The old continent’s digital banks are setting their sights across the pond on the American market, but to thrive, they must overcome considerable regulatory obstacles and cultural differences.
As one of Europe’s leading digital banks, Bunq hoped for quick approval when it applied for a US banking licence in 2023. One year later, the Amsterdam-based fintech withdrew that application due to a misalignment between American and Dutch regulators. Now Bunq is trying a different route. In April 2025, it filed for a US broker-dealer licence, which would allow its American users to invest in stocks, mutual funds, and ETFs.
This two-step approach is only the first move in an ambitious American adventure, a Bunq spokesperson says, adding that the company will “start by making investing effortless and fully transparent, with no hidden fees.” It’s possibly a jab at some US competitors’ less transparent practices.
Prioritising growth above all else
Bunq is not the only European digital bank casting eyes across the Atlantic. UK-based neobanking leaders Revolut and Monzo have also been plotting entry into the US market, riding a wave of renewed investor interest following a post-pandemic fintech funding crunch.
The strategy is a no-brainer for these firms, given slowing customer acquisition in Europe after a decade of breakneck growth and intensifying competition that has compressed margins. After years of explosive expansion in their home markets, growth at home has cooled.
A sense of urgency now permeates the fintech sector as it matures, and it’s expected that only a few digital banks (also known as neobanks) will ultimately dominate globally. Many players have spent years in the red chasing scale, but now some are finally in the black. For example, 2024 was Bunq’s second consecutive year of profitability, reporting €85.3 million net profit (up 65% from 2023’s €51.6 million).
Bunq achieved this feat by capitalising on higher interest rates (earning yields on customer deposits) and maintaining lean operations. It’s a trend mirrored by peers like Germany’s N26 and the United Kingdom-based Monzo, which have also edged closer to breakeven as investor pressure to show viable business models mounts.
One persistent problem for neobanks is that they lag far behind traditional incumbents in the quintessential banking business, i.e., lending. These fintech upstarts have relatively small loan books, so they generate far less revenue from credit products than established banks.
Instead, much of their income comes from sources like interchange fees on card payments, subscription fees for premium accounts, and other transactional charges. This model worked during growth phases, but as expansion slows, the limitations become clear, especially since interchange fees in Europe are capped at low levels (around 0.3–0.4% of a transaction), unlike in the United States, where they average closer to 2%. In other words, European neobanks have been operating with thinner margins on payments and must convince investors they can find new revenue streams.
Compounding these business challenges, funding conditions have tightened, and regulators have toughened up in Europe, creating a more hostile environment for fintechs. Venture capital investment in European fintech plunged in 2023 (falling about 65%, from $24 billion in 2022 to just $8.4 billion in 2023), leaving many startups strapped for cash and under pressure to become self-sustaining.
Navigating the regulatory maze
Obtaining a full banking licence in the US requires approval from multiple authorities, as well as securing federal deposit insurance and meeting strict capital requirements. In practice, a foreign fintech that wants to operate nationally as a bank might need a US banking charter that can be federal (through the Office of the Comptroller of the Currency) or state-by-state. This might include obtaining FDIC (Federal Deposit Insurance Corporation) deposit insurance to protect customers’ deposits, securing a state money transmitter licence, and demonstrating sufficient funding and compliance.
This multi-layered regime creates a regulatory minefield for newcomers. It’s no wonder that rising American economic nationalism adds an extra barrier, warns Hatami, “Current instability in engagement with foreign providers is possibly making the rollout of a European fintech in the US problematic.” In short, even if laws are becoming more fintech-friendly in theory, foreign applicants may face subtle protectionist scepticism.
Dealing with the American payment infrastructure can also be tricky for entrants accustomed to Europe’s more modern systems. In Europe, neobanks benefit from near-instant interbank payment networks (such as SEPA Instant) that let customers move money seamlessly 24/7.
By contrast, US banks have been slower to adopt real-time payments, and the Federal Reserve’s new FedNow instant payment system launched in mid-2023; the decades-old reliance on paper cheques persists.
European fintech executives who view the United States as one single market often struggle, notes Dave Glaser, CEO of US payments firm Dwolla. Indeed, past attempts by European neobanks to crack the United States have proved traumatic. Monzo withdrew its US banking licence application in 2021 after regulators signalled that approval was unlikely.
Berlin-based neobank N26 also pulled the plug on its US operations in 2021, having failed to gain traction, in part because it never managed to offer its lucrative premium accounts or bring its full feature set stateside.
Revolut, meanwhile, has been stuck in regulatory limbo; a long delay in obtaining a British banking licence made pursuing a US banking licence impractical until recently. Without their own American banking charters, these digital banks have been unable to offer credit products or hold customer deposits directly, limiting their revenue opportunities in America.
