The Rise of Digital Neobanks In The Post Covid Era

We can all agree that 2020 was no ordinary year. While Covid-19 negatively impacted many industries, many digital-first businesses were positively impacted. The year of remote working saw increasing demand for remote financial services for added access and convenience, a need which many Neobanks were able to fulfill.

Well Positioned For A Digital Economy

Before Covid-19 became a part of our dictionary, there was already a demand for digital-only financial services across the region. These solutions are designed to serve modern businesses by helping them save time and money through a 100% online experience - say goodbye to physical visits and long queues. By leveraging technology, Neobanks are able to operate more efficiently while keeping their pricing plans affordable and lean, which in turn benefits the end consumer.

In a data-first economy, Neobanks are also able to target traditionally underserved but fast-growing segments, widening their reach on the market. Their target market further widened as Neobanks saw accelerated demand for digital solutions during the lockdown.

The New Normal

What can be expected from Neobanks in the new digital reality? I will approach this question from 3 perspectives.

• Digitisation First, there will be more digitisation in banking as remote banking charts the way forward. Aside from providing access from anywhere, digitisation also comes with cost savings which are especially relevant given the state of the economy. In 2020 the Singapore government has awarded two digital full banks (DFB) licenses and three digital wholesale banks (DWB) licences from the Monetary Authority of Singapore (MAS), which was a major milestone for the industry. As the government confirms its commitment to advancing banking sector liberalisation, it acknowledges that a digital-only presence and technological approaches aimed at new market segments has a respectable place in the industry.

• Internationalisation The second pillar is internationalisation. With digitisation there is a growing trend of individuals and SMEs doing business beyond borders. Even in the midst of a collective lockdown globally, trade did not stop. Providing cross-border solutions will be key to being relevant to the modern consumer or business.

• Transparency Lastly, transparency has become an increasingly important trend as information becomes freely available. We believe the increased emphasis will benefit end-users as it pushes financial access towards being affordable, lean, and inclusive for all.

The Way Forward

The digital acceleration has come and is here to stay. At Aspire we constantly question how we can continually push boundaries and remain relevant.

1. Focus on the customer

   Staying focused on customers and solving their problems is key to remaining on top of the game. As we continue to reach out to underserved segments, we continue to engage our existing user base to also look for more ways to serve them by solving their problems.

2. Build for the future

   It’s no question that new technologies will drive banking transformation over the next 5 years. Artificial intelligence and personalisation technology will play a big role in maintaining relevance and providing personalised experiences to users. Prioritising for the future is key.

3. We are all part of an ecosystem

   Humans, as well as businesses, do not work in silos. Recognising that our users are part of mature ecosystems, we believe the key is to integrate with existing ecosystems rather than trying to build our own. Neobanks go beyond providing basic financial services; they can track finances, predict activity in accounts, and even send regular push notifications to alert you when your spending exceeds your budget. By connecting banking services with SaaS, neobanks will be able to provide a financial operating system layer for businesses and create an all-in-one experience, embedded in a customer’s experience they are already used to.