Investing is becoming more accessible thanks to tech advancements, easier access to investment services, and better investor education and trust. Neobanks play a crucial role in this shift, having already transformed the financial services industry and amassed millions of loyal customers throughout Europe.
We took a deep dive into consumer neobanks in Europe, analysing 60 companies to see how common investing services are in 2024 and what types of services are on offer.
How common is investing among neobanks?
Our analysis reveals that just over half (53%) of neobanks in Europe now offer investment services to consumers. That’s an almost 10% increase compared to our survey in 2022.
For instance, UK digital bank Monzo rolled out an investment service in the last year, giving its 9 million users access to three funds. Meanwhile, Swiss-neobank neon introduced its own service, offering a range of stocks and exchange-traded funds (ETFs) in a country where more than a quarter of people are now investing.
When it comes to the most popular financial instruments, funds take the lead, followed by ETFs, stocks, crypto, and bonds. Both Monzo and neon are leading with ETF offerings, which aligns with the trend as ETFs broke a quarterly net sales record in Europe in Q4 2023.
Half of neobanks currently offer a single financial instrument, while the other half offer more variety. This suggests a balance between simplifying investment offerings and catering to different investor preferences. It’s also common for digital banks to introduce new investment options over time, like N26 did at the beginning of 2024 by rolling out stock and ETF trading in addition to its existing crypto offering.
Investing across Europe
The proportion of neobanks offering investments varies significantly by country. In Italy and Spain, consumers have access to investments at all neobanks we examined. However, in the UK and France, fewer neobanks have introduced investing services, with coverage being particularly low in France at just 22%.
While our analysis focused on neobanks in their home countries, several have expanded across borders, bringing investment services to new markets. Revolut, for instance, has launched in several European markets and recently surpassed 30 million retail customers worldwide. This includes France, where 2.2 million Revolut customers have access to investment services.
International expansion by neobanks contributes to the democratisation of investing. But how easy is it for them to do so? From a regulatory standpoint, firms authorised to offer investing in one EU state can leverage the EU passporting system to offer services in other states with minimal additional authorisation. However, practical considerations like consumer preferences and local investment infrastructure also play a significant role. European investors seek access to local instruments and the ability to benefit from tax-free wrappers such as ISAs in the UK, ISKs in Sweden, or ASKs in Norway. For example, UK-based neobroker Freetrade learnt the importance of offering Swedish equities through tax wrappers when it launched in Sweden in 2022.
Empowering investors
Increasing the availability of investment platforms is just one area that’s important for democratising investing, according to an insight report by the World Economic Forum. The other key areas, they say, are education and trust.
We explored the role of investor education in a previous article, but our neobank survey reveals that some fintechs are implementing ways for customers to access support in three areas.
A quarter of neobanks in our study offer dedicated learning platforms that go beyond basic FAQs or blog articles, providing a structured way for new or less confident investors to enhance their knowledge.
A few neobanks offer premium advisory services, though these tend to be reserved for clients who meet higher capital thresholds due to the cost of offering dedicated advice.
Social trading, where investors can learn and interact directly with others, isn’t yet widespread but is gaining traction. French neobank Lydia is one neobank to have implemented this concept, allowing customers to invite friends and family to follow their portfolio.
Value proposition
Neobanks have become integral to the financial ecosystem by focusing on streamlining user experiences, lowering fees, and innovating. Another reason they’re effective in democratising investing is their appeal among younger generations, who are investing at higher rates and at earlier ages than previous generations. Younger investors are also more likely to support environmental, social, and governance (ESG) issues according to a survey by U.S. Bank.
Our analysis shows that almost a third (28%) of neobanks have developed part or all of their value proposition around sustainable investing, although this figure hasn’t changed much over the past two years. ESG fund performance has suffered recently with challenging market conditions, although the long-term story for ESG remains strong according to a recent FT article.
Artificial intelligence (AI) is another area gaining attention, with Spain’s Openbank recently adding an AI-powered stock investment tool to its portfolio.
How are neobanks implementing investment services?
A majority of neobanks (56%) have chosen to partner with wealth technology firms to launch their investment services due to the cost, complexity, and time needed to build necessary infrastructure and regulatory frameworks. Others, like Spain’s Imagin, are neobank brands owned by larger traditional banks that already have the necessary infrastructure.
Some neobanks opt to partner with retail investment firms, resulting in a faster time to market, although they may end up competing for business due to similarities in offerings and target markets. We observed two neobanks using this setup that have removed their investing services in the past year.
Another common option is partnering with B2B investment infrastructure platforms like Huddlestock, offering a broad choice of financial instruments, and flexibility in configuring pricing, and the overall customer experience. These platforms also offer simple integration with existing technology and scalability as neobanks grow.