Facing stiff competition, Revolut broadened its free offerings in hopes of attracting new US customers. The change runs opposite its UK strategy, which is focused on boosting fees, and driving paid subscriptions—ultimately increasing the bottom line. The big takeaway: Steep costs will limit a foreign neobank’s ability to grow in the US.

Revolut. Security Intelligence. TechCrunch.

Incumbent FIs are reacting to that growing interest: Wealth managers like Morgan Stanley are providing portfolio exposure to clients, and banks might seek to close the gap on challengers like Revolut and offer custody. This will be a boon for B2B crypto firms that give incumbents the tech needed to build their own products, demonstrated by NYDIG’s $1 billion raise in December.

Data drilldown: Mammoth funding rounds drove the figures, including those of Revolut, Monzo, Copper, Checkout.com, and Starling. Late-stage and early-stage rounds got the most funding, pulling in $7 billion and $27 billion, respectively. Growth-stage level followed with $1.6 billion. By number of deals, the seed stage saw a decrease in funding (securing less than $1 million).

Revolut. TechCrunch. The Motley Fool. The Wall Street Journal. U.S. Bank. Varo Bank.

UK-based neobank Revolut just entered the US-Mexico corridor, offering 10 fee-free transfers a month to its customers and a fixed transaction fee range to ensure low costs. US-based Intermex plays a large role in the Latin American remittance space: In Q1 2021, Intermex had a 19.6% share of its four core markets of Mexico, Guatemala, El Salvador, and Honduras—up from 19.4% in 2020.

The neobank will enhance its competitive advantage versus prominent UK challengers: it plays in the less-crowded mortgage space, unlike Revolut, Starling, and Monzo. If scaling in mortgages proves successful, it would combine its first-mover advantage with a sophisticated way of originating mortgages to build a moat.

Making personalized plays to customers gives the incumbent a way to stay competitive against UK neobanks—like Revolut, Starling, and Monzo—because it’s going beyond simply making digital products available; instead, it’s centering them around customers' needs.

In the West, the additive model led to providers like PayPal and Revolut. The mature landscape of offerings in those markets compelled providers to add something on top of the status quo to catch on.

UK neobank Revolut closed an $800 million Series E funding round in July that valued the company at $33 billion. US neobank Chime raised $750 million in August, achieving a $25 billion valuation.

And banks are starting to offer crypto services to keep customers on their platforms: Customers are increasingly using exchanges, and challengers like Venmo and Revolut already offer trading. Several large wealth managers, including Morgan Stanley and Goldman Sachs, partnered with fintechs like NYDIG to offer their clients exposure to Bitcoin.

Meanwhile, neobanks, such as Upgrade and Revolut, are blending BNPL with digital money management tools, moving the needle on innovation. Higher risk attracts scrutiny and threatens to slow growth. BNPL may attract those with poor credit as well as consumer-protection watchdogs.

Revolut offers expense management as part of its targeting small businesses. Tide plans to add expense management next year. Brex became a decacorn by offering a corporate credit card alongside financial management tools like expense tracking. Credit card and accounting fintech Ramp reached a $3.9 billion valuation in August.

The company also has a timely opportunity to do so: UK-based Revolut—which, as Stalf noted in his interview, also competes in Eastern Europe—is making a significant push in the US. N26’s new war chest, plus related plans to hire 1,000 staffers globally, also give it the means to mount its Eastern European push.

UK-based Revolut reached break-even status for November 2020, according to NECN. Chime, based in the US, disclosed in September 2020 that it had a profit when measured by EBITDA, per TechCrunch. The big takeaway: Nubank’s milestone shows that its strategy of initially focusing on user scale before shifting gears to monetization has paid off at home—and it could replicate that strategy abroad.

Zopa’s UK customer base of 500,000 also trails behind the likes of Monzo (5.8 million), Revolut (3.1 million), and Starling (1.9 million), per a 2021 Insider Intelligence forecast. Yet Zopa says it is approaching profitability by year-end, indicating that its focus on savings accounts, which creates the capital to finance its personal and car lending operations, is paying off.

Klarna and PayPal both revamped their apps in fall 2021 with additional shopping features, but Square, Affirm, Revolut, and others are also making noise about becoming super apps. In the future, these apps will likely add additional shopping, travel, and health marketplace features. Predictions. Consumers will hit a limit on how many subscriptions they’re willing to join.

It’s also a customer acquisition and retention incentive in the UK offered by Revolut and Monzo. The ability to generate a paper check from the mobile banking app and mail it for free is a valuable payments tool when electronic transfers won’t suffice.

Western fintechs like US-based PayPal and UK-based Revolut are rebundling services to emulate the successes of early super apps, such as China-based WeChat and AliPay. Lydia’s new trading feature is part of its own super app strategy and will likely draw on its $131 million Series B funding from December to continue expanding its product suite. However, our matrix covered 57 features per super app.

Major insurtech players include Cover Genius, Boost, and Qover, which have enabled the likes of Deliveroo, eBay, and Revolut to offer insurance. Other nonspecialist full-stack insurtechs are also embedding their solutions on third-party platforms. In 2022, insurers will build or augment their embedded insurance strategies. Here are their key options:.

Deeper dive: To learn more about why Revolut faces a tough road ahead in the US digital brokerage space, read this article from our Fintech Briefing.

Revolut recently updated its paid accounts with new purchase protection and insurance benefits. Earlier this year, Monzo introduced its paid subscribers to new virtual card capabilities and expanded functionality for clients who connect their outside bank accounts to its app.

Neobanks: Digital-only insurgents in the UK include Revolut, Starling, and Monzo. All three have seen sizable recent growth in their user bases. They have also been rolling out a slew of products, ranging from Monzo’s Flex buy now, play later (BNPL) offering to Revolut’s early-wage access. Direct bank: Fellow US banking giant Goldman Sachs offers Marcus in the UK.

The news: Revolut will make a plunge into the buy now, pay later (BNPL) space, per the Evening Standard, citing an interview with its CEO, Nikolay Storonsky. The UK neobank intends to test the offering next year in parts of Europe, with plans to deploy it for its 17 million users.

Revolut: The fellow UK neobank’s CEO, Nikolay Storonsky, disclosed the company’s BNPL plans in an Evening Standard interview just four days before the publication reported on Monzo’s plans. Square: The US-based fintech and business neobank said in August 2021 that it’s seeking to acquire Australian BNPL company Afterpay in a deal worth around $29 billion.