# How Can Neobanks Keep Up? The Answer Lies in Their Edge in Tech Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-10-19 Category: TECHNOLOGY Category URL: https://financedigest.com/category/technology Meta Title: Enhancing Customer Journey for Neobanking Success Meta Description: Discover how the neobanking sector can retain customers through enhanced customer journeys while prioritising onboarding security and regulatory compliance. URL: https://financedigest.com/how-can-neobanks-keep-up-the-answer-lies-in-their-edge-in-techhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/istock-1163132207-1736815000565-compressed.jpg) ![](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/jimmy-fong-450x417-1736815000529-compressed.jpg) _By_ **_Jimmy Fong,_** _CCO at SEON_ In recent times, we have witnessed an explosion in the neobanking sector, with emerging digital-only [providers benefiting from rapid digitization](https://www.financedigest.com/impact-com-acquires-pressboard-providing-publishers-with-a-best-in-class-platform-for-branded-content-as-digital-advertising-is-deprioritised.html "impact.com acquires Pressboard, providing publishers with a best-in-class platform for branded content as digital advertising is deprioritised"). Now, as this sector begins to mature, companies must find a way to retain customers that may want to transition [back to traditional banking](https://www.financedigest.com/bank-of-englands-mann-doubles-down-on-backing-for-rate-hikes.html "Bank of England’s Mann doubles down on backing for rate hikes") companies. To do so, businesses in the sector should look [toward systems that enhance the customer journey](https://www.financedigest.com/the-journey-towards-a-digital-bank-five-major-stages-to-successful-banking-digitalisation.html "THE JOURNEY TOWARDS A DIGITAL BANK – FIVE MAJOR STAGES TO SUCCESSFUL BANKING DIGITALISATION"), all while ensuring onboarding security is preserved and meeting regulatory requirements. Recent years have highlighted the resilience and flexibility of tech-first [finance platforms—such as neobanks—that have been able to continue servicing customers in ways](https://www.financedigest.com/6-ways-to-finance-your-dream-vacation.html "6 Ways to Finance Your Dream Vacation") largely unaffected by global volatility. Since the start of the decade, app-download rates for neobanks have soared, with younger demographics [leading the charge](https://www.financedigest.com/financial-services-must-lead-the-charge-in-the-re-skilling-revolution.html "Financial Services must lead the charge in the re-skilling revolution"). This situation was even more pronounced in developing parts of the world, with a huge surge for [fintech and neobanking solutions](https://www.financedigest.com/meet-tilak-joshi-the-fintech-ceo-building-modern-solutions-for-the-gig-economy.html "Meet Tilak Joshi: the fintech CEO building modern solutions for the gig economy") clearly visible. In fact, [research by Publicis Sapient shows that almost 20% of all neobanking companies](https://www.financedigest.com/title-rubber-gloves-market-research-report-2030-top-companies-market-size-and-forecast.html "Rubber Gloves Market Research Report 2030: Top Companies, Market Size and Forecast") were established in 2021 alone. This acceleration led to [several companies](https://www.financedigest.com/the-severe-impact-of-downtime-on-companies-bottom-lines.html "The severe impact of downtime on companies’ bottom lines"), including Revolut, Nubank, and Chime, becoming household names. This was especially true among younger users who had limited previous experience with traditional [banking solutions](https://www.financedigest.com/georgias-tbc-bank-slashes-loan-decision-time-with-fico-solution.html "Georgia’s TBC Bank Slashes Loan Decision Time with FICO Solution"). In general, the [fintech movement clearly benefited from this recent push for financial](https://www.financedigest.com/how-can-fintechs-better-engage-zillennials-with-their-financial-health-the-answer-lies-in-speaking-to-them-in-their-own-language.html "How can fintechs better engage Zillennials with their financial health? The answer lies in speaking to them in their own language") digitization, with segments like embedded finance and buy now, pay later also experiencing growth. It’s clear why these [solutions have been so in demand](https://www.financedigest.com/demand-for-temperature-controlled-pharma-packaging-solutions-to-reach-over-us-9-bn-by-2030-fmi-projects-a-decline-till-q2-2020-amid-covid-19-pandemic.html "Demand for Temperature Controlled Pharma Packaging Solutions to Reach over US$ 9 Bn by 2030; FMI Projects a Decline till Q2 2020 Amid COVID-19 Pandemic"). For a myriad of reasons, people in [recent times have been unable to physically visit banks](https://www.financedigest.com/the-recent-bank-of-england-meeting-the-biggest-rate-hike-recession-warning-and-the-fallout.html "The recent Bank of England meeting, the biggest rate hike, recession warning and the fallout") in person in the way they have before, which has limited the ability of traditional financial businesses to validate customers. In turn, traditional financial [solutions were unable to be offered in the ways](https://www.financedigest.com/5-ways-data-integration-solutions-are-helping-financial-organizations-deliver-improved-outcomes.html "5 Ways Data Integration Solutions Are Helping Financial Organizations Deliver Improved Outcomes") they had been previously. Of course, the demand for these [services didn’t decline](https://www.financedigest.com/decline-in-german-services-sector-eases-raising-hopes-for-milder-recession-pmi.html "Decline in German services sector eases, raising hopes for milder recession -PMI") during that period, which often left a lot of customers stuck. Fortunately, the advent of tech-first neobanking solutions offered a way out. However, there’s now a