A cross-country comparison of global neo-banks catering to small businesses

1. Global Overview
SME NEO-BANKS
• Global Players
• Ecosystem Factors
• Ownership & License
• Product Innovation
• Business Models
• Indian Opportunity
• Founder Analysis

2. SME neo-banks are new generation digital banks offering value-added business banking
services for underserved segments like small businesses, startups, and freelancers
Global PlayersSME NEO-BANKS
IndiaAmericas
United States
Latin America
#
Europe
United Kingdom
# #
European Union
#
China
Mainland China
Hong Kong
Rest of the world
Singapore Australia
# Indicates neo-banks having SME & retail operations
#
#
Neo-banks mentioned are representative and not exhaustive
Yilian Bank

3. Europe & China are two of the more mature SME neo-bank markets with
supportive digital banking licensing and tech-savvy small businesses
Ecosystem FactorsSME NEO-BANKS
India China Europe America
Market Maturity
(Average Age of Neo-bank)
2.1 years 5.6 years 6.4 years 4.8 years
Digital Banking License No Yes Yes No
Number of Existing
Players
Less than 5 5-10 More than 10 5-10
Total Funds Raised* $168 Mn $2.7 Bn $1.8 Bn $33 Mn
* Neo-banks with undisclosed funding details have not been considered for total funding

4. Chinese neo-banking space is dominated by the TechFins while Europe & Americas have a mix of
independent & bank-owned neo-banks. Neo-banks leverage both own & bank-partner license to operate.
Ownership & LicenseSME NEO-BANKS
India
*Deposit account services provided by partner bank
China Europe America
OwnershipLicensePartner*
Independent Ownership Independent Ownership
Independent Ownership
Independent Ownership
Own-License
Own-License
Own-License
Own-License
Own-License
Own-License
Own-License
Own-License
Yilian Bank
Yilian Bank Own-License

5. Current account, business loans, corporate cards, accounting & invoicing are common offerings
across SME neo-banks globally. Competition is boosted through value-added services.
India China Europe America
• Automated book-keeping
• API integrations
• B2B marketplace
• Loan approval 0.3 seconds
• 240,000 transactions
per second
• Lending to lower mid-
market businesses
• White-labelled tech
platforms to global FIs
• Streamlined lending
through integrations
• Business banking
community
• Banking APIs
• Workflow & CRM
• Payments processing
• Digital loans - 3 mins to
apply, <1 sec to approve,
0 human intervention
• Point of sale banking
• Company incorporation
• Sub-accounts
• Integrations with
accounting, payments &
e-commerce providers
Product InnovationSME NEO-BANKS

6. A freemium subscription-based model is followed by majority of the neo-banks.
Transaction fees, interest income and technology outsourcing make up primary revenue streams
Business ModelsSME NEO-BANKS
India China Europe America
Operating model
• License
Bank Partnerships Digital Banking License
Digital Banking License/ Bank-
Partnerships
Bank Partnerships
• Technology In-house Platforms In-house Platforms
In-house Platforms / New-Age Tech
providers
In-house Platforms / New-Age
Tech providers
Revenue Model
Freemium
Subscription
Service-based Freemium Subscription Transaction-based
Major Revenue
Sources
1. Transactions
2. Deposits interest
3. Subscription
4. TPP Commission
1. Loan interest
2. Deposits interest
3. Banking as a Service
1. Transactions
2. Loan interest
3. Deposits interest
4. Subscription
5. TPP Commission
6. Banking as a Service
1. Transactions
2. Deposits interest
3. TPP Commission
TPP = Third Party Providers

7. Neo-banks have a super-efficient digital-only operating models with a significantly higher customer
to employee ratio as compared to traditional banks
//
WeBank*
MyBank
k 1000k 2000k 3000k
Open
RazorpayX*
InstantPay*
Tide
Coconut
Penta
Starling Bank*
CountingUp
Holvi
Qonto
NorthOne
0
100
200
300
400
500
600
700
800
k 50k 100k 150k 200k 250k 300k 350k 400k
NumberofEmployees
Number of SME Customers
India Europe China America
* Neo-banks have other business units apart from SME banking as well
100x EfficiencySME NEO-BANKS

8. The Opportunity
• MSME sector contributes 28% to GDP,
employing 111 million people
• 63.38 million MSMEs in India, of which
63 million are micro-enterprises
• Only 11% MSMEs access formal credit.
• Overall credit gap in the MSME sector is
estimated to be ₹20 – 25 trillion.
• 15+ MSME-supportive government
schemes in India
• Launched - 2017
• HQ - Bangalore
• Services - 400,000+
SMEs & startups
• Launched - 2018
• HQ - Bangalore
• Services - 5000+ SMEs
& large enterprises
• Launched - 2019
• HQ – New Delhi
• Services - 23000+ SMEs
& large enterprises
• Founded 2018
• HQ - Gurugram
• Services - SMEs &
large enterprises
MSMEs are the new focus of Aatmanirbhar Bharat with a potential to boost the economy to higher levels
Source: U K Sinha Committee Report on MSMEs
India OpportunitySME NEO-BANKS

9. India China* Europe America
Neo-bank
Avg.Years of
Experience
15 11 20 30 - 12 20 21 9 17 29 19 18 13 17
Female
Founders
2 - - - - - - - - - - 1 1 - -
In which industry did the founders start?
Finance
✓ ✓ ✓ ✓ ✓
✓
✓ ✓ ✓ ✓ ✓ ✓
Information
Technology
✓ ✓
✓
✓
Consulting ✓ ✓ ✓ ✓ ✓ ✓
Other
✓ ✓ ✓
✓
✓
✓
✓
✓
✓
✓
✓ ✓
66% of SME neo-banks’ founders are outsiders (i.e. they started from industries other than finance)
Founder AnalysisSME NEO-BANKS
* CEO of Chinese neo-banks have been considered

10. Disclaimer: All views & opinions mentioned are personal and do not represent views of any organisations or institutions.
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