Neo banks refer to online banks, which operate virtually. Neo banking offers a complete experience of online funding through mobile apps. It also provides solutions in a way that conventional banks don’t, with the goal of offering a good experience to clients.
Neo banking solutions are quicker, affordable, and may leverage a single type of network with the whole financial portfolio. Neo banks are also exponentially banking, leveraging technological advancements to win over clients who expect efficient, quicker, and easier financial services. In recent years, neo banking has become the next big thing in fintech.
When it comes to collecting payments and doing payouts, a few solutions provide an experience as all-in-one as neo banks. Most banks provide an integrated payment gateway so as to collect payments. Gateway payment solutions, like PayU and Skrill transfer and captures data from clients to acquirers.
Neo banks also carry out digital customer onboarding procedures for opening accounts. Unlike traditional banking, neo banks carry all their transactions through digital channels. With neo banking, clients don’t have to go to the bank to have an account opened. Customers may quickly open bank accounts with digital channels, regardless of their location. Other advantages of neo banking include the following:
- User-friendly and simple interface
- Fewer costs
Europe laid the first wave of neo banks. According to Exton’s database, the continent counts more than 50M accounts and 110 live applications. Within this continent, the United Kingdom is a hotspot, having spawned around 36 neo banks. Thanks to the strong digital infrastructure and a head start in the space, the UK has become the most active neo bank market.
Better still, countries such as India, the US, Brazil, and South Korea are catching up quickly, recording a massive development in live competition and customer awareness.
There is a high demand for accessible monetary services that allow the local fintechs to establish the gold standard for neo banking before the key or global players to begin paying attention to the geographical location. By introducing many customers to the formal monetary system, neo banking will increase the potential and opportunity in the market so as to deliver more lucrative services in the near future.
While typical neo bank customers might not be lucrative or attractive to traditional banks, they usually account for the majority of the population in the region and are a segment, which feels comfortable with carrying out personal and business transactions online. Engaging with one of the fintech startups and embracing a full-scale digital transformation is a great way to compete with big digital giants that will enter the region later.
Opening the Floodgate
The banking sector is traditionally among the most impenetrable. Most market leaders, including HSBC and JPMorgan Chase, have market capitalizations measured in billions of dollars. For startups or entrepreneurs, there are simpler markets to disrupt.
Germany’s N26 is an example of a neo bank, which guarantees clients a paperless sign-up procedure that only takes a few minutes to finish. Competitors, such as Australia’s Xinja and UK’s Revolut are as well gaining traction.
For the predictable future, traditional banking still has a place in the landscape of customers. Brick-and-mortar firms carry prevalence, familiarity, and brand recognition, which offers them an edge over neo banks.
However, tides are changing, and the fast-growing minority of customers are tired of excessive paperwork or wasting their valuable resources and time. Therefore, as it turns out, using technology linked with neo bank space is good for banks and customers’ bottom lines.