“Previous attempts faltered due to underestimating the complexity of US regulation, overestimating brand pull, and launching without a compelling local value proposition,” observes David Donovan, head of financial services for North America at consulting firm Publicis Sapient.
For fintechs that cannot obtain their own banking charter, the shortcut into the market is partnering with an American bank, a model known as Banking-as-a-Service (BaaS) or using a sponsor bank. Monzo, for example, has partnered with Ohio-based Sutton Bank to hold American customer deposits, allowing Monzo to offer accounts without a licence of its own.
Similarly, smaller British fintech Cleo (which provides a personal finance chatbot) entered the United States by teaming up with community banks (Thread Bank and WebBank) and now serves over seven million customers in North America. These arrangements let fintechs piggyback on a licensed bank’s infrastructure.
However, the compromise is that the partner bank typically retains a slice of the interchange fees and imposes its own compliance requirements. Given that interchange fees on the American credit and debit cards are significantly higher than in Europe, those fees are a major revenue source, and splitting them “eats into your margins,” notes Stephen Greer, a banking industry consultant at SAS.
Recent events have also highlighted the risks of the partnership route. In early 2024, the American fintech world was rocked by the collapse of Synapse, a once-promising BaaS (Backend as a Service) provider that sat in the middle between fintech apps and their partner banks.
Synapse’s “gross mismanagement” of customer funds led to around $85 million going missing and the firm filing for bankruptcy. One of Synapse’s key partner institutions, Evolve Bank & Trust, became embroiled in the fiasco as customers of various fintech apps lost access to their deposits. Regulators have since intensified scrutiny of these bank-fintech partnerships.
The US Office of the Comptroller of the Currency (OCC) and the FDIC have even solicited public input on tightening oversight of BaaS arrangements, and the FDIC proposed new rules requiring daily reconciliation of funds between tech firms and banks to prevent another Synapse-style incident. The lesson for ambitious neobanks: hitching your American expansion to a partner bank can carry significant compliance and reputation hazards if that partner or an intermediary mismanages funds.
Given these constraints, more ambitious European neobanks have decided that going it alone with a full licence is a bet worth taking, despite the up-front pain. Revolut, for instance, still offers its cards and accounts in the US via a partner (Missouri-based Lead Bank) and holds a US broker-dealer licence, but it has made clear it is pursuing its own US banking licence. Bunq also views the broker-dealer move as a prelude to eventually launching a fully licensed US bank of its own.
“The best strategy for a European fintech is to create a US entity and nurture this by tapping into the US investor markets, from venture capital all the way to IPO. And to play down its European roots as far as possible,” Hatami advises.
In other words, treat the US expansion almost like founding a new company, build a dedicated local team and product, raise money from American investors who understand the market, and don’t lean too heavily on your European brand if it doesn’t resonate locally. The subtext is that American consumers (and regulators) might be more receptive if a service feels homegrown rather than an import.
Cut-throat competition in the USA
Even with a charter in hand and funding secured, European neobanks will land in a fiercely competitive arena. The US retail banking market is crowded with over 4,000 institutions, from giants like Chase and Bank of America to regional banks, credit unions, and community banks, all fiercely guarding their customer bases.
New entrants must be prepared for slower growth and higher customer acquisition costs than they faced in the relatively consolidated markets of Western Europe. US fintech darlings like Venmo, SoFi, Zelle, and Chime have set a high bar with massive marketing budgets and ubiquitous branding.
On the other hand, the sheer size and diversity of the US market mean new entrants can aim for niche segments that are still large in absolute terms. Unlike in smaller European countries, in the United States, a niche play can yield millions of customers. European neobanks can try to differentiate by offering one-stop, digital-first banking solutions to Americans who are hungry for modern user experiences.
This might include slick apps that combine checking, savings, investing tools, real-time spending analytics, budgeting features, and more under one roof, something many US legacy banks have struggled to deliver.
Publicis Sapient’s Donovan said, “Many US fintechs are built on banking-as-a-service models that limit control and innovation. European firms, having built more of their stack in-house, can differentiate on both cost and customisation.”
In other words, a neobank that owns its own tech and platform can potentially out-innovate competitors who rely on white-label banking providers. For example, a European entrant might roll out features Americans aren’t used to seeing from their bank, think instant international transfers with low fees, or multi-currency accounts that update exchange rates in real time.
One obvious opportunity area is remittances and cross-border banking, given the large population of immigrants and expats in the United States. Roughly 20 million US residents are foreign-born Americans from countries in Europe, Africa, and elsewhere. These globally mobile customers often face steep fees and frustration when sending money abroad or managing finances across borders. A case in point is the success of Wise (formerly TransferWise), a London-based platform that has gained a strong US following by offering international money transfers with transparent fees and exchange rates.
