The first online bank -Security First Network Bank, commonly known as SFNB-, was founded in 1995, just a year after the giant Amazon started its activity. However, if digital commerce did not take long to take off, exclusively digital banking has had a harder time taking off. That’s largely because traditional banking launched digital services that were good enough not to invite their old customers to switch to new competitors.
That trend started to change three or four years ago, first in the UK, then in the rest of the world. Digital companies with strong investors behind them began to win customers: first Monzo, then Revolut, and followed by Starling, Nubank, Chime…, among many others.
However, we have yet to see a company gain significant ground in the small business arena. Yes, there are firms that are dedicated to granting loans to small and medium-sized companies, such as Kabbage, Square, Paypal, Amazon or Brex, to name just a few. Instead, there is not yet a place where those same small businesses have all their financial needs covered in a single interface.
How to finish which are the best digital banks
The interesting thing, therefore, will be to determine which are the best digital bands for business. To be considered banks, they do not even need to be regulated as such as long as they offer the three main products in the same user interface: deposits (that is, a checking account), credit or debit cards, and lines of credit.
By this definition, PayPal is a bank, just like Square and Amazon are. By contrast, Kabbage, by offering only lines of credit, is not.
Finally, to be considered for the list, companies must be focused on small business financial services (which eliminates PayPal, Amazon and Square) and be predominantly digital (which excludes Wells Fargo, BofA or practically any traditional bank). Instead, divisions of traditional banks are included in the list as long as they operate under an independent arm, such as BBVA’s Azlo.
The list:
Using their own data and sources such as Pitchbook, Crunchbase, Craft and SimilarWeb, this is the list compiled by Fintechlabs in May 2021:
- Brex
- NEW
- Mercury
- rh
- Lili
- Oxygen
- Grasshopper
- NorthOne
- Relay
- AZLO (BBVA)
- Joust (ZenBusiness)
- Seed (Cross River Bank)
