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Brazilian digital bank Neon aims for 1 million customers in 2018

The fintech raised a new funding round and plans to make further investments in technology to improve its customer experience.

Brazilian digital bank Neon plans to grow its customer base from 600,000 clients to 1 million this year as it raised a new funding round.

The fintech, one of the hottest ventures in the Brazilian startup scene, has announced today (3) that it raised $22 million in Series A funding, with participating investors including Propel Venture Partners, Monashees and Omidyar Network.

According to the bank's chief executive Pedro Conrade, the investment will support goals such as increasing the size of the technology team, currently 40-strong.

"We want to be as agile as possible and not only create new offerings but improve what's already there. In the field we are in, we just can't afford to stop innovating," Conrade told ZDNet.

The technology function at Neon, Conrade says, is multidisciplinary, so employees work in all manner of projects including the digital current account, investment and credit products, as well as business offerings and customer experience.

According to the 26 year old entrepreneur, Neon has not suffered so much from the typical problem that startups - and fintechs specifically - often have around placing technology efforts in one area in detriment of other parts of the business. That, says Conrade, is due to the fact that since its inception in 2016 the bank's various offerings have been developed in parallel - but this was not always the case.

"We currently work in a way where all the offerings are worked on without depending on one another, but at the beginning we focused more on the digital bank account, as it was our first product - but now our products have all entered a continuous evolution phase," Conrade says.

According to Neon's founder, there is a general belief that a digital bank is simply moving tasks that are usually carried out in the physical realm to a digital setting but Conrade points out that it is a lot more to do with innovation.

An example cited by the entrepreneur to illustrate that point is facial biometrics authentication: Neon claims to be the first Brazilian bank to use that for account opening and the first in the world to use it for transactional purposes.

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"A money transfer transaction will always be what it is: moving cash from one point to another. The question is, how to continue to innovate to make that process better," Conrade says.

"Technology is obviously key to improving that - and unlike some large banks I won't invest millions of dollars in datacenters because I simply don't need it, our platform is much more modern and lean. But I will invest in technology to really enhance the customer experience," he adds.

Neon has an API platform, despite the fact that Brazilian banks are not yet required to do so. That, according to Conrade, is result of a realization that it is a key part of doing business for any bank going forward.

"We are a small bank so we have to know exactly where to invest, but in terms of must-haves for a bank, an API platform is not a bet, it's a certainty," he points out.

When Conrade set up Neon, he sought inspiration in the business models of a "mixture of old school and new companies"in the digital banking space, ranging from Simple in the US to challenger Monzo in the UK and N26 in Germany.

With new international investors such as Propel Ventures, it is even more likely that the company will be even closer to what firms elsewhere are doing - and potentially using those learnings in the Brazilian market.

"Without a doubt, global best practices will be adopted to accelerate the business," Conrade says.

Within a year's time, Conrade expects that the technology strategy and set-up supporting Neon will have considerably evolved:

"I think our processing capacity will have ramped up considerably,, we will have more financial services, which will have the accompanying innovations on the app. Existing offerings will also see a real optimization," he says.

"You have to be cool, but also very solid. Mistakes - even the smallest ones - can be very damaging for a company, so we are doing our utmost to provide the best experience we can and that will be a key focus for us going forward. "