Future of Fintech
Neobanks, the next evolution of banking
Few developments within Financial Services have happened with such breathtaking speed as the evolution of Neobanks. Less than 10 years after the first next gen mobile banks entered the market, these digital disruptors have developed into a global standalone industry segment.
The solid growth of electronic payments globally is likely to continue on the back of economic growth, an incremental shift from cash to electronic payments, and efforts by many neobanks to modernize their payment systems.
Advances in financial technology (fintech) are rapidly changing the way businesses and consumers make and receive payments around the globe, creating opportunities for neo banks and payment companies that stay on the cutting edge and threatening those that don't. The volume of electronic payments is growing robustly globally, consumers are finding new and better ways to pay businesses and each other, and the system of business payments is gradually modernizing.
One cannot help but wonder - how are neobanks going to evolve? What pushed the neobanks to grow at an astronomical rate? What global trends will carve the future of neobanks?
The Rise of Neobanks
The whole BFSI industry has undergone a massive transformation in the last two years than in the previous decades combined and will continue to do so. Pandemic presented immense opportunities to the Finance/BFSI industry. On one side, it forced people to stay indoors but, on the other hand, asked banks to rethink their modus operandi.
Economic uncertainties, increased competition from digital-only banks, rapidly changing customer requirements, and fast-developing technology completely changed the banking ecosystem, forcing traditional banks to reprioritize their long-term vs. short-term goals.
However, what underpins a conventional bank has become part of the resistance to required transformations such as high operating costs, the burden of back-office operations, limiting banking processes, and outdated systems.
Many traditional banks lacked digital transformation capability due to their inflexible underpinnings. Customers began to incline towards fintech solutions that allowed them to integrate their existing conventional bank accounts and perform all the banking functions in one place.
The gap between the services offered by conventional banks and what customers expected out of them widened. The disparity between banks and customers became more evident during the pandemic.
Current trends across major markets
Neobanking is going through a massive transformation. Developed markets such as Europe, the US, and the UK are going through regulatory changes that create a favorable environment for the neobanks. New players are now targeting ultra-niche segments of the market, such as the LGBTQ segment, artisans, and teenagers. Neobanks are adopting leading-edge technologies, thus nudging traditional banks to reinvent themselves to serve the customers better and increase customer retention.
Ultimately, traditional banks are facing rising competition from neobanks and are wise to pay attention to the growing trend of digital banking among consumers. Understanding some of the benefits digital-only banks deliver — such as always-on customer service — is key.
Customers’ appreciation for customer service, as well as their growing trust in fintech solutions that solve their existing pain points, contributes to the neobanking trend. With a growing number of neobanking options available to consumers,they are earning an increasing share of primary financial relationships — and all banks should take notice.
If you have any questions or feedback, or just want to say hi, send us a note at marketing@ipeakoin.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.