How to successfully build a digital bank?
By Jeroen de Bel, Benjamin Kral on 01-02-2021
Over the last decade, there has been a rise of digital banks. These newly established banks, also referred to as neo banks or challenger banks, offer modern banking propositions tailored to the smartphone and the digital world. They are founded in the aftermath of the financial crisis with the vision to create a better and more fair banking experience. These digital banks are setting the benchmark for the future banking market.
There are currently over 400 digital banks worldwide and they are still growing fast in number and size. Nevertheless there are still ample digital banking opportunities in selected niches and geographic markets. The question is then how one could seize this opportunity and successfully launch a digital bank? This whitepaper offers a practical guide to help you from start to finish with hands-one information.
We looked at their value proposition and what makes them successful. We did put our findings in a new guide. ‘How to successfully build a digital bank’ was born from a collaborative initiative with BPC BT and Radar Payments.
The success of a digital bank is defined by their unique value proposition and viable business plan, a lean operating model able to deliver the customer promise, and a well-managed and profitable business.
This white paper takes you through each step of the process. It first provides an introduction into digital banking and helps one understand the current market landscape. In three steps we then take you through what kind of digital bank to build, including the value proposition and business plan; how to build a digital bank, with a detail description of each of the buildings including the regulatory framework, organization design, technology, and people capabilities; and then how to scale a digital bank into a sufficiently large and sustainable business.
By the end of this white paper one will have a complete overview of what it takes to build a digital bank. This will not only help one getting started in building a digital bank, but also put one in pole position to achieve future success.
Download your free copy here: How to successfully build a digital bank.
Performance of neo banks in times of COVID-19
In recent years, we have witnessed the steady rise of digital challenger banks, also referred to as neo banks. It seemed that the only way was up, but COVID-19 halted the growth. We analysed neo-banks’ performance using our Fincog Challenger Bank Index, across various categories, regions and even for individual neo banks. Read more
How Challenger Banks can get on The Path to Profitability
We previously highlighted that the challenger bank’s revenue and profitability have generally not yet matched expectations. We have performed another benchmark on leading international challenger banks. While it’s a mixture of players, they share that they are all profitable. Our benchmark provides interesting learnings for success. While the path to future profitability differs per player, we have defined four strategic initiatives that challenger banks can undertake to drive revenue and become profitable. Read more
Why challenger banks struggle with profitability
There has been a strong growth of challenger banks in recent years. Despite their strong growth, however, their revenue and profitability are lagging behind. We have benchmarked some of the leading international players on their propositions and financial results. Overall, a less-active customer base combined with a limited product portfolio at lower margins, leaves many challengers with low income per customer and often negative profitability. Read more
How Neobanks Are Setting the Benchmark in Banking
Over the past years we have witnessed a steady rise of challenger banks, or neobanks, in Europe. These newly established retail- and SME banks are competing with (or ‘challenging’) the established banks with modern banking propositions tailored to the digital world. Read more