So long, challengers? Here’s why neobanks matter today more than ever

I recently found myself at a financial event, surrounded by representatives of big, conventional banks. You know the ones - massive institutions with even bigger egos. They’re like whales in the finance ocean, moving slowly but dominating their territory. As a digital bank CEO (we are at myTU those who are called “challengers"), I had a simple request: “Can we open an account?” The answer, again and again, was no.

“We don’t open accounts for financial businesses or neobanks,” they said.

After a few drinks, an advisor of one of such banks pulled me aside and said, “We know you’re a great company – innovative, interesting, etc. But there’s no way we’re going to acknowledge the competition.”

This is where we are in 2025. Legacy banks still lobby against innovation, clinging to outdated models while pretending fintech doesn’t matter. Moreover, traditional banks have questioned the sustainability of neobanks' business models  and criticized them for allegedly having lax financial crime controls. After Starling Bank was fined £29 million by the Financial Conduct Authority for inadequate financial crime systems, the voices grew louder with articles like “So long, challengers”.

But the numbers tell a different story.

The numbers don’t lie

53% of the world’s population is expected to access digital banking services in 2026, reaching over 4.2 billion digital banking users. In Europe, 70% of internet users are already banking online. Countries like Denmark and Finland are leading the way, with 97% of people embracing digital banking. Even in Poland, a market where fintech is still viewed like some exotic animal, foreign neobanks like Revolut are breaking through, ranking among the top 10 banks in retail banking. Mark my words: soon they’ll be in the top five, maybe even the top three.

Why? Because traditional banks are still operating like they’re in the 1970s.

Let me give you an example. As a company, we’ve been trying to open a business account with one of the main legacy banks in Europe. We started in May. It’s now December. Eight months of back-and-forth emails, document reviews, and meetings. Every week, they come back with another question, with something that could have been asked from the start. Meanwhile, we’re regulated under the same rules. We open accounts, too. The difference? Our process takes one week because we use technology to ask the right questions up front and get the answers quickly.

Stability or an illusion?

Traditional banks pride themselves on stability. Nice buildings, big offices, thousands of employees. But stability isn’t about appearances. It’s about liquidity and volumes. I had been  working in old, big, legacy banks for decades. I’ve seen liquidity crises, managed bankruptcies, and watched banks collapse from the inside. Remember Credit Suisse? Everything looked fine until it wasn’t.

Here’s what’s really happening: traditional banks are losing their core income streams. Retail commissions made up 30% of their revenue. Fintechs are already eating into that. Next up? Corporate commissions. Then interest income. Fintechs are starting to issue loans, keeping the margins for themselves while funds still pass through traditional banks. Eventually, legacy banks will hit liquidity gaps. They’ll ask regulators for special loans, and at some point, regulators will say no.

This isn’t just theory. It’s a pattern. It happened with Credit Suisse, and it will happen again. Many of these big players might think they’re untouchable. However, I believe they won’t be here in 10 - 15 years to argue with me then.

Here’s why neobanks matter today

The legacy system is like old plumbing. It worked fine for a long time, but now it’s cracked and leaking. Banks are protected by regulations, but those same regulations also keep them stuck. In countries like Poland, for example, cloud banking isn’t allowed unless the servers are physically located in the country. Banking on Google Cloud with all cost for infrastructure less than 1000 euro per month? What are you guys talking about!

Meanwhile, neobanks are already using cloud-first and AI-driven technologies to streamline processes that legacy banks still handle manually. Old banks rely on armies of compliance officers to review files one by one. In neobanks, AI does the same work faster, cheaper, and more accurately. But legacy banks can’t change because their systems are too bloated. You can’t fire thousands of people. You can’t replace outdated systems without spending more than the bank’s entire capital. 

And so, they sit. They live off reserves and client bases built decades ago, creating nothing new. Progress slows. Efficiency disappears.

Neobanks, or challengers if you want, don’t face those constraints. We’re smaller, leaner, and better equipped to adapt to real business needs. Yes, legacy banks have money to lend. Yes, they have physical branches for people who still prefer face-to-face service. But those advantages are diminishing. The market is changing.

The ongoing banking war

This war isn’t between old banks and neobanks. It’s between old banks and progress.

In the U.S. already a large percentage (from 40% to 60%) of neobank customers use them as their primary bank account, and many of them are younger customers. It’s a generational behavioural change, and no one can stop it. 

To give you more analogy, while old banks are stuck on horsepower, neobanks are already using electricity. AI, cloud technology, instant payments: this is the industrial revolution of banking, and neobanks are leading it.

Legacy banks see us as strange and different. But it’s not fintech that’s in danger. It’s them.