The banking industry has traditionally displayed inertia to major disruption and innovation.
With the rise of neobanks in Europe and the UK, and the arrival of Australia’s first neobanks; Volt, Xinja and 86 400, this may be set to change as the younger generation of customers increasingly adopt more digital and customer-centric banking services.
Neobanks are fully digital, typically mobile-first, branchless banks that provide a suite of financial products with a customer-focused approach. However, they are not simply digital versions of traditional banks. Neobanks differentiate themselves by using new technology, rather than legacy systems which are usually functionally limited and less adaptable.
Neobanks are more ambitious. They still want to improve customer experience through better front-end solutions. But they also want to overhaul the whole structure of a bank, using technology to drive more efficient operations with more open APIs that third-party services can integrate into. As a result, neobanks offer a more streamlined set of products and services with more transparency and flexibility. To date, neobanks have been targeted towards millennials and early technology adopters. These customers are more open to digital-first offerings.