There’s simply no denying that the financial industry is experiencing a power struggle. Established financial institutions are now competing with FinTech-wielding startups and large enterprises with deep pockets looking to further leverage their existing customer base. And customers are increasingly open to the idea of accepting these novel digital banking services.
Serge Beck is a serial entrepreneur, venture capitalist, IT specialist, and blockchain ambassador, with over ten years of experience on Wall Street and over ten years of experience as a venture capitalist. Beck is the CEO and Founder of Optherium, a global fintech company developing blockchain solutions to reform defective functions within financial and security infrastructure.
Beck spoke to The Fintech Times to explain digital banking solutions must be adopted by larger enterprises as customer interest and demand grows:
The popularity of neobanks, and online banking as a whole, is driven largely by consumer demand for a new standard of financial service delivery in the tech era. A recent consumer survey conducted by Optherium Labs and PYMNTs finds that Millennials are leading the charge for more convenient and secure banking relationships, with 37% of respondents in this cohort having a digital-only bank as their primary service provider.
With these changes in consumer needs and the wide availability of neobanking FinTech, companies outside the traditional financial services establishment are poised to capitalise on the transition. Large retailers, employers, and enterprise-level companies increasingly turn to digital banking as a novel revenue stream.
Below are a few of the major reasons why incorporating neobanking solutions into the modern-day business model is a must for companies looking to capitalise on the digital banking boom.
The Financial Benefits of Adopting Digital Banking as a Large Enterprise
Although there are still those who prefer to use a local branch to meet their banking needs, the popularity of these centralised services is waning — especially for the younger generations.
According to experts, one of the few barriers holding back a complete transition to remote banking is a lack of comprehensive software platforms from financial institutions. Particularly for those on the smaller end of the spectrum, it can be difficult to offer full-fledged online services due to software infrastructures expense and operating costs. Neobanks and FinTech platforms are now filling that service gap by providing a digital suite of comprehensive, turnkey banking services.
The Ultimate Loyalty Program
We’re all creatures of habit at the end of the day. Financial behaviour is fairly predictable and repeatable overtime, with people falling into spending and financial management patterns. Although the global pandemic has certainly driven more consumers to use online-only services, we’re quick to form habits, and many people are now comfortable conducting online transactions with large enterprises like banks, retailers, and eCommerce companies.
By including a digital banking feature, companies also break down a financial barrier between themselves and consumers. Online banking services are the ultimate loyalty program for enterprises because they provide customers with checking, savings, and even credit accounts specific to the organisation. Consumers now have a designated pool of resources attached to the large enterprise to conduct their transactions more efficiently and better monitor spending.
Improving Customer Experience
Two main things are holding some consumer segments back from adopting neobanks and other digital- only financial service providers: Security and high-quality UX.
Safe, convenient banking is an essential component of life in the 21st century, especially considering how covid exposes the fragile nature of our global economy. Consumers want to have access to their finances at all times, and they want that experience to be as convenient and safe as possible. At the surface level, it seems that these two wants are conflicting, with higher convenience meaning fewer security measures. But the latest iteration of neobanking platforms can fully integrate with security APIs for biometrics and RegTech, making them both easy to use and fully secure.
Large enterprises can take advantage of innovative, turnkey FinTech platforms to better accommodate these new customer needs.
Understandably, the majority of the business world is focused on how neobanks and established players are duking it out for market share. But what is receiving less focus is how enterprises from the retail, eCommerce, and large employer segments are also joining the fight. Here are just a few examples of how forward-thinking executives are leveraging neobanking platforms to capitalise on this critical new revenue stream.
In the same consumer study by Optherium and PYMNTS, it’s notable that Gen Z consumers are increasingly open to the prospect of using banking services with their favourite large retailers. This is built upon the high level of trust that these consumers have in companies like Amazon and Apple. These retailers are now looking to leverage their strong brand loyalty to create a massive new revenue stream.
Unsurprisingly, the pandemic served as a springboard for the eCommerce industry. With nowhere else to shop, consumers quickly turned to digital stores running on Shopify and other large eCommerce platforms. Now, Shopify and the rest of the industry are looking to improve the digital buying experience with innovative digital bank accounts.
- Large Employers
Enterprises with a large employee base are one of the prime candidates for implementing neobank services. Payroll, benefits, and incentives can be delivered much more effectively through an employer-run bank account. Additionally, there’s strong interest amongst consumers for the ability to bank directly with their employers digitally. This means additional revenue for the company and a more streamlined experience for end-users.
The case for large enterprise adoption of white-label neobanking services is readily apparent. Consumers are interested, and the financial services market is in flux. Now it’s on executives and leaders to take decisive action to capitalise on this immediate market opportunity.