- Neo-banks are acquired and rolled into larger digital channels offerings: I wrote earlier this year about banks acquiring technology companies, thereby acting more like tech companies than traditional banks. The neo-bank model and acquisition of innovation are not that dissimilar, and BBVA´s acquisition of Simple is the conflation of both strategies. Through acquisition, BBVA is able to jump the steps of creating a culture for digital channels innovation, establishing a customer base (albeit small), and aligning internal resources required to launch a new service. There aren´t many neo-banks, but digital channels start-ups are numerous. This could be the way forward for institutions that are struggling with adapting the existing operating model to digital financial services.
- Traditional institutions begin offering their own neo-bank, digital-only services: Fundamentally, there`s nothing truly disruptive about a neo-bank. There´s no secret algorithm, intellectual property, or disruptive idea at work, and many banks are more than capable of offering similar levels of service. Indeed some of them have already begun offering digital services through a separate digital brand. Examples globally include NAB´s UBank, ASB BankDirect, Banamex´s Blink, Hello Bank by BNP Paribas, and Customer Bancorp’s new mobile brand. With new brands, and often new platforms, these banks are testing the digital model. This should satisfy a growing number of digitally driven consumers, as well as provide a clear path for banks looking to move accounts to more digitally-focused services.
- Neo-banks never become viable stand-alone business models, but they influence the way banks think about digital channels: Currently, most neo-banks aren´t banks–they rely on other institutions to handle the deposits, making them simple prepaid services with additional functionality. The reliance on third-parties is becoming a bottleneck for delivering the value neo-banks have come to represent. Without diversified financial offerings that encompass the entire financial need of the consumer, these “prepaid” services are pressed to create enough value to validate adoption. This is a major question when assessing viability.
November 12, 2014 by Leave a Comment
Since the launch of neo-banks like Moven, Simple, and GoBank, financial institutions in the US have been avidly monitoring their popularity. Some have written them off as non-starters; others have praised them as disruptors. In recent months, however, the neo-bank model has hit a few stumbling blocks that call into question the promise of the digital-only model, and gives credence to the sceptics. GoBank recently announced that it was going to stop allowing account opening via the mobile device. Users will now have to purchase an account opening “kit” from a store, adding significant friction to the process. Simple has experienced a number of issues related to payment scheduling, the “safe-to-spend feature,” and service outages or delays. Moven received $8 million to begin moving their app overseas in an effort to garner higher adoption. The promise of these new start-ups was a drastic improvement on customer experience, ditching traditionally stale financial services with improved digital offerings, social media integration, and a familiar/casual communication style. Yet these recent issues serve as a reality check for the neo-bank model—when your value proposition is customer experience, technical issues look 10x worse. It´s far from clear what will happen to these new market players, but Celent envisions a couple of different paths over the next few years.
June 18, 2012 by Leave a Comment
Last Wednesday, Celent hosted its fifth annual Banking Innovation & Insight Day. We had a full house of energetic attendees, and a solid crew of dynamic panelists and presenters. After a brief welcome address we launched right into the agenda with a panel session on tablet banking. We did things a little differently this year, with each of the panelists (from USAA, CIBC, and Stellar One Bank) giving brief demos of their iPad apps. The demos were followed by a stimulating discussion on tablets and how they are changing the digital banking landscape. The mobile theme continued right into the next session – a panel discussion on the future of mobile banking and payments. Panelists from Wells Fargo, SunTrust, and Standard Chartered prognosticated on future mobile innovations and the potential of mobile payments. Right after lunch we were extremely honoured to present awards to the banks selected for our 2012 Model Bank initiative. The audience was also given the privilege of hearing from two of the model bank award winners – Redstone Federal Credit Union and Bank of America Merrill Lynch. Stay tuned for a blog entry on the model bank awards from Bob Meara. In the afternoon session we introduced the topic of industry disruption and invited a bank speaker (from Citi) and a start-up speaker (from Social Money / SmartyPig) to talk about disruptive initiatives in banking. One of the highlights of the day was definitely the energetic and thought provoking presentation given by Yobie Benjamin, CTO of Citi Transaction Services and Citi Enterprise Payments. There were quite a number of tweeters in the room providing an event play by play. We invite you to review what folks had to say about the event on Twitter . Bank Systems and Technology published a couple of articles regarding the event:
- Tablets, Mobile Payments, Disruptors Among Hot Topics at Celent Banking Innovation & Insight Day
- iPads, Smartphones, Mobile Payments and Clean Water: Top Quotes From Celent’s Banking Insight & Innovation Day
February 3, 2011 by 3 Comments
Tablet computing is on an obvious growth trajectory, but is this trend something banks should be acting upon, and if so – how? Said another way, led buy Apple’s iPad, will tablets change banking? In the words of Sarah Palin, “You betcha!”. We see tablets contributing to financial services channel delivery both inside the branch network and as a viable self-service channel on its own. Tablets provide distinctive and compelling attributes that, in our opinion, will drive adoption: • Mobility compared to the desktop platform, with the ability to operate usefully in both online and offline environments. • Particularly rich video delivery capability. • A unique form factor making the platform particularly useful for interactivity between staff and bank customers. Several examples of tablet applications may help illustrate. USAA Federal Savings Bank this week launched its iPad application after months of design effort aimed at leveraging iPad’s unique attributes. Like USAA’s internet and mobile channels, the application provides banking, insurance, investments and financial advice in one place. That’s where the similarities end. The tablet application enjoys less latency. Significantly more content is available above the log-in and it’s more intuitively and easily acquired. And, the content is available whether online or offline. See: www.usaa.com. Financial Management Solutions, Inc. (FMSI), a provider of workforce automation solutions aimed at small to midsize financial institutions will be introducing an iPad integration to its Lobby Tracking System (LTS). LTS is a web-based, queuing and reporting tool that tracks key productivity, sales and service indicators. Running LTS on a tablet in addition to desktops will provide FIs new options beyond traditional desk based concierges. Finantix, a Venice Italy based provider of front end sales and service solutions launched its Wealth Apps 2.0, a comprehensive suite of wealth management applications for the Apple iPad last month and plans similar applications for its banking platform sales application in the future. Finantix won Best of Show at Finovate Europe this week with its app. Tablet apps are clearly nascent in retail banking at the moment. Banks should evaluate the use of tablets in future branch initiatives and keep the heat on vendors that are slow to respond. Why? Because tablets will help branches sell more effectively with a reduced training burden. How might this work? Currently most banks rely on branch staff to engage customers as directed by staff-facing CRM systems (or no system at all). Using a tablet interactively with clients reinvents the experience. It holds the promise of a more engaging interaction – one in which branch staff interact alongside clients as coaches. In the process, much paper can be eliminated and workflow efficiency much improved. As a self-service channel, tablets will likely emerge as yet another development opportunity. No one really wanted another delivery channel to manage, but this one looks like it’s a keeper.