How Millennials Use Neobanks and Why
There’s no denying that millennials have everything at their fingertips today. Technological waves have taken almost every product and service by storm. As a result, everything from rides to taxis is more easily delivered to consumers.
But one industry that has taken a bit longer than others to build user-friendliness into its services is banking. While financial services like payments had seen breakthroughs like UPI, the banking industry as a whole showed little sign of using technology to meet customer needs.
This is where neobanks come in.
Technology in banking
The lack of technology in traditional banking does not allow it to be customer-centric. This means that things like opening a bank account, tracking your expenses, and even closing a bank account, all become tasks that require a lot of time and effort. Neobanks eliminate all of this by bringing a digital layer on top of a traditional bank. Since it has no physical presence, it has also brought banking services within the reach of millennials. The idea is to go beyond the traditional meaning of banking – where it is not just a means of depositing and borrowing funds. Neobanks expand the reach of banking by helping you easily track your expenses, get insight into them, automate recurring payments, and generally control your finances.
How are millennials using digital banking?
Several studies consider Generation Y to be the least financially prepared generation. While there could be many reasons for this, one of the biggest is that the financial needs of millennials have not been met in a digital world. When all the other services around them are so smooth, they also come to demand the same from financial services.
A perspective like the neobank makes it possible to meet this demand. It bundles banking services in a tech-savvy way that’s more palatable to millennials. They get agency on their finances while getting help on how best to manage their money.
Now, since banking is as easy as, say, ordering food online, millennials can use that to their advantage. This can take the form of reining in online spending, getting monthly spending under control, identifying spending trends, or saving and investing more.
Ease customer fees
Being fully digital also has monetary benefits for users. This means that neobanks pass the benefit of no physical infrastructure cost, leaner business models, and more efficient IT spend directly to users. This comes in the form of lower or no monthly fees on banking services and other reduced fees.
In general, the fees charged by neobanks are also completely transparent. In addition, most neobanks also meet the need for monetary fluidity. This means that you can also use them to make payments abroad with minimal exchange fees.
Compared to traditional banks, neobanks bear 1/3 of customer fees. There is no doubt that when it comes to providing financial relief to customers, the neobank takes the lead.
Get out of a traditional banking experience
Although neobanks have functional advantages, another distinguishing factor in them is the fundamentally different experience they offer customers.
Most neobanks have created an intuitive and simple user experience. They make banking services as user-friendly and accessible as possible. They push users to know and develop their finances and, therefore, to develop better financial habits. While spending is one aspect of banking, neobanks can help customers set reminders for recurring payments, automate transactions, and track spending. All this is done in an intuitive, simple and intuitive way. The more they know about their finances, the less likely they are to make hasty financial decisions or overspend.
The future of banking
Since millennials are the most connected generation, they take technology and its benefits for granted. Neobanks meet this standard. They take a service like banking and mold it around the customer using technology.
This wave of digital banking has pretty much accelerated, and over time more and more people will become familiar with the idea of online banking. Moreover, neobanks would also add more services to their board to help users be more financially savvy.
Millennials with their technological savvy will be the biggest beneficiaries of this trend.
The opinions expressed above are those of the author.
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