Neobanks are having the same effect on banking, as quantum theory did on our ideas about reality, Medici suggests. Furthermore, digital banking has become a part of our everyday lives.
Stash CEO, Brendan Krieg, claims that his company has gained over 3 million customers since 2015. He says that the reasons as to why they have become so popular is that they’ve studied the consumer, and discovered that the average person wants to live a better financial life. Perhaps it is unsurprising that Stash’s average user is a 29-year-old who makes $50k a year, not a bad salary for a Millennial these days. But, success, Krieg suggests, is down to the fact that Stash’s app makes it easy for people to invest.
As Medici points out, the neobanks have gained their successes because they are meeting the customer where they are and are finding ways to connect advice, banking, and investing in one experience.
This applies not just to Stash: it’s a global phenomenon. The leading success factor for the major neobanks’ growth appears to be their superior customer experience compared to the traditional banks.
The redesigned mobile and web applications, and smooth customer onboarding, have enabled players like Monzo, Atom and Starling Bank to grow at speed.
Also, by eliminating costs associated with physical branch maintenance, neobanks are able to reduce the fees associated with key products.
However, while the customer experience seems to be the neobanks’ key selling point, there is another factor. They are solving the bigger issues with conventional banking.
For example, they are looking at innovative product offerings and improved customer service. Medici gives the example of Open, a neobank in India. It has integrated automated accounting and payment gateways with their current account offering. Furthermore, its platform enables startups and SMEs to integrate banking and accounting in one place using a multi-bank connect feature. And Open helps startups and SMEs to manage employee expenses in a seamless way.
Another example from India is InstantPay. It is focused on bridging a gap that traditional banks have not looked at since banks opened in India, and that is some time ago. InstantPay drives financial inclusion in a responsible and sustainable way and has reached 10,000+ PIN codes, and caters to 50 million unique customers.
Anish Achuthan, CEO of Open, said, “Most Startups & SMEs generally use multiple dashboards and interfaces for invoices, bookkeeping, and online payments. Making vendor payments and employee payouts have always been a challenge. All of this drains entrepreneurs and finance teams of their time & energy.”
Western neobanks have been successful largely because of the customer experience they offer, while in the Asia-Pacific markets the neobanks have to take a step further by answering core banking problems in the industry, such as like ‘knowledge transfer,’ ‘undocumented logic,’ ‘technical debt,’ and a ‘skills/desire gap’.