Consumers are slowly moving away from traditional payment methods and increasingly rely on banking apps to deal with their finances.

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According to data from App Annie cryptocurrency app and buy now, pay later apps are also gaining in popularity.

Neobank app downloads exceeded 264 million from Q4 2020 to Q3 2021.

Brazil and LATAM saw some of the highest demand for downloads with Brazil seeing the lion share of downloads at 25%, primarily thanks to Nubank.

Nubank is an app that provides a no-fee digital account and a free credit card.

Around 29% of Neobank app downloads came from teens in the US, an audience segment that is driving much growth in the area.

Current – Debit Card for Teens was the most popular app for teens in the US, while goHenry was popular with UK teenagers.

And although traditional banks are performing well, challenger banks such as Chime, Lili and Greenlight are still chipping away at the brick-and-mortar bank’s dominance as Gen Z increasingly embrace mobile finance apps.

5 Trends for Neobanks: What you Need to Know

Neobanks, sometimes referred to as “challenger banks,” are financial technology firms that offer apps, software, and other financial services to streamline mobile and online banking. These fintechs generally specialize in particular banking services, like checking and savings accounts. They also tend to be more nimble and transparent than their megabank competitors in the financial industry, even though many of them partner with such institutions to ensure their financial products.

1) Opening account: Neobanks VS traditional banks

In the earlier days, opening an account in a traditional bank was a complicated process and highly rigid. However, opening an account now with a neo bank removes the challenges that were associated with traditional banking. Through digital banking, customers can open an account with neo banks without visiting branches of financial institutions, thereby making it more convenient and comfortable especially in light of the COVID-19 pandemic. In fact, this trend is growing at such an alarming rate that the CEOs of many traditional financial institutions have started to worry about losing market share.

2) Improved financial technology knowledge

As more and more people adopt digital banking services, they learn more to navigate and explore the new technologies of the banking sector’s digital transformation. This way, they become more aware of the financial tools available to them and gain more knowledge concerning financial planning and investing. Through digital banks, the average consumer will gain easier a great depth of financial products and mechanisms.

3) More transparent financial services

Neo banks are very transparent and strive to provide real-time information of any charges or fees incurred by the customer. From the onboarding process and creating a new bank account, to wealth management services and trading, they aim to clearly inform consumers on products and services but also management fees and extra charges. In digital-only financial institutions, it is much easier to achieve full transparency since they collect all kinds of data, which they can then share with the client in real-time.

4) Cybersecurity in financial institutions

Security is now an essential part of digital transaction processing through banks. Although not all neobanks have a fully accredited banking license like all large-cap financial institutions, it is the way they structure the operations that make cybersecurity easily achievable for them. Neo banks implement biometric verification, encryption technology, and various other security measures to protect customer data and their mobile phone. They provide high-security features like locking and freezing any time through the app.

5) Useful insights for the neo banking customers

Advanced analytics and AI have allowed technology-driven internet banking to provide customers with multiple useful information concerning their transactions, expenses, and investing actions. Most of the neo banks provide dashboard solutions to their customers with highly enhanced interfaces and easy-to-understand and valuable insights for services such as payments, payables and receivables, and bank statements.

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