5 challenger banks booming in the Americas

By Pavithra R

The challenger bank trend began in Europe, and since then it is flourishing across all parts of the world. Challenger banks are small, recently-created retail banks that compete directly with the longer-established banks and gives consumers more options in the FinTech world. 

A few features that separate challenger banks from traditional retail banks include, superior apps, easy signing up with mobile apps, instant notifications, users can block and unblock their cards, better transparency and users can control features, such as foreign payments, ATM withdrawals, online transactions, etc. Challenger banks are still in the growing phase, and with the introduction of more and more innovative solutions, the sector is to become highly competitive.

Here is a list of 5 Challenger banks booming in the Americas:

Neon (2016)

HQ: Brazil

Neon Pagamentos is a Brazilian FinTech with the mission to unite technology and design to redesign and simplify people’s financial experience. Neon was born with a clear purpose: to provide an accessible bank account to any Brazilian, placing user experience at the center of everything. Recently, the firm raised $300 mn in Series C funding led by General Atlantic.

The increased demand for digital-based services amid the pandemic has accelerated Neon’s growth trajectory. The firm to meet the increasing customer demand has provided an alternative to in-person banking solutions and has seen a surge in investments, deposits, and online purchases and an uptick of 26% in new users since March. Neon was launched with a simple digital account. Since then, the company has expanded its product suite to include investment products, personal loans, and credit cards, among other new offerings and features.

Nubank (2013)

HQ: Brazil

Nubank is a well-funded challenger bank in Latin America developing simple, secure, and 100% digital solutions for customer’s financial life. The FinTech launched its first product in 2014, a credit card with no annual fee managed entirely by a mobile application. In 2017, Nubank launched its proprietary loyalty rewards program (Nubank Rewards), as well as a digital account (NuConta) that is already used by more than 17 million people. In 2019, the company began testing its personal loan product and took its first steps in international expansion, opening offices in Mexico and Argentina. Currently, the firm is standing at a $10 Billion valuation.

Chime (2013)

HQ: United States

San Francisco-based Chime, found by veterans Chris Britt and Ryan King, aims to change the way people feel about banking. The FinTech is leading the U.S. challenger banking segment, helping members avoid bank fees, save money automatically, and lead healthier financial lives. Chime members receive a Chime Visa debit card, a Spending Account, a Savings Account, and a mobile banking app that keeps members in control. The firm does not take profit from people but earns a profit amount from Visa (paid by the merchant). The company has raised $ 1 billion in funding to date and is standing at a $5.5 billion valuation.

SoFi (2011)

HQ: United States

SoFi is a values-driven company that helps people achieve financial independence to realize their ambitions. The FinTech creates modern financial products and services that help people borrow, save, spend, invest, and protect their money better. Its membership comes with the fundamental essentials for getting ahead, including career advisors and connection to a thriving community of like-minded, ambitious people. Recently the company announced the go-live of Samsung Money by SoFi in the United States. To date, the firm has raised $2.5 billion in funding and is standing at a $4.8 billion valuation.

Ualá (2017)

HQ: Argentina

Ualá is a personal financial management mobile app linked to a Mastercard prepaid card that allows users to conduct financial transactions. Through the mobile application, users can carry out a wide variety of financial transactions, including transferring money, paying bills, loading balance on prepaid cell phones, and SUBE transport cards, among others. The app also allows users to track expenses through an analysis tool. It no issuance, renewal, maintenance, and closing costs. To date, the firm has raised $194 million in funding and is standing at a $950 million valuation.