Exploring the benefits of neobanking

Yet in 2017, the world saw its first neobank: a completely digital bank that has no physical branches. By 2020, there were just under 30 neobanks worldwide.

As neobanks become more popular, what benefits do they present? ZEDRA is seeing increased interest from our clients who want to explore the possibilities of neobanking.

There are several factors that fuel this uptake, but speed, efficiency, busy lifestyles and younger clients used to fintech and online tools are pushing the trend.

Flexibility and speed

Neobanking also offers significant flexibility for customers – customers are given more options from the get-go with add on services rather than a package approach. Real-time foreign exchange rates, services like forward exchange contracts, mobile banking apps, prepaid multi-currency cards, escrow accounts, offshore or onshore accounts and IBANs for each account are appealing benefits for clients who are considering neobanking. Speed too is a key consideration and customers are sometimes finding neobanks processes are faster.

Ongoing compliance

Customers of traditional banks have sometimes been frustrated by what can be a lengthy process for completing and submitting information for ongoing compliance. Because the whole process with neobanking is already online, any ongoing compliance requirements can also be handled digitally. The result is the process can be faster and more efficient for customers of neobanks.

Facilitating banking in a modern world

The ease and speed of neobanking is also tempting clients to move away from traditional banks. Today’s clients are busier than ever before with work and travel, regardless of whether they are a (U)HNWI or a person looking for a savings account. Going into branches with limited opening hours, or with branches that are only in certain cities can be a challenge. Neobanks are facilitating banking that can be set up and used anywhere and at any time without the reliance for face-to-face interaction. For some clients, it may be a better way of banking.

Focus on customer service

Because neobanks have had to carve out space in the market and their interactions with customers are digital, many have invested heavily in an ‘A-Z’ customer experience. Neobanks can’t rely on a relationship with a banker that lasts for years to secure customer loyalty. The result is a very carefully thought-out customer experience, and many customers – especially those with smaller accounts – can feel the benefit of that.

The best of both

While neobanking is the new kid on the block, one thing is for sure: the need and desire to work with traditional banks isn’t going anywhere fast. ‘Both systems offer some real advantages, and there is still a central place for traditional banks for both personal and business use. For some people, neobanks are the future. For others, traditional banking is perfect for their needs.