability, risk mitigation and adequate financial resources.

In addition to its existing services, Kroo will now be able to offer its customers overdrafts, loans and savings products. In addition, challenger bank customers will now be covered by the UK’s Financial Services Compensation Scheme for deposits up to £85,000.

Related: UK pledges to change 50-year-old consumer credit law

Like Ashman, Kroo presents itself as a sustainable alternative to its competitors. The young challenger bank provides its customers with a fully biodegradable card and promises to plant 20 trees each time an existing Kroo account holder refers a friend.

Other Neobank news

Away from the UK, Revolut has started piloting its buy now, pay later (BNPL) service in Ireland and has announced plans to roll out the service in Poland and Romania by the end of 2022.

See also: Revolut pilots BNPL product in Ireland

The UK-based company is the latest neobank to offer its BNPL customers after Zopa recently entered the business and Monzo introduced the feature towards the end of last year.

Related: What’s Next in BNPL: Zopa CEO Says Longer Tenures, Bigger Loans

Although Revolut has a large customer base in the UK, UK account holders will have to wait before they too can access BNPL from the bank.

“We are currently testing Revolut Pay Later in Ireland, and we have no plans to introduce it to the UK at this stage,” a Revolut spokesperson told Verdict. “We’ll keep you posted when we have any news on Revolut’s plans to offer Pay Later in the UK.”

Finally, Dutch neobank Bunq recently announced its 2021 financial results. million euros reported by Bunq in 2020.

Read more: EU neobanks bet on innovation and consolidation to support growth

The latest figures will be seen as good news by Bunq investors. Despite the proliferation of neobanks in recent years, the business consulting firm Simon-Kucher & Partners estimates that less than 5% of them are currently profitable.

As the industry seeks a path to profitability, alternative models from new entrants and diversified offerings from established neobanks will help drive the sector forward.



About: More than half of utilities and consumer finance companies have the ability to digitally process all monthly bill payments. The kicker? Only 12% of them do. The Digital Payments Edge, a collaboration between PYMNTS and ACI Worldwide, surveyed 207 billing and collections professionals at these companies to find out why going digital remains elusive.