Focus Outlook

Revolution in the banking sector: How neo-banks are challenging traditional banks


Hand of man holding hologram of bank icon, blockchain digital currency technology and DeFi virtual bank concept.

In recent years, a new type of bank has established itself on the financial market the so-called neo-banks. Neo-banks are digital banks, i.e. banks whose processes are mapped completely digitally, meaning they have no physical location. Neobanks have now also brought banking onto smartphones. The core business of neobanks is therefore mobile banking. They offer their customers completely mobile and web-based solutions for opening accounts, making transfers, payments and other banking services. These new types of digital financial institutions have the potential to fundamentally change the way we bank. Unlike traditional banks, neo-banks rely on innovative technologies to provide their customers with a seamless user experience.

Dive with us into the fascinating world of neo-banks and discover how they are changing the banking landscape forever!

The advantages of neo-banks:

Ease of use: neo-banks allow customers to carry out banking transactions conveniently from their smartphone without having to go to a bank branch. This saves a lot of time and is more flexible; for example, you no longer need to make an appointment at the bank. You can access your account, make transfers and much more at any time and from anywhere. Neo-banks often offer personalised financial services and innovative tools to better meet the individual needs of their customers.

Low fees: Neo-banks typically have lower fees compared to traditional banks because their operating costs are lower. This enables them to convince their customers with attractive conditions.

How neo-banks are challenging the banking sector:

Customer-centric approach and technological innovation: neo-banks focus strongly on customer satisfaction and develop innovative solutions to offer added value to their users. As a result, they are challenging traditional banks to improve their own services in order to remain competitive. They also rely on advanced technologies such as artificial intelligence, machine learning and big data analytics to enable personalised offers and seamless customer service. Traditional banks need to invest in innovative technologies to keep up.

Agility and speed: Neo-banks are able to react quickly to changes in the market and introduce new products or features. This agile approach presents traditional banks with the challenge of accelerating their decision-making processes and innovation cycles.

The impact on traditional banks is serious. Firstly, there are changes in customer behaviour: More and more people are willing to leave traditional banks and switch to neo-banks in order to benefit from the advantages of digital financial services. Furthermore, it also leads to increased pressure on traditional banks: the growing popularity of neo-banks poses challenges for traditional banks such as customer churn and the need to invest in technology and innovation to remain competitive.

Neo-banks undoubtedly have the potential to revolutionise the banking sector. Their customer- centric approach, technological innovation and agility make them a serious competitor for traditional banks. The challenge for traditional banks is to improve their services, become more innovative and invest in modern technologies in order not to be left behind. The rise of neo-banks marks an exciting development in banking that is worth keeping an eye on. Will traditional banks and physical branches even exist in the future?

By Anton Michael Herzog the Founder and CEO of king+

Anton Herzog has over 15 years of experience in finance and banking. In 2011 he founded a financial services company that offers customers a modern banking experience that suits their lifestyle. The king+ Mastercard enables worldwide payments and cashback on all transactions. With the innovative king+ app, customers have full control over their budget all with low fees and full transparency. As a king+ customer, you are always a king.

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