How do the New Digital Banks plan to Challenge the Legacy Banks
Best known for their alternative services, super fast transactions and state of the art finance apps, the likes of Revolut, Starling Bank, Monzo and N26 seem to continually challenge the traditional banking system. As they begin to offer more financial products in a millennial way, it is almost certain that these digital banks are here to stay.
On the other hand, the traditional high street banks are trying really hard to catch up and up their game if they are to survive this digital revolution. To do that most of them started copying the digital products that the new banks are offering. For example, Natwest is the last stages of rolling out a new personal finance app, called Mimo, with budgeting tools and spending insights. The likes of HSBC and Barclays are sticking to their existing apps and try to add more interesting features to attract the new generation of clients.
As many of these Fintech unicorns keep improving their game, the traditional legacy banks seem to fall behind. Digital banks have lower operational costs and their model is solely mobile and online based. This allows them to roll out even more of the “classic” financial products that used to be exclusive to legacy banks, such as credit cards, mortgages and loans. Some even take a step further and dare enter the competitive world of insurance and helping their clients find the best utility providers. In a way they are consolidating most of the financial functions and services under the same roof.
Let’s have a closer look to what they have in store for the future.
Revolut – A Radically Better Account
With nearly five million users in more than thirty countries, Revolut plans to expand its services even further, by working closer with Google and Apple pay, as well as targeting a younger audience with Revolut Youth. The new service will target teens and children under the age of 18. Their parents will also be able to add them to their accounts as secondary users, in order to monitor their transactions and manage pocket money in a digital way.
Revolut Youth will become very useful for busy parents that don’t always have cash in their pocket. Children will get the opportunity to play around with budgeting tools and prepare for the struggles to come. As societies are moving towards a cashless set up, one may say that Revolut are investing for the long run.
Moverover, Revolut plans to launch a new pay per day travel insurance. As the digital bank takes pride in the low exchange rates it offers, the new travel insurance product will allow it to become the absolute travelling companion. The app will use your phone location to work out where you are in the world and provide a quote accordingly, starting from 1 pound a day.
Starling Bank – Better Banking with our Mobile Bank Accounts
Starling has been quite busy since the launch of their business accounts back in March of 2018. Since then, more than fourty thousand businesses have sign up worldwide. As the accounts have no fees and can be easily accessed from anywhere in the world, the service has become quite popular.
The mobile bank has won a big portion of the RBS(Royal Bank of Scotland) grant back in February 2019, and is planning to use it to expand its business account offering. One of the main improvements, will be the launch of a web portal that will allow better account management. Their clients will be able to switch between the mobile app and computer/web portal seamlessly and with ease.
Monzo – The Bank of the Future
With more than four years of operation, over a million clients and a fabulous bright pink debit card, Monzo is dubbed to be the fastest growing digital bank in the UK. As its rival, Starling bank, Monzo is also focusing on launching a business account using the grant from RBS.
Monzo is shifting its focus towards freelancers, sole traders and SME owners with new business accounts that will be launched later this summer. But not only that, Monzo’s clients will also enjoy budgeting tools, expense tracking and international payment options with the big upgrade coming later this year. The company also plans to integrate an accounting software and introduce flexible fees for travel and phone insurance. This will establish Monzo as the ultimate partner for any entrepreneur or self-employed worker around the world.
N26 – The Mobile Bank
N26 has become quite popular within the European Union countries. Launched back in 2013 in Germany, N26 quickly managed to acquire more than two million users in more than twenty four countries.
The future looks bright for N26 as they plan to expand their services where no one of their competitors has set foot yet. Despite the existing subscription services that offer premium features to its clients, N26 plan to partner up with more third parties and offer more than just a personal finance app. New products will include travel insurances, exclusive deals with WeWork’s workspaces, hotels, and Babbel’s language learning apps. However, these benefits and perks come with a higher monthly fee.