Determine your bank needs: Establish which banking services and features are used, as well as any features that matter most.
Neobanks depend on banking-as-a-service software providers to offer FDIC-insured checking accounts and money transfers.
They can also reduce customer fees by cutting infrastructure expenses such as branches and employee salaries, which ultimately enables them to cut customer fees more effectively.
1. AI-Powered Customer Experience
Neobanks provide customers with an experience that is effortless, fast, and responsive – as well as using machine learning for personalized and contextual services – making neobanks more customer-centric than traditional banks.
Neobanks typically boast lower operational costs due to not needing ATMs or bank branches for infrastructure support, plus their operations are highly flexible allowing them to quickly introduce new products instead of waiting years to do so.
Successful neobanks take an engagement-focused approach to digital engagement as an approach towards monetization, similar to their peers in consumer tech. Furthermore, successful neobanks often create complementary products outside transactional banking for nonfinancial needs (for instance shopping, gaming etc).
Neobank customers tend to interact with them more frequently and at higher volumes than with traditional banks, necessitating robust systems for verifying and using data effectively. Successful neobanks also utilize artificial intelligence (AI) tracking metrics related to customer lifetime value (CLTV) and customer acquisition cost (CAC).
2. Artificial Intelligence-Powered Recommendations
Neobanks typically provide reduced services such as payments and savings accounts compared to traditional banks. Furthermore, neobanks often specialize in serving a certain segment of customers; Chime offers services specifically to consumers who have avoided traditional banking due to fees, minimum balance requirements or the absence of physical branches nearby.
AI helps neobanks deliver hyper-personalization, anticipating customer needs and providing relevant and timely recommendations. For instance, WeBank utilizes AI chatbots to interact with its customers while automating responses and eliminating human errors – Juniper Research estimates this could save the global banking industry up to US$7.3 billion in operational costs by 2023.
Successful neobanks emphasize customer engagement, adhering to the belief that consumer time trumps consumer wallet. They create comprehensive customer profiles which allow them to attract, engage and monetize various customer segments more easily; additionally they develop flexible core tech platforms which make launching new products relatively painless.
Neobanks possess an unparalleled competitive advantage due to their ability to adapt quickly. While traditional banks take years to launch products, cutting-edge neobanks that focus on AI can quickly develop and test services within months or even weeks – thanks to full-stack teams comprised of product owners, designers, data scientists as well as representatives from legal, risk, operations and marketing departments.
3. Artificial Intelligence-Powered Engagement
Successful neobanks prioritize customer engagement. They understand that time precedes money and that customer interests come before products or services they offer. Therefore, many neobanks provide features to increase engagement such as gamification (such as managing a demo investment portfolio), content on topics that customers find interesting, social features, etc.
Neobanks drive engagement by making money transfer easier between accounts and by forgoing service fees that traditional banks charge; furthermore, these alternative banks may provide competitive interest rates or waive monthly charges for consumers meeting certain criteria such as direct deposit.
As a result, accounts with neobanks can quickly grow – according to a survey conducted by Publicis Sapient in 2017, 20% of new neobanks launched within just 12 months alone!
Neobanks not only engage their target consumers, but are able to reduce costs by not investing in physical infrastructure and resources such as branches. Some providers pass along these savings directly to consumers through reduced or no monthly service charges; and small businesses can earn competitive interest rates on their accounts. neobanks such as Branch and MoneyLion target unbanked or underbanked consumers by offering accounts that work like demand deposits with debit cards that allow access two days ahead of payday.
4. Artificial Intelligence-Powered Analytics
Neobanks depend on machine learning models to enhance customer experiences and product innovations. To do so successfully, they require an efficient data infrastructure capable of gathering and storing all required information – this may involve gathering from traditional banking sources as well as transactions data – which then must be fed into a unified platform where ML models can access it.
Successful neobanks must also track key metrics aligned with their business model, such as being able to identify customer segments with high LTV and offer offers or nudges designed to increase engagement and loyalty, while calculating customer acquisition costs which enable accurate calculations of margins and return on capital.
Neobanks offer more than reduced bank fees – they promote healthier financial behaviors that encourage positive spending habits and boost credit score and assets by offering budgeting apps and automated savings features that encourage positive spending habits. Competition from neobanks has driven traditional banks to improve their mobile apps and customer experiences as competition between these banks increases consumer options for quality banking products.
