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Will Neobanks become the future of traditional banking system?

Like many other industries, the neobanking industry has felt the impact of the COVID -19 pandemic. But while other industries suffered due to the imposed restrictions and other measures, the neobanking sector flourished. Accelerated further by consumers’ shift away from in-person contacts, neobanks were just the right solution for many banking service consumers looking for online banking options worldwide. The size of the global neobanking market reflects this shift in consumers, with a CAGR of nearly 40%, as mentioned in our upcoming publication “Global Neobanking Market and Trends 2022”. Although neobanks rank after traditional global/national banks and local/regional banks, close to one-third of global banking service consumers had financial relationships with neobanks in August of 2021. Consumers of neobanking services value the transparency and efficiency of the products and services offered by neobanks. The most used neobank products and services of global neobanking service consumers were deposits, digital payments, and investments in mid-2021, as cash use also decreased during the pandemic.

Compared to traditional banks, the fully digital neobanks allow their users to have an easy and seamless experience for their banking transactions. By doing so, neobanks are able to offer more benefits not only to users but also to businesses. The operational processes of neobanks are instantaneous, secure, efficient, and transparent, making the use of neobanks more cost-effective for businesses. Furthermore, neobanks enable businesses to reduce the number of used platforms for their different payouts to customers, employees, and more. With the growing use and demand for neobanks, the global demand for banking super-apps also grew. As banking service consumers expect a highly integrated experience, neobanks came forward with banking super apps. These neobanking super apps are capable of combining multiple services into one platform for their users, and further enhance the user experience compared to traditional banks’ approaches. With such methods, neobanks continue to increase their consumer base and compete with the traditional banking system worldwide.