Atom Bank might get acquired by BBVA (BBVA)

The UK neobank market is crowded, and new players are now cropping up regularly . Additionally, a number of neobanks have been able to attract over a million customers in the country, showing that they have managed to establish themselves in the market.

Major European Neobanks' Customer Numbers Business Insider Intelligence

Many neobanks in the UK were able to attract large funding rounds last year, including Atom, which secured 149 million ($191.5 million) in March 2018. Atom is now gearing up for a potential exit, shedding light on just how mature the UK neobank market has become.

The neobank may be scooped up by Spanish banking giant BBVA.Atom has appointed Citi to advise its board on future options for the business, according to Sky News . One of the options on the table is selling to shareholder BBVA. The bank already holds almost 40% of Atoms shares , and under the current agreement, has the option to acquire the stock it doesn't already own.

However, sources close to the matter cited by Sky News denied that hiring Citi represented a sale mandate, meaning nothing has been decided yet. If an acquisition doesn't occur in the next few months, Atom will likely opt for more private fundraising or go public in autumn, the insiders said. That would make it the first neobank to opt for an initial public offering (IPO).

We're likely to see more players taking similar steps in the future.Neobank Tandem recently revealed plans for an IPO within the next three to five years, for instance. As the market continues to mature, we will likely see a number of UK neobanks make exits, either through IPOs or acquisitions.

The latter path could be especially popular, as establishing their own brands will get more and more difficult as the market crowds further. This will likely be welcomed by incumbents, which are keen on launching their own challenger banks. In fact, BBVA will probably be happy to acquire the other 60% of Atom to boost its digital offering and enter the UK market.