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The BBVA-owned Finnish challenger bank, which provides banking services to self-employed workers, will shutter UK operations on October 31, per a blog post. Users are being asked to transfer their balances to alternative accounts by the exit date.
Holvi had just launched UK services in January, marking its ninth market overall, but now cites both the coronavirus pandemic and the uncertain regulatory landscape caused by Brexit as reasons for changing its business strategy. For the rest of the year, Holvi will focus on introducing new products to its remaining markets.
This marks the latest neobank exit from the UK market, at a time when homegrown competitors are seeing mixed success. German-based neobank N26 left the UK market in February, saying it would no longer be able to operate in the country with its EU license.
Some UK-based neobanks are also facing issues, with RBS challenger bank Bó shutting down months after launching, partly due to the pandemic. And UK neobank Monzo recently expressed "significant doubt" about its ability to continue operating given the pandemic and stricter financial crime reporting requirements. Yet other players have reported strong results despite the pandemic — especially Starling, which has doubled down on servicing the business segment and may have snatched prospective customers from Holvi.
Holvi's exit could give a boost to other neobanks in the market, and it likely won't be the last to do so. When N26 left the UK, Monzo reported a 250% spike in payments made into Monzo accounts from N26 accounts in one day; Starling reported a jump in customer numbers in the week after; and Monese noted a 200% swell in incoming payments and a bump in new customers.
Holvi's departure could lead to a similar boost for other neobanks in the country, though it's unclear how many users Holvi was able to pick up in the few months it operated in the UK; for context, it has around 200,000 users across all its markets. Nevertheless, we expect neobank consolidation to continue in the already crowded UK space as pandemic uncertainties and ongoing Brexit negotiations put a strain on smaller and larger players alike, leading more to shut down or cease their operations in the UK.
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