A digital bank is not based on whether there are branches or the availability of a mobile banking app. A sustainable digital banking organization delivers the majority of products and services digitally. It also allows for real-time digital interactions with a culture that allows for rapid response to innovation opportunities.
Today’s technology offers consumers access to more insight and choices than ever thought possible even five years ago. As a result, today’s consumer is more informed and more demanding of organizations they plan to do business with.
In financial services, new digital fintech start-ups, benefiting from lower barriers to entry, are offering solutions that are responding to these needs before many legacy banks can respond. Globally, entrepreneurs and even traditional banks are creating digital-only banks or neobanks that embrace a digital-first strategy.
Simple, Moven, BankMobile, Number26, Atom, ZenBanx and NuBank are just some of the firms testing the waters. These neobanks have digital technology at the core of their value proposition. Opportunities exist for existing organizations that can leverage the new technologies to engage an increasingly demand consumer in close to real-time, but legacy challenges are difficult to overcome.
The movement toward digital or direct banks continues. For some banking customers, it is an extension of mobile and digital banking, and for others, a look at promising new ways of banking. While this delivery method may be less costly and highly efficient, the more promising business models include plans to offer – or partner with – organizations that can offer something more than efficient transactions, including access to savings, loans, and other credit products.
Overview by Ed’O Brien, Director, Banking Channels Advisory Service at Mercator Advisory Group
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