The banking sector has historically been dominated by the incumbent, established banks, however, a new breed of banks dubbed “neobanks” are starting to slowly tap into this monopoly, especially in Europe.
Over the past few years, Traderoot has been immersed in the neobanking space, working closely with some and utilising our technology and expertise to develop their products and services. Neobanks are quickly becoming a topic that every member of the fintech industry needs to know, and understanding how they can affect the future of fintech is crucial.
What is a neobank?
Neobanks are essentially online-only financial institutions that are very similar to a traditional bank. Neobanks offer banking services to customers via their mobile phones or other digital platforms. Neobanks aim to transform the banking landscape with a more personalised customer experience and product offering.
Their offerings are, however, somewhat limited when compared to traditional banks and usually only offer a simple checking and savings account. By moving everything online and disregarding physical branches, neobanks can reduce their fees and offer larger interest rates, allowing them to tap into the unbanked market.
The rise of neobanks in Europe
Europe is largely considered to be a hotspot for neobanks with the UK performing well. In recent years, neobanks’ customer base across Europe has grown by more that 15 million, and by 2023, it could reach up to 85 million customers. Over the last few years, banks like Revolt, Monzo and N26 have become prominent names in Europe, but why are they becoming so popular?
To put it simply, neobanks are gaining widespread popularity because they put the customer first. In today’s modern world, increasing customer demands have led to the creation of entirely digital banks which are operational 24/7 and do not close their doors at 5pm. While the majority of neobanks started off by only offering debit and savings accounts, they have since expanded their service offering to include a number of useful services. From sending or exchanging money in different currencies to buying cryptocurrencies, neobanks have it all.
“We’ve seen incredible growth in neobanking, especially in Europe, and one can only expect that this growth will continue tenfold,” says Jan Ludik, CEO of Traderoot. “Customers’ frustrations with traditional banks play right into the hands of neobanks. Most people are tired of paying exorbitant fees and using not-so-user-friendly outdated systems.”
People are willing to part with traditional banks if they are offered an accessible and efficient solution to their needs. In the age of convenience and instant gratification, customers want it now and they don’t want to wait, and this is exactly where neobanks come in.
As a developer of Financial Technology and provisioning via managed services, Traderoot is excited about the future of neobanks. We only expect the growth and opportunities to continue over the next few years. Take a look at our website to learn more about our service offering or email us on sales@traderoot.com. If you would like more information, our sales team would be delighted to assist.