Squeeze on neobanks as expectations rise
As market forces churn, neobanks find themselves faced with old rivalries and new
“Because Starling works in an agile manner,” says a representative at the bank, “with collaboration in multidisciplinary teams and a flat organisational structure to make decision-making faster, we are able to be responsive and to adapt quickly to change.”
As traditional foes pivot and new competition rushes to capitalise on changing consumer spending and saving patterns, neobanks must be on the front foot.
Think Revolut. Compared against the twenty largest US banks by assets held, and the fintech celebrates its sixth birthday offering relatively advanced capabilities within a remarkable digital user experience. Only one of those top twenty offer a virtual card – now considered a key tool in getting an onboarded applicant using their bank account instantly. Only five of those top twenty offer instant ID verification and 65% allow the applicant to set the card PIN during the application process.
The trouble is that Revolut isn’t in that top twenty. And while its latest fundraise makes it more valuable than the UK’s NatWest, the fintech needs to start capitalising on those 16 million customers. The competition is advancing and has every reason to arm itself in the digital banking space.
Old and new players fighting for tech
Since Revolut’s inaugural year an average of fifty physical branches have closed each month in the UK. In the US, 14% of branches have closed since 2008. That trend has been hastened by the pandemic, with many more closures scheduled throughout 2021, and incumbents rushing from the high street and into the smart phone.
With them, they’ve brought knowledge. They can see what is leading the digital agenda and they’ve learnt from erroneous forays of the past. It’s also become clear to the traditional set that significant work is required on their end, rather than simply buying and plugging in the most appealing product from the banktech market.
“Mistakes have been made on the bank side. They’ve learned it’s not just about connecting to an API and hoping for the best,” says a Europe-based onboarding vendor.
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