Neobanks : Opportunities and Challenges

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A neobank is a virtual bank that is purely online and digital.

Accessible on smartphones, computers and tablets, neobanks have no physical presence nor street branches, and use up-to-date Fin Tech approved technologies with artificial intelligence.

Neobanks are starting to boost their presence in the banking industry. They are driving innovation and increasing competition against traditional banks. At the same time – and while still in their early phase of development – neobanks are subject to the same regulations and procedures as traditional banks.

How it works

Opening an account with a neobank is fast and free via video streaming and live chat – such as FaceTime and Zoom – with authorized representatives and bankers. There are automated kyc (know-your-client) checks before opening an account using regulated applications such as videoldent.

Accounts can be opened and up and running in minutes.

Neobanks support open banking dashboards and applications on their main platforms and can track personal expenses and other customer needs such as basic and complex account packages including credit cards. They waive all major hefty transaction charges such as purchases involving foreign exchange. Payments and loans are executed on a real time basis.

N26 is coming

A new Berlin-based neobank, N26, is set to launch in the Swiss market within the next two months, according to CEO Valentin Stalf.

Its main competitor in the Swiss market will be Revolut who already have some 50,000 clients.

Over 10,000 Swiss-based customers have already signed up to open an account with N26 when it debuts in the Swiss market. The bank is also preparing its launch in the U.S. with a staff of 60 already working full-time on this project. The company’s value at the beginning of 2019 was CHF 2.7 billion.

Future challenges

For tech savvy consumers whose requirements include fast service, online convenience and low costs Neobanks seem to be a viable, additional option to having a traditional bank account. Neobanks have potential for growth, however, attracting customers and creating profitability are two major challenges they will have to face as they compete against the traditional banks.

 

Sources:

neobanks vs. Old money by Matthias Gall, Trimplement, 2019

What is a Neobank (and should you try one), Justine Pritchard, The Balance, 2018

Key trends for Neobanking in 2019, Shrey Agarwal, 2018

N26 set to open up in Switzerland , Finews, 2018

What are neobanks? Techly, 2019.

Leonidas Epiphaniou Leonidas Epiphaniou

The bulk of my professional path lies in Private Banking and Wealth Management in Geneva with over 7 years of experience.

I hold a B.A. in Psychology and Criminal Justice and an MBA with a specialization in Finance.

I am quick to find creative and out of the box solutions to simple and complex problems with a smile.

My motto is "do your best" and I always carry out my tasks and duties keeping in mind certain principles such as "never give up", "visualize crossing the finish line", "seize every opportunity" and always strive to make a positive difference.

I can fluently express myself in French, English, Spanish and Greek, while being conversant in Italian.

I recently obtained the ISFB Banking Competency, Fidelio Opera, Life Coach, Stress Management, Green Belt Six sigma and Salesforce Ranger certifications.

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