Are you one of those thinking the neobanks market is getting crowded with too many newcomers already active competing against each other?
Well, you are not alone. But, have you ever thought about how many traditional banks there are and how many will survive in the future? Recent surveys show that up to 75% of consumers are considering switching to a neobank!
Like it or not, the world is going digital.
The neobank space, in particular, is growing fast. Still, we are in an early development phase with plenty of opportunities for fintech entrepreneurs and investors.
While neobanks initially emerged as a solution for low-income unbanked people, they are now evolving into something more sophisticated. Huge congrats on that to Andrei Cherny and Anthony Noto for the great job they are doing with Aspiration and SoFi, addressing demographics outside of the low-income and unbanked!
Here are some of the key advantages of neobanks compared to traditional banks:
1. Customer-centric approach: thanks to better use of technology, a different structure, size and business approach, neobanks are generally much faster to evolve and adapt to new customer needs and wants.
2. Modern user experience: usually offer a radically better experience for customers looking to have their money completely manageable from their smartphones. A smooth user experience is one of the key elements – something that incumbents are struggling with.
3. Ecosystem services: financial and lifestyle services are seamlessly integrated and easy to use. While financial institutions are also trying to go in that direction, the level of integration and the speed to add new services is not comparable.
4. Convenience: when it comes to fees, charges and commissions, neobanks are very hard to beat. Branchless and cheaper to admin, neobanks are able to offer financial services at prices that traditional banks can’t.
If that sounds interesting, I suggest you check Six, a new full-service neobank we are building right now!