This resulted in the
banks adapting their business models and developing their mobile banking apps and making transactions and other banking business available mostly digitally without the need to going to some of their branches. This is also why some of the banks have had their branches closed – which isn't necessarily a bad things but means that the banks are evolving.
Some experts say that banks aren't adapting to the digitalization like the big fintechs but that is not entirely true. Most of the financial institutions have now rolled out mobile apps, electronic bill payment and online products. However, since
banks are tied more tightly with regulation and legislature than fintechs, the digitalization cannot progress as swiftly as with fintechs.
Nevertheless, competitors of all sizes are targeting banks and that is why banks must keep reinventing their services to keep up with the times.
What are neobanks and challenger banks?
Neobanks and challenger banks have been making headlines in the past year or two and as the words say these are the banks challenging the traditional banks with their more specialist or digital-only services.
KPMG, "Challenger banks can be established firms – most likely midsize or specialist – that seek to compete with larger institutions. Neobanks tend to be newer, completely digital mobile outfits, but there's some overlap." And as
Judd Caplain, Head of Global Banking & Capital Markets, KPMG International, pointed out smartly – "these banks don't carry the weight of legacy technology, so
they can leapfrog over traditional infrastructure and disrupt the status quo."
These types of banks, however, are more focused on niche products so they don't offer a full suite of services like traditional banks do which means they can move through innovation more easily but they don't satisfy all customers' needs. For example, they offer customers to open a checking account and borrow money, but the customers have to go elsewhere for credit cards, mortgages and wealth management.
Revolut are one of the best top neobanks – digital banks.
N26, named after the 26 small cubes in the Rubik's cube, is the Europe's first Mobile Bank with a full European banking license with 3.5 million customers across 24 markets, according to the company.
Facebook Pay, Samsung Pay, Revolut, Apple Pay etc
With the plenty of options being used for payment and mobile banking, it seems that the new generations have completely put their trust in digital.
Be that as it may, customers of all age groups
still put most trust in their primary banks when it comes to security and legal things and the
main reason to change their bank is that the other banks are offering better digital service or have better offers.
Recent surveys from cg42 as seen on
The Financial Brand have proved this.