The world economy is being increasingly globalised, necessitating easier access to banking services from anywhere. Neobanks are thriving in modern society because they meet customer needs, and everyone can now solve banking problems online in a matter of seconds. The smartphone and browser interfaces focus numerous work tasks, making the user experience so much simpler.
What exactly is a Neobank?
A Neobank, is a Fintech-based digital bank that offers banking and payment services without the use of conventional bank infrastructure. It operates online or via a mobile app. Real or virtual payment cards, mobile deposits, individual payments using phone numbers, addresses, social media IDs, mobile budgeting tools, and real-time digital receipts are all examples of neobanking.
Neobanking in Australia
58% of Australians are already actively engaging with FinTechs and 14 percent of customers have, or are in the process of, changing their main financial institution according to Deloitte.
The Australian Prudential Regulation Authority granted licensed deposit-taking institution licenses to three start-up banks targeting the lucrative retail banking sector in 2019: 86 400, Volt and Xinja.
Douugh was the first Neobank to list on the Australian Securities Exchange (ASX). (ASX:DOU) in October 2020. The business bills itself as a “next-generation Neobank,” with plans to enter the “buy now, pay later” market by partnering with payments company Humm Group (ASX:HUM). Douugh provides a subscription-based financial wellness program that assists consumers with money management, debt repayment, monthly savings, and asset accumulation with a “smart” bank account and Mastercard debit card.
After installing an app and registering, you can start using a Neobank in minutes. The majority of digital banks work with digital wallets like Apple Pay, Google Pay, and Samsung Pay. New users may, however, request a physical card be mailed to their address.
Apart from that, Neobanks all have the same philosophy: they want to improve the way their customers handle their money and conduct their banking. They are known for having low costs due to reduced fees because they do not need to operate a branch. They employ Artificial Intelligence providing personalised insights into their overall financial situation.
Another Australian bank challenger, Juno Bank, is focused on SME lending but also offers a range of personal term deposit products. According to market sources, they are targeting a valuation of $2.5bn-$3bn in an initial public offering.
68% of Australian millennials choose to open a new transaction account on their phone or device, according to a GlobalData survey.
Top Neobanks in the World
Among the most famous Neobanks in the world are the following:
- Atom Bank (UK). The full service is provided through a mobile application, offering login using face and voice recognition. The bank allows remote opening of deposits and processing of loans. The clients can also get a mortgage. They currently have 65,000 customers according to Statista.
- WeBank (China). Its service is closely linked to the WeChat social network ecosystem and provides a wide range of services (from payments to microcredit). They currently have 200 million customers.
- Simple (USA) was known initially as BankSimple. They provide accounts and are part of the STAR network for free access to approximately 55,000 ATMs. They currently have 100,000 customers.
- Fidor Bank (Germany). They exclusively use digital technologies, whose banking services are aimed at solutions for the digital generation. They currently have 70,000 customers.
- Starling Bank (UK). Starling services focus on providing current accounts. The mobile app offers intelligent solutions for smarter money management and real-time monitoring. They currently have 1.42 million personal customer accounts.
- Monzo (UK). It was one of the earliest of several new app-based challenger banks in the UK. They currently have 5 million customers.
- Revolut (UK). One app for all things money. Buy crypto, gold and manage your money with spending analytics.Looking to buy a banking licence in the longer term.
The Future of Neobanking
Neobanking is already a technology that aims to make your product more successful, cost-effective, safe, and fast. In today’s world, conventional banking models don’t always fit. They must adapt to offer a wide range of customer services in a more cost-effective and engaging manner.
Some Neobanks have been unable to move quickly because their networks proved to be less adaptable and scalable. Fintech companies must invest more money to re-engineer these solutions, improve the service, and broaden their markets.
Overcoming the Challenges
Although it could seem like very tight restrictions and strict capital requirements to start a ‘challenger bank’, fintech companies have realised that they don’t necessarily need to purchase their own banking licence. Instead of spending huge amounts on an ADI licence, they could partner up with smaller players such as regional banks and rent a licence.
Thanks to the technology, Neobanks can address and successfully overcome the challenges they face.
When resources are scarce, Neobanks can enlist the help of experienced Fintech software developers such as Appello who own the necessary storage, servers, and other infrastructure, as well as talented and skilled developers.
Expanded functionality or technical dominance will easily alleviate the burden of competing. After all, if you give users something they can’t get from another digital bank, they’ll come to you.
With the right system architecture, a larger user base can be served, allowing many clients to be helped at the same time.
The financial sector runs smoothly because of regulations. And most of them are considered by your trusted software development partner.
Therefore, modern technology, proper software architecture, in-time technical support, security, adherence to compliance policies, and broad functionality are all factors that contribute to a better digital experience.
Involving FinTech Software Developers
To ensure the success of your Neobank, it’s critical to partner with a software development agency such as Appello, who knows all about digital Fintech solutions, regulations, pitfalls, challenges, has significant experience, and provides quality services. Contact us today.
Finally, FinTech is one of the fastest-growing verticals within the app development world. Thanks to the rapid pace of digital transformation, many financial firms and their clients are searching for easy to use applications. Read Appello’s article about the features your new fintech app needs to achieve success here.