“Wise addresses international money movement with a clarity and fee structure that is still uncommon in the US,” Hatami notes.
Bunq, for its part, explicitly says it is targeting digital nomads and expats. The company points out that “nearly five million European expats, entrepreneurs, and professionals” live in the US and often struggle with banking bureaucracy.
Those users are frustrated by traditional banks that aren’t set up for cross-border life. Bunq’s hope is that its experience serving such customers in Europe (with features like travel accounts and easy international transfers) will resonate strongly with this segment in America.
However, cultural differences in consumer expectations also come into play. American customers tend to be far more credit-focused than Europeans. Decades of aggressive credit card marketing have conditioned US consumers to expect rich rewards programmes (cashback, airline miles, points, etc.), sign-up bonuses, and easy credit.
New entrants who only offer debit cards and basic accounts might find it hard to lure customers away from incumbent banks or specialist credit card issuers unless they, too, dangle attractive perks that can be expensive to provide.
Additionally, Americans exhibit a certain stubborn loyalty to traditional banks. Despite the prevalence of fintech options, most consumers are not itching to switch their primary bank. A recent survey by Phoenix Synergistics found that 81% of US consumers considered themselves “loyal” to their main financial institution. Lerner from Javelin agrees, “Americans are largely satisfied with their financial institutions. They are not eager to switch banking relationships.”
According to Javelin’s research, roughly three-quarters of consumers say they are unlikely to move their primary account to a new provider.
This inertia indicates that a foreign neobank requires a compelling proposition or significant incentive to encourage Americans to give it a try. It might require offering significantly better interest rates, zero fees, or unique products to entice customers to overcome the hassle of switching, especially when many Americans have multiple products like direct deposits, bill pays, and maybe a safe deposit box tied to their current bank.
Some industry insiders believe that European neobanks focusing exclusively on direct-to-consumer services face significant challenges in the US due to high customer acquisition costs and established brand loyalties.
“Without a pivot to some differentiated credit product, prepaid and debit offerings often don’t generate enough revenue to warrant those costs,” notes Kevin Fox, chief revenue officer at Thredd, a UK payments processor that expanded to the United States and has helped several neobanks scale internationally.
Fox suggests that fintechs stand a better chance if they expand into business services (B2B) or partner more closely with businesses. For example, some challengers have found success offering expense management cards and software to small companies, or white-labelling their tech to employers and other brands.
These business customers can be more lucrative and cheaper to sign up than millions of individual consumers. Indeed, several European fintech “unicorns” have been extending into SME banking or payments (even Revolut has rolled out business accounts and tools for companies). This B2B focus could provide a beachhead in the United States where pure retail banking might be hard to crack.
Money lies in the stock market
Beyond immediate revenues, a major prize that comes with a US expansion is the possibility of a public listing on a US stock exchange. New York’s capital markets remain the deepest in the world, and IPOs in the US tend to achieve higher valuations and attract a bigger pool of investors than those in Europe.
For Europe’s most valuable fintechs, a US footprint makes it more plausible to court American investors and eventually float on the Nasdaq or NYSE. Both Revolut and Monzo, for instance, are widely expected to go public by the end of the decade, and their leaders have hinted at preferring a US listing over a London one.
Revolut’s CEO, Nik Storonsky, has even publicly complained about the UK’s business climate and suggested the company might list in the US if conditions in London don’t improve.
Such decisions have political undercurrents: European governments are eager to have their “unicorn” fintech champions list at home, while founders and early investors often lean toward the higher liquidity and valuations available in New York.
“Revolut was recently granted a UK banking licence, probably in part because of a promise to list in London, not in the US. Most companies want to list on Nasdaq or the NYSE, raise a ton of money, and cash out. But governments want to keep their unicorns close to home,” Azizov observes.
He adds that if a European fintech truly wants to win in the US market, “they will need to go all in, full teams, full infrastructure, full commitment. They may even need to move their HQ.” In other words, dabbling in the US with a small satellite office won’t cut it if the goal is to become a global player, as it requires a fundamental shift to treat the US as core to the company’s identity.
The holy grail for digital banks is proving that their tech-first, product-led model can generate consistent profits even in the world’s most competitive and entrenched banking market. If a European neobank can crack that code in the US, achieving American-scale profitability while keeping true to its innovative roots, it would validate the entire fintech disruption playbook. But that remains a big “if.” Until then, Europe’s neobanks will continue eyeing American wallets, cautiously optimistic that they can bring something new to the land of red, white, and plenty of green.