Prevailing cookie-cutter strategies and monolithic business models limit banks in reaching their full potential. That’s why banks will embrace more diversified strategies that are tailored to meet the needs of specific customer segments. One strategic archetypes that help banks to win in the digital banking era is the so called full-stack digital bank, or neobank. Neobanks are built on latest technology stacks and focus relentlessly on solving specific customer needs. This article provides a short snapshot of how neobanks operate.
Neobanks provide niche excellence
Neobanks are first-movers that utilise latest technology stacks and set new customer experience benchmarks. That’s why they run on fully digital operations and digital-era business models. A key success factor is the laser-focus on solving key pain points of a customer segment that can be served exceptionally well.
Many consumer-facing neobanks mostly innovate around digital customer journeys and experiences. After un-bundling their incumbent competitors with a vastly improved niche product, they often re-bundle again by complementing their own core features with value-adding third party products (e.g. investing, lending, cross-border payments, insurance, accounting). In most cases, the neobank still controls the end-customer experience.