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Insights: “Where’s Waldo” and Neobank Profitability.

Nov 17, 2020

"Where's Waldo?" is an iconic series of children's puzzle books, in which readers are challenged to find a character named Waldo, identified by his red-and-white-striped shirt, bobble hat, and glasses.  It is difficult to spot Waldo because the author camouflages him among similar-patterned backgrounds.

The slowdown of the global macro in recent months caused a major re-evaluation of the investment attractiveness of neobanks.  At the same time, there are some clear winners and losers in this process.  So, let’s see if we can “spot Waldo” and discern any trends by training our pattern recognition on the recent neobank newsflow.

  • Revolut: for a long time, Revolut remained the darling of the European fintech VC scene.  However, based on YE2019 results, staff tripled to 2,261, and so have losses with a whopping 67% Net Loss margin. Despite having raised $500M at a reported $5.5B valuation earlier this year, Revolut is reportedly losing a lot of revenue so far in 2020, and is focused on cost-cutting, applying for banking licenses, and bolstering up its revenue stream with premium services.
  • Monzo: this major European neobank was forced to raised money this year at a 40% discount to its valuation the year before.  The continuing massive operating losses and valuation decline triggered the ousting of the founder, and installation of a professional banker CEO by the VC investors.  In July, the company went as far as saying that the pandemic had threatened its ability to operate. 
  • Xinja: top contender in Australian neobank scene, Xinja attracted over $100M in deposits in the first two weeks of operation.  However, it was since forced to cut its interest rate dramatically and stop taking new deposits to cut operating losses.  It is also trying to accelerate a lending product to bolster its profitability.  A financing round with a Middle Eastern investor has been put on hold, putting the company in a precarious financial position.
  • Starling: in sharp contrast to its more “glamorous” neobank peers, Starling was founded by a banking veteran, and has taken a much more measured approach to growth.  Its focus on building up a profitable book of loans and cost control are paying off, with the bank projecting to break even by the end of 2020.  It was also able to benefit from the government SME support programs in the UK, unlike its more consumer-focused rivals.
  • Chime: this US neobanking contender saw its valuation increase 10x in the last 18 months.  Chime doesn’t have its own bank license, and its revenue model remains mainly interchange fee driven.  However, customer growth numbers have been accelerating through the pandemic, most recently reaching 8 million.  It has made first steps into lending by offering a free overdraft facility to its direct deposit customers.
  • Nubank: having reached a 25M client mark this year, Brazil’s Nubank is boosted by the massive shift to digital as a result of the pandemic.  An innovative credit card lender from the start, Nubank has not only increased its revenues by over 50%, but also was able to sharply cut its losses to only $16M in 1H 2020.  Nubank continues with a strong momentum on strategic development as well, having expanded into Mexico organically and investment services through acquisition of Easynvest.
  • Tinkoff: the only publicly listed neobank globally, Russia’s Tinkoff remains one of the most profitable banks in the world.  Although its ROE declined from the 70’s to the 40’s percentage mark from year before, Tinkoff considered and rejected a $5.5B bid from Yandex in the last couple months.  Already a top 3 player in credit cards in Russia’s highly competitive consumer lending market, Tinkoff is maintaining a strong growth and profitability momentum.

So, getting back to our “Where’s Waldo” game, what are the common characteristics of the “winners” vs. “losers” in the global neobank race:

  • Emerging vs. Developed Markets. The Emerging Market players Nubank and Tinkoff have been a major beneficiary of transactions moving into the digital sphere.  On the other hand, for Developed Market players, transaction volumes are actually down sharply due to the lockdowns. 
  • Transactional Revenue vs. Lending. The drop in interchange transaction volumes in the developed markets hits particularly hard the neobanks that are very dependent on interchange revenue:  Revolut, Monzo, Xinja.  By contrast, the lending-focused Starling, Nubank, and Tinkoff are booking some losses, but generally continue at strong positive contribution margins and improve their profitability.
  • Bank License vs Other License. To execute the Lending business model, a bank needs to be able to take its own deposits.  Most of the “winners” are fully licensed in their countries as a deposit-taking bank, and the ones that are not (e.g. Revolut, Varo) are scrambling now to get their own bank license. 

Incidentally, tonik’s strategy has been from the start focused on these three pillars of profitable operation: Emerging Markets, Consumer Lending, and Own Bank License.  Ok, I’m off to Lazada to buy a striped shirt and bobble hat.  Can you see Waldo now? ????

Greg Krasnov Ambassador ES (1)

Greg is the Founder & CEO of tonik (, the first digital neobank in the Philippines, and one of the few neobanks globally that is operating on the basis of its own bank license.  tonik is backed by major international Venture Capital investors, including Sequoia Capital, Point72 Ventures, Insignia Ventures, and Credence Partners. 

Prior to starting tonik, Greg co-founded and chaired four other successful fintech startups in Asia: Credolab (, FLOW (, Solarhome (, and AsiaKredit (  Greg invested into and supported these ventures through his Singapore-based fintech venture builder FORUM (, in partnership with some of the leading Venture Capital funds in Southeast Asia.   

Prior to moving to Asia, Greg was the Founder/CEO of one of the top private equity-backed success stories in Consumer Lending in Eastern Europe, Platinum Bank (Ukraine), which was exited in 2013 generating over $150 million for the investors.  Before that, Greg spent 10 years in Private Equity in Europe at Bank of America (London) and Innova Capital (Warsaw).  A serial entrepreneur at heart, Greg’s launched his first business at the age of 18, earning his way through college in the USA through coding and PC repair. 

Global citizen, having lived in 8 countries across 3 continents, and done business in 40+ countries, currently residing in Singapore.  Married, with one son.  Lifelong hobbies include sailing and music. Considering balance to be key to a successful life, Greg had lived and cruised Southeast Asia aboard a sailboat for 2 years with his family, as well as recorded two albums, one of which is published on Spotify.  Greg is a long-standing member of the global Young President’s Organization (, and the Founder of its Kyiv Chapter.  Fluent in English, Polish, and Russian.  Graduate of Cambridge University (UK) and Arizona State University (USA). 


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