How Financial Business Services Can Boost Neobank Profitability

Neobanks have emerged rapidly in the last decade. Through rapid growth, market penetration and targeting new customers, they have shaken up the banking industry, taking with them millions of customers who have been attracted by their smart digital solutions.

They are the future of banking, providing a much more efficient, secure and quick service than traditional banks. As technology continues to evolve, so does their ability to provide a host of new services that will improve a customer’s banking
Experience the bottomless.

The problem, however, is that many neobanks have grown too fast and too far, and have become too thinly spread in the geographic areas they serve. Some people try to open as many new accounts as possible without thinking for a moment how they can do so
To benefit Others have become volatile because they did not consider emerging trends that may affect them when they created their initial product.

The bottom line is that most neobanks have struggled to turn a profit. In fact, less than five percent have broken it, according to one study.

Simon-Kucher & Partners has disclosed.

Trading Services Platform

So, what does he need to do to get out of the red and into profit? The answer comes in the form of financial services business.

Neobank already has unparalleled knowledge and insight into customers’ spending habits and financial situations through the vast amount of data they have collected over many years. Therefore, they are in a perfect position to provide them special facilities.
trading platform based on their needs and wants.

Neobanks like Revolout are already doing this. Self-proclaimed ‘financial super app’
Launched its commission-free stock trading platform in August 2019, and others followed suit.

providers are in the minority

But till now their number is very less. The majority do not have such an offer. And those that do are restricted, giving half of them access to only one financial instrument.

This is because setting them up is extremely complicated. Digital banks must obtain regulatory licenses along with financial infrastructure, logic and workflows to remain compliant.

work in partnership

Despite all this, help is available. One solution is for neobanks to partner with fintech startups that provide merchant services to deliver their offering. Many have already gone down this path, as demonstrated by our recent study, which found that
59% Neobank had teamed up with the investment as a service provider to launch new products.

Offering new services is the key to ensuring Neobank’s profitability. For example, Revolut has prioritized such growth. following the success of its first full-year profit in 2021, where more than half of its revenue came from foreign exchange and
Money Services.

sustain growth

Now is a critical moment for many neobanks that are reaching maturity. They need to introduce new strategies for profitability and sustainability that will sustain their growth and competitive advantage.

But these strategies can only be delivered effectively through the use of technology. Technology enables Neobank to get to the bottom of the matter and resolve customer issues, while ensuring that they get a seamless experience.

harnessing technology

Ultimately, what neobanks want is more customers and less churn. This means more revenue and, thus, higher profit margins.

To achieve this, they need to convert customers by offering them highly personalized service that will inspire them to use their services more often and advocate for their offering. This is enabled through the use of digital tools and services.

Providing financial business services is just another link for Neobank. If they can deliver it well, they can bring in profit and even more growth.