During the pandemic, the number of neobank entrants exploded, targeting retail and small-business with their digital-only approach. The acceleration of the digitization of financial services, hastened by covid, has dramatically transformed how the world banks. At a glance, it is easy to assume that the pandemic has been the only game-changer for neobanks. The pandemic has positively impacted digital banks with its societal regulations and restrictions. However, it will be interesting to see how many neobanks will survive amongst digitization’s complex, competitive landscape.
Neobanks generally have a few signature features, including low-cost foreign exchange and international money transfers, payment, and branded debit cards. Many have the goal of being multinational, full-service digital banks encompassing current accounts, lending facilities, insurance, and investment.
However, these intentions often come with obstacles. Retail and consumer banks are very culturally and demographics specific. What works in one place may not work somewhere else. Governmental and financial regulations differ, making established business models less flexible and transferable.
Alternatively, some marketplaces are overbanked, making an entrant neobank void unless they have a specific audience, demographic, or stand-out signature feature. Moreover, traditional banks are gradually becoming more digitally and technologically savvy, reducing the ability and capacity for neobanks to maintain their differentiation on functionality and services alone.
Youtap has a proven track record of providing the assistance Neobanks need to launch, from regulatory and compliance help to advanced and innovative white-label banking and payments technology required to move forward seamlessly. Youtap’s cloud-based digital banking application stacks transform traditional banking cores. Their applications and platforms are fully customizable, giving emerging neobanks a point of difference to stand out and survive the crowded marketplace with their “significant feature.”
While battles continue post-pandemic in digital banking, Youtap has the weaponry for them to stand out, have success, and survive.