Most analysts expected neobanks to consolidate in 2025. The opposite happened. The number of neobanks operating worldwide grew from 397 to 451 between January 2025 and January 2026, according to Simon-Kucher’s annual neobanking report. Funding rounds continued. New markets opened. And the largest neobanks posted their strongest financial results yet.
Why Consolidation Was Expected
The case for consolidation was reasonable. Venture capital funding for neobanks fell from $14.8 billion in 2021 to $4.2 billion in 2024, per CB Insights. Rising interest rates increased the cost of deposits for neobanks that rely on wholesale funding. Customer acquisition costs rose as digital advertising became more expensive. Several smaller neobanks shut down, including Xinja in Australia and Moven in the United States.
The prediction assumed that neobanks without a path to profitability would either merge, sell to incumbents, or close. Some did. But the sector as a whole kept expanding because the largest players reached profitability and new entrants targeted underserved geographies.
Digital banking customers are expected to exceed 3.6 billion by 2028. That market is large enough to support hundreds of competitors, particularly because banking preferences vary by country, language, and regulatory environment.
The Profitability Wave
Nubank, the Brazilian neobank, reported $1.97 billion in net income for 2025, according to its investor relations filings. That made it more profitable than several traditional Brazilian banks. Nubank has 105 million customers across Brazil, Mexico, and Colombia.
Revolut reported pre-tax profit of $545 million for 2025 on $3.4 billion in revenue. The company received its U.K. banking license in July 2025 after a three-year application process. Monzo, the U.K. neobank, reported its first annual profit of $24 million in fiscal year 2025 on $880 million in revenue.
In the United States, Chime reported $1.8 billion in revenue for 2025 and positive EBITDA for the first time. SoFi, which operates as a digital bank through its national bank charter, generated $2.1 billion in revenue and $400 million in net income. Over 300 fintech companies have achieved billion-dollar valuations, and the neobanks that have reached profitability are among the most valuable.
Where New Neobanks Are Launching
New entrants are concentrated in markets where traditional banking is expensive or inaccessible. In Southeast Asia, 28 new digital banks launched between 2023 and 2025, per the Monetary Authority of Singapore. The Philippines alone issued six digital banking licenses. Indonesia licensed four. Malaysia and Thailand each added two.
In Africa, neobanks are growing fastest in Nigeria, Kenya, South Africa, and Egypt. Moniepoint, a Nigerian fintech, processed $180 billion in payment volume in 2025 and operates as a de facto digital bank for millions of small businesses. Fintech startups are expanding across emerging markets, and neobanking is one of the primary models.
The Middle East is also active. Saudi Arabia’s STC Bank reached 8 million customers. The UAE licensed three digital banks in 2024. Bahrain’s central bank has created a regulatory sandbox specifically for neobank applicants.
The Revenue Model Has Matured
Early neobanks relied almost entirely on interchange fees from debit card transactions. That revenue model was fragile. Interchange rates are set by card networks and can be regulated downward, as the Durbin Amendment did in the United States.
Successful neobanks have diversified. Nubank generates 62% of its revenue from lending products, including personal loans and credit cards. Revolut earns revenue from foreign exchange, cryptocurrency trading, insurance, and subscription plans. Monzo launched business accounts and small business lending. Chime charges no fees to consumers and relies on interchange plus a premium account subscription at $5 per month.
Fintech infrastructure platforms represent a $150 billion opportunity, and neobanks are both users and builders of this infrastructure. Several neobanks now license their technology to other financial institutions. Starling Bank in the U.K. generates more revenue from its Engine banking-as-a-service platform than from its consumer bank.
What the Skeptics Got Right
The consolidation thesis was not entirely wrong. Smaller neobanks without differentiation or a path to profitability have struggled. At least 19 neobanks shut down globally between 2023 and 2025. Dozens more have been acquired, often at valuations below their last funding rounds.
Customer acquisition costs remain a challenge. The average cost to acquire a primary banking customer in the U.S. is $350 for neobanks, compared to $175 for traditional banks with branch networks, according to Bain & Company. Neobanks that cannot convert free accounts into revenue-generating relationships will continue to face pressure.
75% of banks now collaborate with fintech startups, and some of those collaborations involve acquiring neobank technology or teams. BBVA acquired Simple in 2014 and Azlo’s technology in 2021. JPMorgan launched its own digital bank, Chase UK, using technology partly acquired from fintechs.
The neobank sector in 2026 is not a bubble waiting to pop. It is a market that has stratified. The top tier is profitable, growing, and preparing for public listings. The middle tier is viable but subscale. The bottom tier is shrinking. That is how most technology markets mature. Consolidation is happening at the margins. But the center is holding.
