Neobanks a boon for customers
There is lot of buzz these days about neobanks. Banking industry analysts say they may if not one day replace traditional banks, become what Amazon is to the supermarkets. They have proved that technology can indeed make big difference and bring in convenience factor, especially for the customer. One of their offerings is that customers will have complete control of their finances using apps. This is not just a sop for the customers but a means for the neobanks to lower their overheads and thereby allowing them to waive fees or service charges that traditional banks usually levy on their customers.
In markets where neobanks h av e fi r mly established themselves, like in the US, the customer service they offer is far superior to those given by traditional banks. And for them, digital is all-pervading. For example, their high- profile chat systems ensure that there is no way a resolution will not be found. In comparison, the apps offered by the highly technology driven banks are often stuck by poor functionality and security concerns.
Studies have indicated that even when neobanks own less than 5% of the retail market, they appeal up to 35% of new customers per year. Their market size was valued at $34.77 billion in 2020 and it is expected to expand at a CAGR of 47.7% from 2021 to 2028.
It is not a wishful thinking that neobanks will, if not render traditional banks redundant, come to stay and offer competition, thereby pushing the latter to evolve, modernize and become customer-centric. They will also be pushed into taking up technology for what it is and not just because others too are using it.
Neobanks have facilitated the creation of a new tech course that has completely changed the services, products and speed of delivery. And this makes them highly impactful, transparent, low cost and easy to access. They are assuming the role of digital challengers to the traditional financial services institutions, proving to be the real people-oriented institutions to the people who need them.