In the future, every bank will be a neobank

The kids are all right

The kids are at it again. Not content just to tarnish Jake Paul’s otherwise pristine reputation, they also have decided to take down JPMorgan Chase and other banks that have been with us since the robber barons. And they’ve somehow convinced a bunch of venture capitalists to help them.

On Tuesday, a pair of funding rounds underlined the extent to which the children are our future and those children have decided the future they want is one in which no one ever steps into a bank ever again.

First came the news that Step, a banking app aimed at teens and endorsed by someone named Charli D’Amelio, announced that it had raised a $100 million round of Series C funding. Not to be outdone, a startup called Greenlight that lets parents create kid-friendly bank accounts, raised $260 million in Series D financing and doubled its valuation to $2.3 billion. (And that was just a few days after it was announced that Bill Gates put some money into Till Financial, which kind of sort of does the same thing.)

It’s not just kids driving this trend toward mobile-first banking: Millennials are also getting in on the fun, as Current—a challenger bank whose average customer age is a near-ancient 27raised $220 million in Series D funding. (Apparently Current also has an offering for teens, according to TechCrunch, but it’s mainly just “focused on onboarding people to the financial system,” says founder & CEO Stuart Sopp.)1

So what’s happening here?

The trend toward mobile-first and mobile-only banking is not necessarily new, as companies like Chime in the U.S.—and Monzo, N26, Revolut, and Nubank internationally—have shown that you can attract millions of users with low fees and better banking apps.

Not to mention that in the wake of the COVID-19 pandemic, interest in going to a brick-and-mortar banking location or paying someone in cash is probably at an all-time low. If for no other reason than necessity, many people around the world have had to get used to the idea of mobile and contactless payment over the past year.2

But the acceleration of challenger bank funding is also maybe a sign that we’ve reached a tipping point, at least among those who are setting up their first accounts.


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1

Side note: I’m fascinated by the fact that Andreessen Horowitz led the investments in both Greenlight and Current—two companies which, theoretically at least, should be considered competitors?

2

If you’re like me, you’ve been carrying the same $53 in cash in your wallet for the last 14 months, with nowhere to spend it.