What's happened
Digital banks Zopa and Qonto are expanding their offerings in the UK and France, respectively. Zopa has launched a new current account with cashback and high savings rates, while Qonto is pursuing a banking license to enhance its services for SMBs. Both aim to attract more customers amid increasing competition.
What's behind the headline?
Zopa's Strategy
- Zopa's new current account, Biscuit, offers competitive features like:
- 7.1% AER on savings
- 2% cashback on direct debits
- No overseas spending fees
- This positions Zopa as a strong contender in the UK market, appealing to customers seeking better returns and flexibility.
Qonto's Ambitions
- Qonto's pursuit of a banking license is driven by:
- The need to offer comprehensive financial services, including lending and savings.
- Aiming for 2 million customers by 2030, up from 600,000.
- Competitors like Revolut and Memo Bank are also vying for market share, indicating a rapidly evolving fintech landscape in Europe.
Market Implications
- The entry of Zopa and Qonto into more comprehensive banking services reflects a trend where digital banks are increasingly challenging traditional banks.
- As these fintech companies expand their offerings, they will likely reshape customer expectations and drive innovation in the banking sector.
What the papers say
According to The Guardian, Zopa's new account, Biscuit, aims to attract customers with features like 'cashback on spending and interest rates of more than 7% on regular savings.' Meanwhile, TechCrunch reports that Qonto's CEO Alexandre Prot stated that the company is pursuing a banking license to enhance its service offerings, which is crucial for its growth strategy. This competitive landscape is further emphasized by the fact that Zopa holds a full UK banking license, providing deposit protection, while Qonto seeks to transition from a payment institution to a credit institution to better serve its customers.
How we got here
Zopa, originally a peer-to-peer lending platform, has transitioned to a digital bank and is now introducing a current account. Qonto, targeting European freelancers and SMBs, has operated under a payment institution license since 2018 and is now seeking a credit institution license to broaden its services.
Go deeper
- What features does Zopa's new account offer?
- How will Qonto's banking license impact its growth?
- What are the competitive advantages of these digital banks?
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