concern among neobanking businesses that this [demand will begin to subside as traditional banking](https://www.financedigest.com/token-inc-launches-london-office-to-answer-demand-from-european-banks.html "Token, Inc. Launches London Office to Answer Demand from European Banks") companies become more accessible again. That means there’s now an incentive for businesses to prioritize new systems that help to [improve the customer experience](https://www.financedigest.com/improving-customer-experience-and-profits-with-embedded-payments.html "Improving customer experience and profits with embedded payments"). By doing so, the neobanking sector can regain the [competitive advantage](https://www.financedigest.com/turning-big-data-compliance-into-a-competitive-advantage.html "TURNING ‘BIG DATA’ COMPLIANCE INTO A COMPETITIVE ADVANTAGE") it was beginning to develop over traditional banking companies. The question is how this goal can be most effectively achieved. Perhaps the most important first step for neobanking businesses is to [improve customer](https://www.financedigest.com/how-can-financial-firms-improve-customer-service-after-the-pandemic.html "How Can Financial Firms Improve Customer Service after the Pandemic?") journeys. For the uninitiated, this term refers to the [process of customers](https://www.financedigest.com/fraud-protection-why-customer-onboarding-requires-digital-identity-processing.html "Fraud Protection: Why Customer Onboarding Requires Digital Identity Processing") signing up, onboarding, and ultimately using banking, or neobanking, services. When conducted by banks, this process is often arduous, creating an [opportunity for neobanks to differentiate themselves by offering](https://www.financedigest.com/surgical-equipment-market-high-trend-opportunities-offers-future-business-growth-by-2030.html "Surgical Equipment Market High Trend Opportunities Offers Future Business Growth by 2030") a streamlined process. However, while pursuing improvements in this area, it’s essential that onboarding procedures remain thorough. On the face of it, these two objectives may sound conflicting. Trust me, they really aren’t. With expanded [digital footprints and data-enrichment solutions](https://www.financedigest.com/carta-teams-up-with-vauban-to-launch-the-first-digital-solution-aimed-at-venture-capital-investors-creating-luxembourg-based-funds.html "Carta teams up with Vauban to launch the first digital solution aimed at venture capital investors creating Luxembourg-based funds"), businesses can accurately decipher, at the point of signup, whether potential customers are fraudulent. Quick and effective, these [systems help to dramatically reduce](https://www.financedigest.com/frances-dassault-systemes-shares-slump-on-reduced-licence-target.html "France’s Dassault Systemes shares slump on reduced licence target") the time previously associated with onboarding checks. That allows neobanks to offer customers [financial services](https://www.financedigest.com/the-future-of-financial-services-tech-evolution-not-revolution.html "The future of financial services: Tech evolution not revolution ") in ways that are far more user-friendly and convenient, allowing them to stay ahead of traditional banks. So, why is this important? Unfortunately, the primary answer is fraud, which continues to grow in both offline and online channels, especially the latter. If fraudsters were able to dupe onboarding processes and access neobanking services, there would be significant potential for [businesses to lose](https://www.financedigest.com/royal-mail-says-uk-business-losing-one-million-pounds-a-day-amid-union-clash.html "Royal Mail says UK business losing one million pounds a day amid union clash") out. Whether it’s through fraudulent loan applications, or through accounts used to facilitate other forms of [fraud attacks](https://www.financedigest.com/attacking-banking-and-fintech-fraud-head-on-through-ai-infused-strategies.html "Attacking Banking and Fintech Fraud Head-On Through AI-Infused Strategies "), this onboarding process must be properly safeguarded. In 2021, a total of $52 billion was lost to [identity fraud](https://www.financedigest.com/british-start-up-reveals-the-secret-to-solving-the-problem-of-identity-fraud.html "British start up reveals the secret to solving the problem of identity fraud") in the U.S. market, [affecting 42 million consumers](https://www.financedigest.com/from-in-store-to-online-how-the-pandemic-affected-consumer-behaviour.html "From in Store to Online: How the Pandemic affected Consumer Behaviour"). By adopting a tech-first approach to this challenge, neobanks can offer the same levels of security, if not better, as [traditional banking](https://www.financedigest.com/fiat-republic-the-specialist-baas-platform-that-bridges-the-gap-between-web3-and-traditional-banks-announces-it-has-become-an-electronic-money-institution-emi-in-the-uk.html "Fiat Republic, the specialist BaaS platform that bridges the gap between web3 and traditional banks, announces it has become an Electronic Money Institution (EMI) in the UK.") institutions—and do it far more conveniently. For example, [digital and social lookup solutions](https://www.financedigest.com/bny-mellons-new-solution-leads-the-digital-bill-pay-revolution.html "BNY Mellon’s New Solution Leads the Digital Bill-Pay Revolution"), with device-fingerprinting systems, can give neobanks an instant indication whether a device belongs to the person signing up. As a result, this system can instantly filter out obvious fraudsters, providing [businesses with more intelligence to automate](https://www.financedigest.com/breaking-down-the-barriers-of-ar-automation-to-help-businesses-save-money.html "Breaking down the barriers of AR automation to help businesses save money ") their decision-making processes. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---