Over the recent years, technology has played an important role in transforming the banking sector. It has not only helped in advancing the working process of traditional banks but has also taken care of various financial expenditures, such as the cost of maintaining the bank’s infrastructure and human resources.
These financial expenditures affect the services provided by traditional banks, hence lowering the customer satisfaction rate. Furthermore, other physical and geographical challenges like transferring customer’s data from one branch to another and repetitive tasks like processing the customer’s documents and uploading them to the server, and maintaining data security further affected the bank’s delivery rate.
With the growing rate of customer satisfaction and expectations, traditional banks realized the need of changing their business and operational models, one that ensures fast service and enhanced customer experience. Neo Banking is a result of one such change.
What is Neo Banking?
The concept of Neo Banking was first introduced in the UK around 2017 and it remains a fairly new concept to many. This bank entirely functions online and does not have any physical branches.
Neo banks provides digital and mobile financial services, such as money transfer and money-lending, among other services. It is an attempt to fill the gap between what customers want and what traditional banks are offering while providing fluidity.
Types of Neo banks?
There are two types of Neo banks present in the financial market today. In the first type, a Neo bank partners with a traditional bank to provide services and does not have a banking license. While in the second type, a Neo bank obtains a banking license and does not need to depend on other traditional banks for providing products and services.
The first type of Neo bank doesn’t function independently while the second type can operate on its own.
How does a Neo bank work?
Neo banks and traditional banks have a completely different way of functioning but both make money between money incursion and lending.
Being an online banking system, Neo banks can save money on legal infrastructures, which enables them to slash customer fees by a significant amount. They provide a personalized experience to every customer using various banking technologies like Artificial Intelligence.
Artificial Intelligence helps neobanks to collect and analyze data based on customers’ user behavior and at the same time allows them to make decisions and prevent fraud. Other technologies like Big Data help neobanks to keep track of the collected data and process it effectively to gain valuable insights when needed in the future. While with RPA (Robotic Process Automation), a neobank can save human labor and upload the data without any human interference.
How is Neo bank the future of banking?
According to recent research done by Grand View Research, the global Neo banking market size was valued at USD 34.77 billion in 2020 and is expected to expand at a compound annual growth rate (CAGR) of 47.7% from 2021 to 2028.
Neo banking is growing every minute due to the various advantages it provides over the traditional banking system. Let’s go through a few of these advantages:
1. Hassle-free process
Anyone who has an account in a traditional bank is aware of the struggles he or she faces while opening that account. With time, the traditional banking system has tried to overcome these challenges but hasn’t been able to find any success in doing so. But with neo banking, customers can create their bank accounts and access them at any time and at any place.
Being an online banking system, customers don’t need to be physically present at a bank branch to create an account or take out cash, instead, they can create and operate their accounts using their phones just by following a few steps.
2. Enhanced customer satisfaction
Neobanks were introduced with a motto to fulfill every customer’s needs. Keeping up with this goal, neobanks focuses on providing a glitch-free net banking website and a responsive banking mobile application.
Learning from the mistakes of traditional banks, neobanks decided to do the complete opposite of what traditional banks did. Neobanks focused on creating banking apps and websites, developed using the best UI/ UX services, making them error-free and at the same time highly responsive, resulting in higher customer satisfaction.
3. Cross border payments made easy:
Traveling abroad is already a hectic process and being a traditional bank account holder makes it even more difficult since it doesn’t make a user eligible for carrying out international payment. For carrying international transactions, a user needs to contact the bank first and request an upgrade. That’s not all! After carrying out this process, a user needs to wait for a long period for that upgrade to happen.
But being a neobank account holder, a user can save their precious time over this as they are eligible for making international transactions without the worry of upgrading their cards before traveling abroad.
4. Easy account management:
Unresponsive traditional bank’s websites and applications make it impossible for customers to keep track of their transactions and not everyone has time to visit banks and get the data. Keeping these points in mind, neobanks aimed to provide a responsive website on which all the transactions are updated from time to time and anyone can access it from anywhere on any electronic device.
Not only this, but neo-apps also provide an overview of your expenses, allowing users to set up their saving goals. This helps in managing the finances in a much better and organized manner.
In this digital era, every other user wants to access their bank accounts on their mobile devices. And to achieve continuous growth in the market, the financial industry needs to provide a better solution to their customers, such as Neo Banking.
Ever since the neobanks have been introduced in the market, the banking industry has experienced a huge shift of customers towards this new and advanced banking technology. It’s a matter of time that neo banking will take over traditional banking.
So what exactly is making neo banking so advanced?
By incorporating the use of advanced technologies like Artificial Intelligence, Big Data, and Cloud Banking, Neo Banking has become successful in overcoming the challenges faced by traditional banking ways.
Jellyfish Technologies have been continuously helping the banking industry to take over the advanced way of operating. Jellyfish Technologies understand the need of incorporating advanced banking technology to meet user expectations, thus providing the best banking software development across the globe.