NEOBANKS
Grinbaum continues : “ Challengers can serve notifications and recommended actions where and when appropriate . For instance , delivering an in-app push notification about progress toward a financial goal .
“ Pairing this with a recommended next-best action can be a game-changer for retention — and trust . If a neobank understands its users ’ goals and why they take the journeys they do , then it can tailor communications to improve the product experience .
“ Establishing this type of trust will increase retention and present opportunities to cross-sell into more areas of financial portfolios .”
Several other factors allow neobanks to more effectively curate and design products and services when compared to incumbents . Namely , as Potts notes , “ the ability to engage target users based on their interest and spending patterns .”
She explains : “ Klarna is one such example . Using a machine learningbased recommendation system to determine consumer purchase patterns , Klarna can offer appropriate shopping recommendations or financing offers .
“ We are also seeing neobanks deploying technology designed to track customer engagement performance , allowing them to more effectively measure the success of initiatives and products , helping to inform decision-making .”
Neobanks : Reaching lofty heights The market truly is primed for neobanks to capitalise on the slower pace of incumbents and establish their position as challengers .
In fact , the global neobank market is expected to grow at a Compound Annual Growth Rate ( CAGR ) of 54.8 % until 2030 –
“Challengers need to view their product from the user ’ s perspective : start with a financial goal and then build an exceptional product experience to support that ”
JEREMY GRINBAUM AREA VP EMEA , AMPLITUDE
from US $ 66.82bn in 2022 to US $ 292.7bn in six years ’ time , according to Grand View Research .
But how will neobanks achieve this mid to long-term growth prediction ? What innovations will get them there ? While they can capitalise on a legacy banking sector which is in transition at present , legacy players will inevitably catch up to match the tech employed by neobanks today .
For Potts , this boils down to continued use of the latest technology , such as AI and machine learning ( ML ), and tailoring it to meet ever-changing customer needs .
“ To deliver a stronger level of engagement with customers , neobanks need to be able to leverage customer-specific insight in their client interactions ,” she says .
“ AI and ML allow neobanks to get this insight from the data they hold about their customers . Leveraging that insight at the point of engagement – especially in realtime – allows them to have a contextual ,
66 February 2024