The Early Days of Neobanks in Europe: Identification, Performance, and Riskiness

Alberto Citterio (), Bernardo P. Marques () and Alessandra Tanda ()
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Alberto Citterio: University of Insubria
Bernardo P. Marques: Universidade do Porto
Alessandra Tanda: University of Pavia

Journal of Financial Services Research, 2025, vol. 68, issue 2, No 1, 153-199

Abstract: Abstract This paper identifies banks born with a digital business model (‘neobanks’) and examines their performance and riskiness vis-à-vis traditional peers. We propose a novel approach to identify neobanks, based on non-financial hand-collected data, and identify 65 neobanks operating in Europe. We show that neobanks perform worse than their traditional peers, while recording a similar level of risk. Namely, neobanks charge higher interest income, record higher impairment charges, and face higher non-staff expenses. Further analysis suggests the presence of economies of scale and scope in digital banking. Our findings are robust to endogeneity concerns and changes to our baseline specification.

Keywords: Neobanks; Digital banks; Business models; Bank performance (search for similar items in EconPapers)
JEL-codes: G20 G21 G28 G32 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10693-024-00433-x

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