The rise of "neobanks" -- a direct bank system that is strictly digital and reaches customers on mobile apps and computer platforms only -- has been prominent in the UK over the past several years, and banking institute HSBC has taken notes with the overhaul of its digital-first neobank -- First Direct. The bank will work exclusively with fintechs to retool its platform in order to compete with emerging competitors.
The benefits of First Direct's digital-first neobank are extensive -- they are more accessible to a larger percentage of the population for a number of reasons. Firstly, as long as the consumer has access to a mobile phone -- which most residents of both rural and remote regions do -- they can complete all their banking needs to on the in-app marketplace. Secondly, the digital bank allows a customer with limited or no credit history to open an account while offering services for them to improve their credit. This means that "unbanked" individuals are not barred from opening up an account.
As the banking landscape continues to evolve to include digital technologies, we can expect to see more digital-first platforms that could greatly benefit underserved populations who live in remote or rural communities.
Digital-First Neobanks
HSBC Overhauls the First Direct Platform to Reach Underserved Customers
Trend Themes
1. Digital-first Neobanks - The rise of digital-first neobanks presents disruptive innovation opportunities for traditional banks to overhaul their systems and compete with emerging competitors.
2. Mobile Banking Apps - The extensive accessibility of mobile banking apps offers an opportunity for fintechs and traditional banks to cater to underserved populations who have access to mobile phones.
3. Financial Inclusion Services - The inclusion of financial services for individuals with limited or no credit history provides a chance for banks to tap into the unbanked population and foster financial inclusion.
Industry Implications
1. Banking - Traditional banks can seize disruptive innovation opportunities by embracing digital-first neobanks and retooling their existing platforms to remain competitive.
2. Fintech - Fintech companies have the chance to collaborate with banks to develop digital-first neobank platforms and expand their reach to underserved communities.
3. Mobile Technology - The growth of digital-first neobanks opens up opportunities in the mobile technology industry to develop innovative solutions that facilitate mobile banking for underserved populations.