Credit Shift News: UK Neobanks Profit, Apple's AI Move and the Rise of AI in Banking

Introduction

Introduction

Hello and welcome to Credit Shift! I'm Paul Sweeney, Co-founder and Chief Strategy Officer at Webio. This week, I'll be your guide through some of the latest stories, events, reports, and trends in the credit industry. Let’s dive into the details!

General Industry News

UK Neobanks' First Profits

Recently, UK neobank Monzo posted its first-ever fiscal year profit, benefiting from high interest rates and growth in subscriptions. Monzo's modest profit of £15.4 million marked a significant pivot from its previous 'grow at all costs' strategy. The bank saw an 84% growth in its loan book, which contributed around a quarter of its revenues. In 2023, Monzo tripled its loan book.

Similarly, Starling Bank reported its third consecutive year of profitability with a 51% increase in revenues and a 53% boost in its loan book. Online bank Revolut swung to a pre-tax profit of £438 million in 2023, almost doubling its revenue to £1.8 billion. Revolut is also seeking a $ 40 billion valuation. Interestingly, Revolut has 2.7 million customers in Ireland, which is considered a high-growth market due to the lack of strong competition.

Consumer Credit Monitoring

According to a new report by TransUnion called Consumer Credit Monitoring, nearly one in five consumers who actively monitor their credit are using their credit score to better manage credit usage and reach financial goals. Around 33% of these consumers actively manage their credit information to enhance their scores, and 25% prioritize debt arrangement and fraud protection.

Apple's Exit from Buy Now Pay Later Market

In a surprising announcement, Apple stated it is withdrawing from the buy now, pay later market. While no reasons were given, other providers like Klarna and Affirm will still be available as checkout options. This decision coincides with Apple's recent collaboration with OpenAI.

Amazon and Shopify

Amazon has announced that it will no longer accept Shopify Pay on its platform within Europe. Both companies are clearly aiming to control the checkout experience and reap the associated financial rewards.

Fintech, Buy Now Pay Later, and AI News

Apple's AI Announcement

Apple recently launched Apple Intelligence, which has received unexpected praise. Apple's AI capabilities focus on features like more contextually smart notifications, new writing tools, and Siri assistant capabilities that link deeply into mobile apps. Apple emphasizes maintaining strong privacy by processing most data on-device.

AI Assistants in Financial Services

At Credit Shift, we believe that intelligent virtual assistants connected to financial information could massively disrupt financial services. With Apple's recent announcements, many more consumers might expect high-quality, privacy-focused AI services.

EU Regulations on AI

The EU's Digital Markets Act is forcing Apple to allow other AI services to operate on its platform. Despite Apple's claims that it might not release AI services in Europe, the market remains highly competitive. Companies like Anthropic are also making strides in AI technology, creating accurate tools and their appropriate use cases.

Key Reports on AI and Financial Services

Deloitte's State of AI Report

Last month, Deloitte launched their "State of AI" report. The focus areas include value creation, scaling, trust, and workforce evolution. Organizations with high levels of AI expertise are scaling more aggressively and achieving greater benefits. However, concerns about data security, data quality, and the explainability of AI outputs persist.

Interestingly, more organizations expect AI technology to increase rather than decrease headcount. The horizontal and vertical implementations of AI are seen as either giving broad-based productivity gains or being strategically impactful.

Conclusion

We hope this week's Credit Shift update helps you stay on top of the credit industry. Stay tuned for more updates and interviews. Don't forget to check out the Webio website for the latest news and offerings.

Keywords

• UK neobanks
• Monzo profit
• Starling Bank
• Revolut
• Consumer Credit Monitoring
• Buy now pay later
• Apple Intelligence
• AI in financial services
• Deloitte's State of AI Report

FAQ

Q: What recent financial milestone did UK neobank Monzo achieve? A: Monzo posted its first-ever fiscal year profit, with a net income of £15.4 million.

Q: What is the focal point of Apple's new AI capabilities? A: Apple's new AI capabilities include smart notifications, advanced writing tools, and improved Siri assistant features, all while prioritizing user privacy.

Q: What did the TransUnion Consumer Credit Monitoring report reveal? A: The report revealed that around 20% of active credit monitors use their scores to manage credit usage and reach financial goals. Additionally, 33% aim to enhance their scores, and 25% focus on debt arrangement and fraud protection.

Q: Why did Apple announce its withdrawal from the buy now, pay later market? A: No specific reasons were given by Apple; however, they will continue to support other providers like Klarna and Affirm as checkout options.

Q: What impact does Deloitte's "State of AI" report suggest AI will have on the workforce? A: Surprisingly, more organizations expect AI technology to increase headcount (39%) rather than decrease it (22%). This may be due to the need for more AI-related expertise.