In the past few years, neobanks have disrupted the banking industry. Although the adoption rate of new digital banking services varies per country, it’s as high as 43% in some countries like Brazil.
Due to their swift growth, traditional banks have started respecting neobanks and are beginning to compete against them with innovative features of their own. But despite the current success of neobanks and challenger banks, like in any other industry, there might be unexpected tidbits along the way to sustainable growth.
Neobanks can be defined as fintech companies offering direct banking services to their customers. The term neobank was first coined around 2016 to describe fintech companies that challenge traditional banks.While most traditional banks have failed to adapt to the technological advancements occurring in the banking industry, neobanks have emerged in response to a new, digital era.
Neobanks are free of traditional banking technology and expensive branch networks. Instead, they provide their banking services entirely online via mobile apps and software, enabling customers to validate their service offerings in real-time. Picking up the slack of traditional banks, they changed the game by meeting the customer needs that traditional players couldn’t grasp or take action on when necessary.
Neobanks distinct themselves from traditional banks mostly in how they offer financial services to their customers. Here are some factors affect the delevelopment of neobanks:
Affordable services: Since neobanks do not have costs related to branch maintenance, their operating expenses are significantly lower, allowing them to serve their customers with much lower fees.Some services are even free.
Accessibility: Especially for developing country citizens who don’t have bank accounts, or for people living in rural areas, having a bank on their phone is extremely important. Having access to financial products and services is a big step for financial inclusion, especially for the underbanked.
More convenience: Everything a customer needs daily, such as depositing checks or making P2P payments, can be done via a desktop or mobile app - anywhere, anytime. This brings a considerable advantage to the users who don’t want to rely on banks’ time and location related limitations.
Better experience: Neobanking platforms are mainly mobile-first, providing a smooth user experience and reducing potential errors by eliminating the need for human intervention. They are customer-centric and flexible enough to provide tailored services to their customers.
However, neobanks’offerings are still very much dependent on banking relationships and traditional financial infrastructure. Not having a banking license restricts them in terms of the extent to which they can offer services.iPeakoin has obtained compliant licences of MSO and MSB. Customers' capital is secured under a bank-level risk control system and assets are subject to regular review by regulators. Therefore, customers can store their extra money in account without any worries.
The main growth factors concerning neobanks will undoubtedly continue to exist during the next few decades. Some of these factors might contribute to growth, whereas others might limit it. The future is unknown, yet one thing remains clear: Neobanks are here to stay, and more people adopt them into their daily lives each day.
It was about time to change the landscape of the global finance ecosystem. With the low-cost services, accessibility, convenience, and user experience they provide, iPeakoin promises a more financially inclusive future, and further innovations that would challenge the status quo.
If you have any questions or feedback, or just want to say hi, send us a note at email@example.com. We always love to chat.
As a neobank, iPeakoin builds a new generation of banking for all businesses to operate without borders and restrictions. We aim to create social value, serve the public good and drive sustainable growth for our customers.