Neobanks as you probably know are digital-only banks and in the last year they have made significant inroads into the retail-banking sector. In part this is due to the loss of consumer trust in conventional banks, following the global recession and it is also due to growth in the customer’s willingness to use online banking and banking apps, rather than depend on a physical branch for services.
According to the Bank of England, it expects to receive at least 130 applications for banking licences before the UK leaves the European Union at the end of March 2019, which is another clue as to how this sector is growing; indeed, the majority of the most successful neobanks are for the moment, registered in the UK, Revolut being an example of one of the most successful of the new style banks.
Trends in 2019
What are likely to be the key trends in neobanking this year?
Marketplaces
Existing neobanks have set up marketplaces to provide customer-centric products as part of their collective mission to provide more than a digital version of traditional banking. This model is likely to expand and to gain more customers in the small and medium business market.
More accurate customer targeting
Neobanks are data driven and they have access to far more customer data than the traditional banks, simply because they are able to monitor customer behaviour through their use of the banks’ apps: Monzo for example, have their data analytics engine hooked directly onto their front-end and back-end systems. Also, Monzo for example, have their data analytics engine hooked directly onto their front-end and back-end systems, which puts them in a better position than the traditional banks and enables them to serve a bigger range of specific customer needs within their target markets.
More autonomy
Autonomy is the common key driver in each of the neobanks’ successes. The way they are structured and operate empowers each person or team to create products in whichever way they see fit, without the need for excessive governance structures. Even the traditional banks are starting to adopt this model and we will see more neobank offshoots of the big retail banks in 2019.