Technology has allowed the financial services industry to make significant changes that streamline consumer experience for personal and business users. Neobanks, also known as “challenger banks,” are fintech companies that offer software, apps, and other technologies to simplify mobile and online banking. These digital disruptors that eliminate the need to visit a brick-and-mortar branch have made immense progress in the industry globally.
The market size of neobanks was about $47 billion in 2021, and its market value more than tripled between 2020 to 2021 due to the industry’s speedy growth. Neobanks promise more transparency than conventional banks and have been embraced by many users in the US. Let’s explore the value of neobanking now and in the future.
Strengthen Integration of Financial Services
Living in a past-faced world motivates people to embrace new platforms that help simplify their lives. This is where neobanks play a crucial role—they allow users to manage their financial transactions online and by themselves without waiting in long lines at the bank.
As more users shift their focus from traditional banks, neobanks have the opportunity to strengthen the integration of financial services. Although neobanks offer many convenient services, a lack of investment in key financial services will require users to continue traditional banking. For instance, conventional banks offer Automated Teller Machines (ATMs), personal and business loans, and Certificates of Deposits (CDs). If neobanks begin to strengthen the integration of financial services on their online platforms, more users will be drawn to the platform due to its user-friendliness, innovation, and service speed.
Allows Users to Avoid Hefty Fees
One of the most common challenges with a traditional banking platform is the minimum balance requirement or monthly fees to hold a bank account. The charges increase for making payments, such as wire transfers or ACH. A significant advantage of neobanks is that they offer low fee banking options with low or no minimum balances.
The top neobanks in the US are transparent about their fees and services, allowing their customers to make informed decisions. Since neobanks operate entirely online and have no physical branch to maintain, they can offer services with no fees or minimal costs. The quick account setup process also helps customers save time and process requests, which is a plus for busy individuals or businesses.
Opportunity to Embed Advanced Analytics
Advanced analytics is the examination of data or content using sophisticated techniques and tools. It typically occurs beyond those of traditional business intelligence (BI), to offer actional insights, make predictions, or generate recommendations. The global data analytics in the banking market is expected to reach about $28 billion by 2023 to avoid banking challenges, such as increased frauds, data breaches, and cyberattacks and provide practical insights to customers.
Analytical technology is being used to revolutionize the banking industry. It can further allow neobanks to boost the overall efficiency of their systems through in-depth customer insights, smart marketing strategies, risk analysis, and better customer service. Offering customer-centric services allow banks to illustrate their commitment to their customers. Neobanks have the scope to implement advanced analytics into their system to enhance the customers’ experience. This can help customers manage their transactions, spending, and investment.
Customer analytics also allow banks to streamline customer onboarding to reduce credit risks. Neobanks can utilize the data, such as the history of the customer, credit score, salary, and other sources of income, and use customer analytics to receive a comprehensive list of attributes about potential customers.
Neobanks have risen to prominence over the last few years and are now used by millions of people worldwide. Consider the vast scope in the future of neobanking and make your switch from a traditional banking platform today.