Traditional banking is undergoing a profound digital transformation, compelled to digitalize its structures and offerings to consumers and businesses. However, it also faces increasing competition from neobanks and fintechs, entities that emerged in the digital ecosystem and are skillfully attracting customers, especially among younger demographics and technology-associated companies. These topics were explored in Bilbao during the XIII Financial Conferences of Deusto Business School, in collaboration with Kutxabank Investment, Finnk, Bilbao Plaza Financiera, and Grupo Noticias.
An expert noted that traditional banking is in a very advanced stage of digitalization in customer relations, with over 70-80% of operations conducted through digital channels. Nevertheless, the main challenge is to transform the operational and technological model to fully leverage the potential of digitalization. This involves gaining agility, enhancing personalization, and structurally reducing service costs.
“"Traditional banking is now very digital and increasingly mobile. The challenge now is to go beyond the channel and transform the operational and technological model to capture the full potential of digitalization."
While digitalization could pose a risk of financial exclusion, the expert argues that neobanks and fintechs are driving lower-cost models that expand access to financial services. However, maintaining balance is crucial, offering hybrid models that combine digital channels with physical or assisted options, and supporting the transformation with financial and digital education for customers.
Neobanks initially gained significant traction among young, urban, and digitally intensive segments, but today they are a cross-cutting phenomenon. In Spain, over 40% of customers have a relationship with a neobank or digital bank, with relevant adoption levels across all age, income, and professional profile segments. Neobanks have captured a significant share of customers and entry-level products such as accounts, payments, and cards. In Spain, over 35% of new accounts are opened with a neobank or digital bank.
Three key elements make neobanks attractive: a superior digital customer experience, a leaner cost structure allowing competitive pricing, and a simple proposition addressing specific needs. Furthermore, their distinct technological and product culture enables them to innovate rapidly and adapt to customer demands. Essentially, successful neobanks are technology companies that use technology to enhance their value proposition.
