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NeoBanks and the Future of Banking

 

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Coming into the 2020s, more and more people are embracing the digital era and incorporating the opportunities it presents into their lives. More specifically, a greater number of people are embracing the rapidly evolving and developing world of fintech, making their financial lives significantly easier than they have been for the better part of 30 years of dealing with big banks.

 

In part, this comes from the evolving nature of work and employment. Freelancers working in the gig economy now account for over 56 million people in the United States, with more Gen Z consumers launching their own side hustles and businesses while a maturing millennial generation incorporate more and more digital services in their lives. This is where neobanks come in.

 

What are neobanks?

As a quick summary, just in case you opened this article without really understanding the title, neobanks are also known as ‘online banks’ or ‘internet-only banks’ and are exactly what they sound like. They are banks that have no physical presence in the world - no ATMs and no branches. The exist solely on the internet, in the form of web pages and an app.

 

The term neobank was first used in 2017 to describe fintech firms that were challenging traditional banks and the market has since exploded. Noteworthy names (from a substantial list of alternatives) include Starling Bank, Monzo, MYBANK, Chime and Xinja. The term is arguably interchangeable with ‘challenger bank’ - that is, a smaller banking firm that challenges the well-established veterans that dominate the field. However, some challenger banks have physical branches while neobanks are exclusively web-based.

 

Neobanks have been helped, in no small part, by the shift towards ‘open banking’ policies by many world governments. New regulations have demanded that all banks, including the old staples, allow their data to be accessed by third parties when such is requested by the account holder. This has given tech companies the opportunity to insert their unique brand of innovation into an industry that has historically been extremely resistant to it, leading the a whole suite of new banking options that are able to compete on an equal footing with the well-established institutions.

 

Serving the underserved

One particular way in which fintech and neobanks have innovated in the world of banking is in providing greater degrees of customisation, helping to serve those that would ordinarily be missed by the cookie-cutter offerings of larger institutions. They, unlike their older cousins, are better able to meet the needs of the unbanked and underbanked, freelancers and small business owners, as well as digital nomads and recently settled immigrants.

 

Being outside of the typical customer profiles, such individuals have often been poorly served or have had to endure significant penalties just to have an account, including large monthly and annual fees due to low account balances or a lack of direct deposits. They would often also be unable to receive reliable and useful banking advice from institutions that do not train their advisors for such unusual circumstances.

 

Of course, the other significant evolution that has allowed neobanks to emerge is the ever-increasing rate of smartphone adoption and internet penetration around the world. Even extremely remote parts of the world, miles and miles from the nearest bank branch, are now able to get internet access. With a particular shift towards using apps over browser pages in the last 15 years, neobanks have been able to evolve to match their customers’ preferences.

 

The results speak for themselves, with 43 per cent of 18 to 24-year-olds and 40 per cent of those aged between 25 and 34 now preferring to bank through a smartphone app. Older customers are not far behind, with significant proportions each of the subsequent age brackets doing most of their banking online, either through their smartphone or their PC. Once you hit the over-65s bracket, it’s more than two thirds (67 per cent).

 

Adapting to serve

The famously agile tech world has proven to be better suited to adapting to the ever-evolving needs of customers and regulators than the old juggernauts, especially when it comes to sharing and utilising data. The best example of this is fintech taking the initiative to analyse data to show trends in budgeting, spending habits and long-term saving, offering clients advanced level of information and support for their financial health. Apart from being an extremely useful service that deepens the relationship with said client and their commitment to their bank, it’s also a premium service that can become an additional revenue stream for a neobank.

 

That’s not to say that neobanks have not faced challenges. The mobile banking revolution has yet to take the world by storm, as evidenced by the continuing dominance of traditional banking. The reason is that two essential components are missing that prevent the creation and development of neobanks - infrastructure and technology. However, even here, the tech world has found ways to adapt.

 

Read the full article at: https://blog.deemoney.com/neobanks-and-the-future-of-banking/

 

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Dear Customer ,

We regret to have to inform you that your account has been deleted .

Your money has not left any physical trace , we are not responsible , as you agreed to the terms when you opened your account ...

In a short time we will cease to exist at all , as we do not have any physical presence , you are welcome to sue us for your loss ...

Thank you for your confidence and good luck for your future investments , ( if there are any ... )

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33 minutes ago, nobodysfriend said:

Dear Customer ,

We regret to have to inform you that your account has been deleted .

Your money has not left any physical trace , we are not responsible , as you agreed to the terms when you opened your account ...

In a short time we will cease to exist at all , as we do not have any physical presence , you are welcome to sue us for your loss ...

Thank you for your confidence and good luck for your future investments , ( if there are any ... )

so funny

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On 9/1/2020 at 2:44 PM, nobodysfriend said:

Dear Customer ,

We regret to have to inform you that your account has been deleted .

Your money has not left any physical trace , we are not responsible , as you agreed to the terms when you opened your account ...

In a short time we will cease to exist at all , as we do not have any physical presence , you are welcome to sue us for your loss ...

Thank you for your confidence and good luck for your future investments , ( if there are any ... )

 

  • Haha 1
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2 hours ago, Harrith54 said:

Good for all, and nice, them quotes, and bluffing.... Bit coins.... They will vanish one day... 

Yes, BTC will be eventually replaced by something better, but still digital. It'll be years IMHO. It has one fundamental flaw: Most of the mining power is in CCP land.

Edited by DrTuner
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I've a Monzo account in the UK, it's easier to move money around with than my Nationwide, particularly as it links with my TransferWise account for overseas transactions. The debit card (Mastercard) is useable anywhere in the world for free, there are no added fees. 

 

Monzo is FSCS protected up to £85,000. 

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