Neobanks are the future of banking due to their decentralized nature and usage of cloud technology to protect data and transactions, and traditional banks can benefit from collaborating with these fully-digital financial entities. With no physical branches to maintain and no reliance on extensive legacy systems, neobanks offer more convenient solutions for bankers seeking more control over their finances and data. Neobanks automate many traditional functions, with operating costs significantly lower as they don’t need a sizeable labor force to run them.
Neobanks and fintech platforms now fill service gaps left by traditional financial institutions with digital suites of turnkey banking solutions. By collaborating with neobanks and fintech, traditional banks develop more robust and modernized practices, improving customer experiences along the way. Here are some of the technological advancements and tactics traditional banks can use from neobanks.
Using Cloud Storage and Biometric Technology
As mentioned in the introduction, neobanks don’t rely on old, elaborate legacy systems to house data and guide their operations. The technology that neobanks use is cutting-edge and advanced. Neobanks primarily use cloud technology for boosting their functionality, significantly lowering operational costs while accelerating their marketing and provisional speed. Because the cloud facilitates more secure data sources, neobanks are more agile and provide seamless consumer experiences all-around.
Traditional banks are gradually adopting cloud technologies, with 82% of IT executives in banks adopting a clear strategy for cloud implementation. Many traditional banks are exploring cloud solutions to cut their operating costs and the effects of the global pandemic. Collaborating with neobanks, traditional banks can accelerate cloud adoption and deliver more flexible financial services to their customers. Fintech adoption improves real-time processing of financial information as well. Typically, accounts have to settle overnight before including updated information. With cloud technology, neobanks quickly process transactions and provide increased access. Traditional banks can capitalize on these benefits when partnering with a neobank.
Another technological advancement neobanks utilize is biometric technology, utilizing fingerprints recognition, ear scanning and other login measures. Biometrics are part of the two-factor authentication security method neobanks use when engaging customers. As consumers voice their concerns regarding data privacy, traditional banks need to consider advanced security measures that consumers, particularly from millennial and Gen z generations, can trust.
Providing Holistic, User-Centric Experiences
Neobanks center themselves around seamless and intelligent engagement platforms that utilize user feedback and provide quick ready-made solutions to consumers. While traditional banks steadily realize how important client engagement is, neobanks have optimized their engagement processes to provide more holistic experiences for their consumers, offering personalized services and meeting unique needs. The user-centric experiences also extend to particular features bankers seek to improve their experience, including transaction alerts, real-time bank balances and personal finance products.
For traditional banks to improve their customer service efficiency, they should adopt client-first thinking, which has led to high satisfaction ratings for neobanks worldwide. The functionalities neobanks provide will only further improve service for traditional banks and large enterprises looking to adopt tech-savvy solutions, including:
- Card-to-Card transfers
- Customizable interfaces
- Digital receipts
- Customizable fees
Improving Security Awareness and Ease of Use
Another positive with neobanks is that they heighten security awareness due to an increased understanding of security vulnerabilities and come up with unique solutions to protect their services against data breaches. By collaborating with fintech, traditional banks develop a better comprehension of data security best practices, placing an increased emphasis on protecting sensitive information and having more resources to analyze data protection properly.
Additionally, through collaboration between traditional banks and neobanks, traditional institutions improve their ease of use with more robust online services and apps that are easy for consumers to understand and use. The technological know-how of fintech solutions like neobanks can supplement efficient programs that consumers can buy into. Traditional banks invest much of their budgets into maintaining their old legacy systems instead of digitized solutions that make them stronger in the financial market. An improved focus on digital transformation successfully combines the convenient solutions of neobanking with the benefits of physical banking, improving all aspects of service delivery.
One service traditional banks should note for ease-of-use is online lending, with predefined criteria to best meet the unique needs of bankers. Neobanks use rules-based approval to grant services, increasing their value by letting people submit loan applications in cases where special algorithms predefine them as qualified for lending programs. Also, neobanks apply metrics and data analytics to generate leads and efficiently promote new products, building their awareness levels. Traditional financial institutions garner an increased presence and more data-driven measures when collaborating with neobanks.
Fintech and neobanks can fully modernize operations for traditional banks, improving their data management, security measures and customer satisfaction when used properly.
