“To change behavior, products must ensure the user feels in control. People must want to use the service, not feel they have to.”― Nir Eyal

Our life revolves around Swiggy, Uber, Dunzo, Urban Clap, and hundreds of applications that give us instant service, usage insights (for example, Swiggy shows the amount of money saved per month through the application usage), rewards, and personalized notifications. Customers are now addicted to this kind of habit and want similar experiences everywhere. What if they can have a banking experience in the same way they order food over Zomato or book an Ola cab via a mobile app. Neobanks are the Swiggy, Zomato of the banking world. Neo is a Greek word that means new. Neobanks are the modern version of traditional banks. Let’s look at how neobanks are changing the CX game in banking industry.

NEO Banks and the Gen Z

Gen Z’s (Generation Z) are the newest addition to the banking world. This generation has a deeply embedded expectation that everything they search for or buy online will be tailored and delivered right away. 

Additionally, Gen Z is a value-driven generation that seeks more value for their money. Their expectations are hyper-personalized experience, prompt deliveries, and on-demand services, higher user engagement, and value for money. And neo banks have been the first movers in decoding these expectations. They are positioning their brand as an online platform for millennials and Gen Z, offering financial services at a touch of a button. Their USP is convenient and simple user experience. 

For example, Jupiter money- a 100% digital banking company designed to target Gen Z and Millennials- helps users open an account within 3 minutes. “Jupiter has 3 main areas of focus at the moment — increasing user engagement on the platform, investment options, and introducing consumer lending services, which will help them monetize the platform”, says the company’s founder and chief executive officer (CEO) Jitendra Gupta. 

Neobanks are making it easy for users to keep a track of their expenses, and save and plan their investments wisely. But what else is different about them? Why are Gen Z and millennials hooked on this modern banking platform? Well, it’s all about the first impression. Neobanks have built the mobile app keeping the new Generation’s daily routines, actions, and habits in mind. They studied user behavior patterns to determine what compels and ticks these newer customer segments. Here’s how neobanks are changing the CX game in banking to win customers: 

1. Real-time financial insights at the tip of a button: Customers can track their spending, saving status, and every financial activity on the app. 
2. Interactive & Conversational App Design: Neobank apps do not have any physical branch yet they are appealing because of their amazing UI and application design. The look and feel of the application is more youthful and vibrant with a minimalistic design. Their focus is on user experience design and functionality, both.

Source: Jupiter

3. Rewards & Benefits: Neobanks offer attractive offers and rewards to bring back users repeatedly on the app and retain them. For instance, customers get a 1% reward on all UPI and debit card purchases using Jupiter Money. They can also track their reward earnings in real-time. 

Where are the Traditional Banks heading towards?

Conventional banks focus more on the functionality of the application. Earlier, customers had to visit the branch physically to avail of banking services. Now they focus on bringing the banking service to the user’s ecosystem. Data and AI-driven personalization have been helping banking institutions to create seamless customer journeys for the users. They are leveraging technologies like metaverse, Virtual Reality (VR), and Augmented Reality (AR), to create offerings in the virtual world. Their USP (Unique Selling Proposition) is Customer Engagement. Gen Z is spending most of the time in this virtual space. Banks are leaving no stones unturned to mark their presence in the customer’s ecosystem. How? By creating an immersive experience for these users in the virtual space. IndusInd Bank launched a video branch, which allows customers to communicate with their bank executive in real-time. 

JP Morgan opened a lounge- Onyx in Decentraland. Bank of America launched VR training in over 4,300 financial centers. Lynx is working on introducing 1) A cryptocurrency-based game that allows players to create, earn and sell digital items with financial value and 2) An“enhanced remittance experience”:  A digital meeting space that allows those sending money to loved ones to visit and communicate with them in a “streamlined, entertaining, economical, and secure” manner.

The Road Ahead:

The Reserve Bank of India hasn’t allowed banks to become fully digital. This is one of the major challenges for Neobanks. Having a completely digital presence, they do not have a license. But they do have the technical expertise and Gen Z’s attention.

Neobanks with their technological expertise & Conventional banks with years of experience can together bridge the existing customer experience gap in the banking industry. Niyo, Jupiter, Razorpay have partnered with the traditional banks to deliver a seamless digital banking experience for their customers. According to the Redseer Strategy Consulting report, partnership profits both, giving neobanks a strong position and traditional banks access to young, tech-savvy customers. Recently, Visa and AI-driven neo bank OneBanc Technologies teamed up to launch the first magnetic-strip-free debit and credit cards in India. More than 300,000 new accounts with neo-banking partners have been launched by Federal Bank. 

In the end, it’s all about creating the best customer experience. And working in silos might turn out to be a disaster for both parties. Healthy cooperation may definitely help win customers.