Five ways neobanks can continue to thrive

July 7, 2022

Part 5: Operational improvements

Part five of a six-part series by Silvio Piserchia, Global Segment Lead, Fintech & Digital.

In 2021 late-stage median deal sizes in investments in fintech companies more than doubled the previous year’s numbers. Early-stage and mid-stage deal sizes grew by 50% and 73%. In short, investor patience is waning as they seek faster returns while market competition continues to increase.

The situation calls for a focus on two key ways to improve business performance: internal efficiency and customer lifecycle management. They are not unrelated; a streamlined backend can improve experiences on the frontend that even the snappiest user interface cannot overcome. They are also areas where neobanks tend to fare well by tapping into select audiences.

Challenges arise when audiences are tapped out and the market becomes saturated. Global expansion is a tempting recourse, but more precise audience identification can be a less risky and more lucrative option.

Precision can come from layering anonymized and aggregated global spend data on top of account data. This should not be a stretch for neobanks, which are not usually awash with data and are used to looking outside themselves for it.

A better way to convert

The ability to open an account instantly on a mobile device is a staple of neobanks. It makes it easier to encourage banked customers to switch banks and unbanked customers to open an account for the first time.

Yet that ease of opening does not guarantee results for a South American neobank struggling with visitors to its mobile site still failing to open accounts. Many of its other visitors open accounts only to then leave them idle. A near real-time analysis of campaign performance data and customer journeys helps the neobank identify the reasons for drop off. Part of the problem involves marketing slightly missing its ideal audience. Part of it comes from misaligned incentivizes after account activation.

Dynamic content allows for continuous testing of campaigns to finely tune and personalize messaging. The result is a virtuous loop as newly generated campaign data then feeds back into the data from the bank and its associated payment network.