Neobanks are rapidly expanding beyond payments and current accounts, raising a fundamental question for the financial sector: are they becoming a genuine competitive force against traditional wealth-management firms? Recent developments suggest the line between digital banking and entry-level investment services is narrowing at speed.
Neobanks move steadily up the value chain
Over the past decade, neobanks have built their business models around low-fee accounts, streamlined onboarding, and superior app experiences. That formula attracted tens of millions of users globally, but it also restricted revenue potential.
To address this, leading players have begun pushing into savings, investment products, and automated advisory services. Features such as fractional share trading, micro-investing, round-up portfolios, and goal-based savings tools are now standard across several major digital banks.
The result is a gradual migration into territory once dominated by wealth-management firms that specialise in asset allocation, long-term planning, and advisory relationships.
Technology gives digital banks a structural advantage
With no legacy infrastructure and lower operational costs, neobanks can deploy investment tools in ways that traditional wealth-management firms struggle to match. Their platforms rely heavily on automation, AI-guided decisioning, and behavioural data to tailor financial recommendations at scale.
This approach allows neobanks to reach younger, digitally native customers who historically avoided high-fee advisory services. By offering automated investing at minimal cost, they address a segment that private banks and asset managers have often overlooked: first-time investors with modest portfolios but long-term growth potential.
Wealth managers still retain key strengths — for now
Despite the pressure from digital challengers, wealth-management firms maintain several advantages. High-net-worth and ultra-high-net-worth clients depend on personal relationships, complex estate planning, tax structuring, and bespoke investment strategies. These are areas where advisory skill, regulatory nuance, and long-term trust remain critical.
Neobanks, even with AI-driven interfaces, cannot yet replicate the depth of personal service required by affluent clients. For portfolios requiring active management or alternative assets, traditional wealth managers still dominate.
A new hybrid model begins to emerge
The competitive tension is creating a hybrid landscape. Some neobanks are partnering with robo-advisers or asset managers, while others are seeking their own licences to offer regulated investment products. At the same time, wealth-management firms are adopting digital tools to modernise client interactions and onboarding.
This convergence means customers increasingly encounter similar investment features regardless of whether they use a neobank or a traditional advisory firm. The distinction between “banking app” and “wealth platform” is becoming less clear.
The next phase: AI-augmented advisory services
Industry analysts expect the next major competitive battleground to be AI-supported financial planning. Neobanks, with deep behavioural datasets and agile development cycles, are well positioned to build automated advisory tools that mimic certain aspects of wealth-manager guidance.
If regulators permit broader AI-driven investment recommendations, neobanks could quickly scale these services to millions of users — a scenario that would reshape the entry-level wealth market.
A sector preparing for structural change
For now, neobanks remain complementary rather than direct replacements for traditional wealth management. But their rapid growth in investment services, coupled with their ability to reach younger customers inexpensively, signals a long-term strategic threat.
Wealth-management firms may retain the high-value segment, but neobanks are capturing the future pipeline — the customers who will accumulate meaningful assets over the next two decades.
Newshub Editorial in Europe – 25 November 2025
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