Traditional Banks vs Neo Banks - Staying Competitive in a Disrupted Industry
Updated: Sep 2
The banking industry is experiencing a significant transformation, thanks to the rise of digital technologies and the emergence of neo banks. In recent years, neo banks have disrupted the traditional banking industry by offering a seamless and user-friendly interface that provides customers with easy access to their accounts and financial information. This article will explore the strengths and weaknesses of both banks and neo banks and highlight what banks need to focus on to remain competitive in this changing landscape.
One area where neo banks excel is customer experience. They offer a seamless and user-friendly interface that provides customers with easy access to their accounts and financial information. For example, N26, a German-based neo bank, offers a mobile app that provides a range of services such as real-time transaction notifications, budget tracking, and the ability to freeze and unfreeze a debit card. Revolut, a UK-based neo bank, offers customers the ability to hold multiple currencies and exchange them at the interbank exchange rate, as well as access to cryptocurrency trading. Successful neo banks such as Chime, Monzo, and Atom Bank are also worth mentioning, as they offer innovative features and services that traditional banks are yet to provide.
However, despite the convenience and innovation that neo banks offer, there are still areas where banks have an advantage. One of these areas is lending. Neo banks are typically not as active in this space as banks, which have a long history of offering various lending products. While neo banks may offer some lending products, they do not have the same breadth and depth of options as banks.
Another area where banks have an advantage is their existing customer base. Banks have a large and loyal customer base that they can leverage to offer additional products and services. For example, a customer who has a checking account with a bank may also be interested in opening a credit card or taking out a mortgage. Banks can use customer data and insights to tailor offers and provide a personalized experience that meets the individual needs of each customer.
The recent partnership between Goldman Sachs and Apple is an excellent reference to highlight how banks are embracing technology and applying business innovation. This partnership aims to offer an integrated financial experience to Apple's customers, combining the convenience and seamless experience of the tech giant's ecosystem with the financial expertise and credibility of Goldman Sachs. This collaboration could potentially be a game-changer in the banking industry, and other banks may follow suit.
Lastly, it's worth emphasizing the importance of urgency and proactivity in the face of the rapidly changing landscape of the banking industry. With the advent of AI and other disruptive technologies, it's essential for banks to leverage their existing strengths, such as their customer base and lending capabilities, to expand their offerings and avoid losing market share.
We are MPL Innovation, a boutique innovation consultancy.
Our mission is to empower our clients by propelling their corporate innovation initiatives to new heights.
With our specialized innovation consulting services, we assist organizations in surpassing their boundaries and unlocking unprecedented growth opportunities.
Follow us ➡️ HERE