Is niche neobanking over?

The role that BaaS can still play in supporting affinity neobanks

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There’s some great points about the limits of *consumer* niche neobanking in Alex Johnson’s latest post, but #3 (that BaaS is incompatible with niche neobanks) seems... incorrect?

Did any of the examples even use BaaS providers? And if they did, is there clear evidence BaaS got in the way of success? I don't think so.

The only thing that's clear right now is that consumer neobanking is hard. BaaS makes it easy to start a neobank, but building compelling financial products & optimizing unit economics w/ only consumer debit interchange, all while keeping CAC low, is still very tough to do.

Also - why limit the definition of affinity neobanking to B2C models alone? Plenty of neobanks cater to freelancers & SMBs that are underserved, and many have traction. Unit economics also happen to work better (higher interchange rates, more spend, lower fraud, lending revenue, larger balances).

Ultimately, the writing is not on the wall for affinity neobanks - not even close.

• If your neobank mainly relies on marketing to win your demo, it's tough times ahead.

• But neobanks that built specific product features to uniquely cater to their demo can still succeed.