Neobanking Is Here To Stay: Top 10 Drivers Of Its Success

Written by Aileen Zaera, Sr. Creative Sorceress of Ugami Inc.

Banks have accompanied the history of humanity for millennia in a hegemonic way. But, due to new technologies, this reality is changing at an accelerated pace. Now it is possible to find new generations of neobanks, which are digital banks.

Neobanks are similar to banks, but one of their notable differences is that they work 100% digitally. They have digital systems and apps specially designed to support their users. This helps the neobanks cover the users’ financial needs.

The origin of neobanking dates back to the early 2000s. Although they generated a bit of doubt at first due to the lack of physical offices, these financial institutions are booming. In fact, by 2021, the market size of the neobanks was $47 billion USD, and it is forecast that this figure will exceed $2 trillion USD by 2030.

This growth is no coincidence, and these are the top 10 drivers of its success:

1) Speed guaranteed

The process of opening an account in a neobank and requesting a financial instrument is carried out almost immediately. Thanks to the new existing identity verification technologies the process is fast. This is a great advantage for users.

2) Security in every transaction

At least in American territory, it is common for neobanks to partner with other institutions or chartered banks. For users, this means that the Federal Deposit Insurance Corp. insures all their deposits and funds.

For example, in the case of Ugami, its debit card for gamers is backed by Blue Ridge Bank, which is an FDIC member financial institution.

3) Easy to use

One of the most frequent complaints that users of traditional banks have is that some processes tend to be complicated. Especially when it comes to going to a physical branch of the bank to make a request.

For their part, neobanks have specialized in facilitating the use and request of their products. They take advantage of digital environments and smartphones. Users can then conveniently access their accounts and request any help or information they need, no matter where they are.

Likewise, the interface of neobank applications is usually optimized to be completely user-friendly. This means that the processes are simple to perform and easy to understand.

4) Less economic impact

Many people distrust traditional banks because of the extra fees and costs they may have. Neobanks usually have lower or almost non-existent costs for using their financial instruments. And even offer much more accessible interest rates for users.

5) Customer service

By not having the limitations of a physical location, customer service is usually guaranteed 24/7 online from wherever the user is. This is a great advantage for many since they can ask for help whenever they need it.

6) International transactions

Neobanks often allow the use of their debit cards internationally or for online purchases. Usually, this is possible without the need to make any extra requests.

7) Real-time transactions

Neobanks allow you to make bank transfers and make deposits and withdrawals of money immediately in most cases. By reducing the availability time of the money, users feel more relieved to be able to use their capital whenever they want.

8) An app for everything

These new digital financial institutions strive to be user-friendly. That is why managing different accounts and carrying out all kinds of actions from the same application is possible. Of course, this reduces the hassles users may experience at traditional banks.

9) Integrations

There are many digital wallets and financial services available. Users use them for different reasons. Neobanking services typically allow quick and easy integration of these third-party services. Yes, including some crypto-wallets.

10) Rewards

Neobanking fintech usually offers a good number of specialized rewards programs besides “Travel Miles.” And being digital products, they also add many ways of earning them.

Neobanks are here, and they're not going anywhere

Modern users are more digitized, especially considering that a large part of Gen Z are already productive adults in society. That is why neobanks have a guaranteed future market by having a specific user profile with digital behavior.

After all, neobanks do not have to change their infrastructure to adapt to new changes. And they rise from the tech evolution while shedding old issues from the financial industry.

The banking world is evolving, and trust me, you won't want to miss it!