The constant evolution of neobanking is exciting for both consumers and businesses. It promises a continuous wave of innovative financial products and services.
Introduction to Neobanking Trends
Neobanking refers to financial institutions that operate completely online. A neobank works digitally and has no physical branch offices. The entire transaction process — from registration to the final transfer — is completed within an app or online platform.
At first, neobanks were considered a threat to the banking industry. The term ‘challenger banks’ was used broadly to suggest they were there to subvert the status quo.
In reality, it is hard for traditional businesses and institutions to innovate. Meanwhile, neobanks created laboratories for banking innovations. The basic services provided through neobanking do not greatly differ from those offered by normal banks. They include: the ability to create savings and deposit accounts; money transfer and payment services; and financial planning services.
Digital banking is widespread, but digital banking experience vary enormously. Neobanking allows customers to link their online accounts to conventional bank accounts. That way, customers can enjoy the best features from both types of banks – like the neobank’s capacity for custom analysis of personal habits and planning with data from their other accounts.
Neobanking Trends in 2024
Neobanking is about providing a fully digital and maximally convenient customer experience of banking. Its greatest innovations all do that and 2024 predictions for neobanking trends all push further into that field of convenience:
1. Enhanced Mobile Banking Features
Mobile banking features are increasing in 2024 and will continue to do so – growing in number as more features launch, and growing in presence as successful features proliferate.
Neobanking services are very practical, allowing consumers to make transactions using only their mobile phones, anytime, anywhere. It is digital banking as an incubator of financial technology.
New neobanking features also offer a more personalised digital banking experience. Consumers can choose the colour of their digital debit card, choose the material and design of a physical card (if they want one), and create and add custom spending categories, which they can sort transactions into manually and set up to file them automatically according to their preferences.
Customers can also add their images to their savings accounts, which is a feature that does not necessarily have a financial service tied to it, but deepens the consumer relationship with the neobank. That helps with customer retention and business continuity and is a marked departure from traditional banking, which struggles to make those personal ties with their customers.
If you build the service around the customer, it makes sense to give them more than just the service. Especially in a mobile-first world where they will have hundreds of interactions with the neobank in just a day.
2. AI Integration
Artificial Intelligence has a growing role in neobanking as it does acrossl financial services and industries generally,
AI and machine learning technology will be integrated into neobanking personalisation features to provide more customised banking insights for customers. AI models can also analyse consumer spending patterns, allowing for the production of more personalised and efficient budgeting tools – all in the platform.
Ultimately, this helps power offerings of embedded financial services and opportunities for new revenue streams and happier customers.
3. Expansion into New Markets
Neobanking found its feet in markets where it was able to grow and mature into the exportable product it is today – especially in the UK.
The UK’s status as a finance hub and a large developed economy with high levels of digital maturity and global integration made it an ideal base for neobanking. It is not the only one, though, and there have been innovations all over the world, from Nigeria to the Netherlands and Indonesia, with neobanks finding ways to meet consumers where they are digitally native.
Neobanks are starting to leave their original territories and enter new markets. This means a more diverse customer base for these neobanks, and a more diverse range of neobanking services, serving a great range of niches, for consumers to choose from.
They are mostly entering via partnerships and collaborating with local regulators – both indicators of the sector’s maturity.
4. Crypto Integration
Cryptocurrencies are not a fad, and will be an integral part of neobanking trends in 2024.
Financial technology that supports crypto payment methods and investment portfolios will open up a new field to the benefits of neobanking. This is a consumer choice decision, but bringing cryptocurrencies into a new arena holds unknown possibilities in its own right.
This aligns with the digital banking principle that offers more diverse financial choices. This development does not mean that real money will be gone, just that consumers will have more financial portfolio and payment options. It also brings crypto to new consumers.
5. Environmental Sustainability
Neobanks lead the trend towards more environmentally sustainable banking practices.
Their ability to reach their customers so intimately means they get great traction with sustainable messaging in-app, and can activate customers with environmental and social initiatives – like donating a round-up from a transaction – by embedding those features in the existing consumer journey.
This shift is driven in part by consumer preferences. Younger generations prefer brands that focus on social responsibility and sustainability is now recognised as a major factor in purchasing decisions for many age groups.
Younger consumers want the businesses they use to align with their own values. For the environmentally-conscious crowd, digital banking is an important platform on which to cultivate trust.
6. Enhanced Biometric Security
Cybersecurity is ever-present and biometric authentication makes neobanks very secure.
Biometric security measures have made digital banking much more secure. Logging into an account by simply typing a password is already considered outdated.
Multi-layered security protocols for authentication are now proactive fraud prevention measures: so they include using fingerprint scanning, facial recognition, or recording videos to authenticate a user. The use of fingerprints and facial recognition tech lends itself to the seamless customer experience and customers easily authenticate every time they open their apps, however often they do it.
7. Increased Cooperation and Competition
Increasing competition with conventional banks is now offering more chances to collaborate.
Competition drives innovations, and as traditional institutions fought to keep pace they were able to see what they could do and where they just could not match the agility of neobanks.
Partnerships between neobanks and traditional financial institutions is itself becoming a trend, as they combine to offer the best of the new with the best of the old. That, in turn, will create many opportunities for consumers to win out.
The new frontier of a changed world with neobanking
The banking world has changed. So has how we manage our finances. User personalisation, the integration of AI, and biometrics have all become commonplace thanks to neobanking. However, these innovations have had a huge impact.
Financial technology changes our lives every day, and neobanking trends will . These feature enhancements are not just neobanking trends – they represent significant changes in digital banking and the ongoing relationship between bank and consumer.
- Neobanking
