The financial services industry is witnessing a shift towards digital-first solutions. Advancements in technology and infrastructure have fuelled the rise of neobanking. It offers convenient, cashless transactions through digital banking features.
From just 12 neobanks operating globally in 2015, the number has skyrocketed to 300 as of 2023. Juniper Research expects neobank users to reach 850 million by 2030.
Introduction to Neobanking
Neobanks are digital-only banks. They rely on mobile apps and web interfaces to deliver their services. Customers access and manage their accounts, conduct transactions, and receive support from their devices. This approach allows neobanks to offer lower fees and greater convenience compared to traditional banks. There are ten key features differentiating successful neobanks.
Feature 1: User-Friendly Interface
Neobanks prioritise user-friendly and intuitive interfaces within their core platform—the mobile app. The app lets customers conduct all essential banking functions directly from their smartphones.
Neobanks eliminate traditionally time-consuming processes. Account openings are conducted entirely digitally. They also offer near-instant identity verification, funding, and activation of debit cards and accounts.
Feature 2: Personalised Services
Neobanks leverage artificial intelligence (AI) and machine learning (ML). This data-driven approach helps them understand their customers better. They analyse spending habits and financial behaviours to provide personalised financial advice. This empowers customers to make informed decisions about their money.
Neobanks also use customer data to create targeted marketing campaigns. These campaigns align with individual interests and financial goals. Neobanks’ real-time, personalised approach enhances customer satisfaction and strengthens customer retention and loyalty.
Feature 3: Robust Security Measures
Security is essential for neobanks, as they handle sensitive customer data and countless transactions. Neobanks embrace advanced technologies like AI-powered fraud detection and blockchain encryption. Multi-factor authentication (MFA), encryption protocols, and biometric identification form the first line of defence against cyberattacks.
By prioritising robust security, neobanks can offer the innovative digital banking features customers expect from financial technology. This also ensures they stay ahead of constantly evolving threats and vulnerabilities in the digital banking sector.
Feature 4: Innovative Products
Traditionally, launching new banking features took years. Now, with ML models analysing large amounts of customer data, neobank teams can develop and launch new digital banking features in just weeks. Moreover, this allows them to stay ahead of market trends and meet customer demands quickly.
Feature 5: Seamless integration with other services
According to PYMNTS, consumers are increasingly interested in super apps, with nearly 70 percent wanting a one-stop platform for managing digital finances. This demand pushes banks to embrace open banking.
Neobanks can collaborate more effectively by sharing their APIs with financial technology companies, digital payment providers, and other platforms. Open APIs grant access to a wider customer base, fostering partnerships between banks and e-commerce firms. This integration allows them to meet consumer demand for a more comprehensive digital banking experience.
Feature 6: Low Fees
One key advantage of neobanks over traditional institutions is their cost structure. Without the burden of physical branches, neobanks benefit from lower overhead expenses. This translates to a competitive edge in terms of fees and rates.
Neobanks can charge zero fees for services that typically incur charges at traditional banks. Additionally, they can also provide more attractive interest rates on savings accounts. These factors can be appealing to cost-conscious consumers.
Feature 7: 24/7 Customer Service
The use of AI and chatbots helps neobanks deliver 24/7 customer support. Customers do not have to wait on hold or schedule branch appointments. Instead, they can receive prompt answers to inquiries or resolve issues at any time.
Feature 8: Hassle-Free Account Onboarding
Neobanks are known for their swift account opening experiences. This is achieved through leveraging advanced technology. Intuitive mobile apps and web platforms let customers open accounts remotely within minutes. Also, technologies like AI-powered identity verification and digital document submission expedite the onboarding process.
Feature 9: Automated Saving Feature
One of the unique features offered by many neobanks is automated savings functionality. This functionality allows customers to set up automatic transfers from their checking accounts to their savings accounts. Additionally, these transfers can be triggered by various events, such as on payday or when a certain balance is reached in the checking account.
Feature 10: Cryptocurrency Services Integration
To expand their offerings and cater to a growing interest in digital assets, some neobanks are integrating cryptocurrency services into their platforms. Also, customers can manage their cryptocurrency holdings directly within their neobanking app and simplify the process of buying, selling, and sending these digital assets.
Case Studies
A successful example of neobanks is Revolut. The bank that allows users to buy, sell, and transfer cryptocurrency directly within their app. Revolut also removes any hidden fees associated with traditional cryptocurrency exchanges.
Conclusion
Neobanks’ core strength lies in its focus on flexibility and user convenience. Furthermore, designed specifically for the digital age, they prioritise a seamless user experience. Their focus on mobile-first design and intuitive interfaces makes banking easier and more convenient. This approach allows neobanks to offer a wider range of digital banking features compared to traditional banks’ online platforms.
- Neobanking