NEOBANKS, Lessons to learn

From time to time new business models arise that rethink and revise old models that suffer from problems typical of large structures. The banking sector and the financial business are also undergoing this revolution. In the shadow of globalized culture and the current technological social revolution, these new business models based on fintech technologies have emerged.

Companies such as N26, Revolut or Atom are changing the paradigm of traditional banking towards a more personalized, mobile banking adapted to the current culture and to the real needs of users.

According to thinker and digital banking guru Chris Skinner, there are three main problems underlying traditional banking:

Legacy customer: The mental taxonomy of some users with respect to financial services remains anchored in traditional models, and it is difficult to transform that user perception especially with the current loss of confidence in the banking system.

Legacy technology: The technology on which large traditional banks are based is obsolete and prevents the implementation of fast and agile service flows.

Legacy culture: This is something typical of large traditional corporations, rigid and immense structures that prevent the so-called digital transformation from being implemented in an effective and unified manner.

“Everything you really need from a bank in the palm of your hand

Next, we will see how the neo-banks have been able to respond to these blockers and we will be able to draw some lessons that are applicable to other business models:

The user in the service center

If we think of traditional banking and the way they have tried to digitize their services, it has been nothing more than a change from paper to silicon. This is a mistake that neo-banks have avoided at all costs. When launching their financial services, neo-banks have been clear that user experience and services tailored to users’ real needs are the core of success. In traditional banking, decisions on the products and services offered depended solely on the structural part of the business. However, in neo-banks, the implementation of methodologies from User Experience design and Service design have put the user at the centre of the service, and have given decision-making capacity to the UX Design departments, thus being able to offer highly adapted and agile services.

Specialisation of the catalogue of financial services

One of the advantages of these new business models is that they do not suffer from these portfolios of inherited products and services, most of the time immense and unstructured. They are born from scratch, and therefore have had the ability to restrict their portfolios to what is really necessary, to the real needs that users claim and that have been discovered in the research process. This specialization has allowed the resources and efforts of the design teams to be focused on only a few processes. This inevitably leads to fine-tuned services and functionality. The key to success is to offer little, but to offer it very well.

Products and services based on technologies and not the other way around

Neobanks are born out of fintech technologies. They have not undergone this unhappy digital transformation, but are born 100% digital, their business model is born and developed backed by a technology that allows you to take a whole banking structure to the palm of your hand. If in traditional banking technologies have been implemented to try in one way or another to digitize products and services, in fintech is the product is born from the technological possibilities currently available.

Market your model

The neo-banks have understood very well that their competition should not be traditional banking, but they have put their vision and focus on bigtech. Companies like Amazon, Alibaba, Samsung, Apple are transforming the financial world, especially in payment systems. The future effort of the neo-banks is to replicate the experiences of use of these new players of the financial system. Why not bring the banking towards the purchase model of Amazon, for example? They are trying to turn their business models into ‘marketplace’, offering not only their own financial products and services, but also having the capacity to incorporate non-owner products and services into their portfolios, which means being able to offer highly specialized portfolios, 100% based on fintech and being able to be very competitive thanks to the savings in all the backoofice that these new technologies allow.

These are some of the lessons we can learn from these new business models, fintech companies that have mutated into new 100% digital banks and have come to revolutionize the way users relate to banking structures. As we have already said, these lessons are valid to apply to many other business models. At Genetsis group we have been helping companies in these digital transformation processes for more than 20 years, generating intelligent user-centered solutions and rethinking the way in which users relate to companies. Our services focus on the development of digital experiences that add value to users and provide profitability to customers. Everything from a holistic approach and in an omnichannel environment.

 

Al Rodríguez

UX Designer

 

 

 

Al Rodríguez

UX Designer