Brazilian Digital Bank Neon Raises $95 Million
Brazilian Digital bank Neon has reportedly raised $95.27 million in a funding round led by Banco Votorantim and the General Atlantic fund. Neon claims a customer base of 2 million users and claims 25,000 new accounts – each day. The additional funding will help the digital bank grow with expectations to triple that number by 2020.
According to Neon co-founder, Pedro Conrade:
“Most of the capital will go to hiring people, especially in technology. Neon has already hired at a fast pace: it will close the year with about 600 employees, triple what it had in early 2019. In addition, more vacancies should be opened next year, with an eye on expanding the portfolio of Company products founded in 2016. After many experiences and user feedback, our product is round and ready to expand. We want to be a complete account that meets all customer needs.”
In 2018, it was reported that Neon Pagamentos had been suspended by the Central Bank of Brazil. The issues came to light following the announcement of a successful Series A funding round – one of the largest ever in Brazil.
Later that year, Neon established a partnership with Banco Votorantim, a top ten bank in Brazil.
Today, Neon claims 25,000 new accounts – each day.
Neon adheres to the ethos of a digital bank. Quick to iterate and branch free. To quote the Neon site:
“We get tired of paying for what we don’t use, wasting hours in lines, going to the branch and listening to traditional bank blah blah blah blah.”
Flourish Ventures explained why then invested in Neon in July 2019:
“Beyond high fees, customer service, and access [to banking] is poor in Brazil, requiring customers to jump through cumbersome hoops whenever they want to change something in their account or when they have a question. Distance to a branch is a barrier for many. In Brazil, about 33 percent of adults surveyed by Findex said banks were too far away, 50 percent higher than the global average. It is no wonder that while over 80 percent of Brazilians have a smartphone, only 70 percent have a bank account. The gap is even wider among millennials. Enter Neon, one of the first full service, digital banks in Brazil.”
Lower cost, better service, all on your mobile phone. Meanwhile, banking in Brazil is dominated by a few traditional banks which have proven slow to change.