The growth of neobanks in the US is estimated to rise from 11% in 2021 to almost 20% in 2025. With growth on the rise and market size increasing, competition naturally continues to grow.
There are 7 questions that each neobank owner must ask themselves in order to know whether they are ready to take on the competition. If the answer is negative to any of these questions, that means that some innovative features must be added or changed in the upcoming years.
Let’s dive into the questions.
1. Can Users Register Only With an ID and a Mobile Device?
Suppose your potential clients need anything else aside from a mobile device and an ID to register and get onboarded in your neobank. In that case, you’re falling behind the competition pretty quickly. A large percentage of people drop out of registration if you require their proof of address or anything they don’t have at hand right now or want to provide.
For that reason, a phone, and ID (two items everyone almost always has at hand or in their pockets), should be more than enough to finish registration and onboarding in your platform.
2. Can Users Register Within Minutes?
If your potential clients cannot register within minutes, they’re very likely to drop out of the process. Many people want to register to fund their accounts as quickly as possible and start utilizing features like P2P payments and marketplaces, and start splitting bills with their friends.
3. Is Everything In One Application?
If there are some features for which your users have to go outside of your application to a website or another mobile app, this is bad news and puts you behind the curve as well.
Every single piece of information and feature should be accessible on one mobile app. Since the average attention span of humans of all ages has decreased by over 25% to just 8 seconds in the past few years, you want to keep your users engaged at all times and in one place.
Switching between platforms would easily allow for distractions to steal away your customers. It takes just one click to divert them from their path.
4. Are You Using Predefined Options For Your Users?
Behavioral science has proven that utilizing a predefined nudge greatly increases the likelihood of the individual to choose–or saves them the option to do so if the choice is already correct. For example, let’s say that 90% of your users are from a certain country of origin, and you don’t have access to geolocation IP due to privacy reasons. If this is the case, you can easily predefine the standard country to the most utilized one.
This would save the effort of choosing a country for 90% of your users and would overall increase the conversion rates of the given step in your registration funnel since you would make people answer one question less.
This method can be applied to many other features, aside from registration. You can always use predefined answers to questions in case you have enough data to know which one is the most expected answer or the most desired one.
5. Can You Integrate Third-Party Solutions Into Your System?
Perhaps, this is the most important question of all, mainly because third-party banking and software-as-a-service companies can expand your list of features for a reasonable cost with much greater efficiency than if you hired internal developers to do so.
If you have developed your neobank from the ground up, it’s very likely for third-party solutions to need additional integration into your systems before you can start using their advantages. For that reason sticking with banking-as–a-service providers might be the best option.
6. Do You Use Pattern Behavior, Biometrics, and Blockchain For Security?
When it comes to money and personal finances, security is one of the most important aspects. Biometrics, blockchain, and pattern behavior with the help of machine learning and artificial intelligence are one of the most advanced security features any financial institution can offer.
In order to not only convince your potential customers that their funds are secure with you but also dissuade attackers from even trying, implementing these features in your neobank security systems is a must.
Pattern behavior can predict whether someone else is utilizing the account of a certain individual by analyzing previous data and comparing it to the current one. Blockchain decentralizes data storage and encrypts data. This makes it much harder for cyber attackers to succeed.
Biometrics fortify the weakest link in the chain of security - the user. The majority of data leaks and identity thefts have happened mainly because users are not cautious regarding suspicious links, phishing, and social engineering. Biometrics greatly lowers the success rates of all of these malicious practices.
7. Are Your Marketing And Back-Office Costs Optimized?
Marketing can be divided into two sections, retention and acquisition. Depending on whether your neobank is in the growth phase or not, you should distribute your budget accordingly. Moreover, automated displays inside your app can also be considered marketing. Displaying the right messages to the right customers with the help of machine learning can greatly increase their spending and can incentivize certain behaviors within your digital banking platform.
Back-office processes can and should also be automated to a large extent. Many banking-as-a-service third-party solutions offer integrated computer system validation (SCV) modules that would make sure that at any point your neobank is up to the respective regulatory standards. Moreover, it will greatly save costs in terms of labor and minimize errors.
After you’ve done a quick health check for your neobank by answering the above-mentioned seven questions, the next step is to truthfully determine whether your banking platform is up to the highest standards. If it lacks in any of these regards, make sure you catch on quickly. The competition is tough and plentiful.
Fortunately, with the help of third-party banking-as-a-service providers, it’s very easy to implement new and innovative features which step up your game as a neobank.