While the concept of banking started as early as the concept of money started in several thousand years Before Christ but the current form of banking was started in the late 14th century with the formation of first modern bank Medici in Italy. However, post 2008 the global financial crisis, banking sector witnessed significant changes in two fronts.
On one, Central Banks tightened regulations and on other technology started making rapid strides in the area of customer engagement. This twin phenomenon resulted in the emergence of Fintech companies who started disrupting banking in specific business areas such as payments and lending. This disruption leads to the emergence of Neo-banks in the current decade, a financial system of the digital age, with the proposition of establishing a bank without a physical branch.
Neo-banks are actually revolutionizing the financial sector by existing entirely on mobile. In today’s age of millennials, it’s all about the customer and improving their experience. With mobiles becoming powerful and feature-rich and the advent of 5G mobile networks across the globe, the digital is the only way and natural medium of choice for any kind of transactions for millennials.
According to AT Kearney’s research, European neobanks’ customer base has grown by more than 15 million since 2011 when retail banks’ customer base has declined by 2 million in the same period. It is projected that by 2023, Europe’s neobanks will win up to 85 million customers, reaching over 20 percent of the population over the age of 14. These data clearly indicate banking is rapidly gravitating towards neobanks.
The USP of every Neobank is innovative offerings which are different from traditional banks and agility at which they deliver service to the customers. These offerings include quick account opening, instant payments, quick loan sanction and disbursement, lower costs of borrowings to customers, mobile deposits, userfriendly interfaces, etc. Xinja is setting up one of the first Neobanks in Australia and they are expected to revolutionize the banking in Australia.
Andy Rigg, Deputy Chief Executive Officer, Xinja and Shubho, Co-Founder of EPIKInDiFi, spoke about “Future of Neo Banks and selecting the right technology partner” in Singapore Fintech Festival 2019. As per Andy, for a neo bank to be successful a neo bank should have agility in launching its products to market, offering services at low cost and customer experience par excellence. The next most important challenge is to select the right technology partner for creating the right technology platform which is critical for the very success of the Neobank like Xinja. EPIKInDiFi, a TechFin company, has been chosen by Xinja as their technology partners because
EPIK’s platforms empower bank with agility to make quick changes in product set-up using drag & drop feature. Platforms also allow the bank to design an extraordinary customer experience. Finally, the most important question to be answered is if neobanks are viable business entities and if they can survive the financial might and reach of established banks. Considering most of the established banks are looking to set up their own digital banks is proof that neobanks are the banking model of the future. In summary, it’s an interesting time ahead for banking and banking customers.
Views expressed in this article are the personal opinion of Rajendra Awasthi, Co-Founder, EPIKInDIFi.