Momentive study: Neobanks and the future of digital banking

TECHNOLOGY

Momentive study: Neobanks and the future of digital banking

Digital banking is on the rise. Find out what our research uncovered about neobank adoption and the future of banking.

Sam Gutierrez

April 1, 2022 | 3 min read

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Key findings:

  • Banking goes digital as mobile apps become the dominant method of accessing bank accounts
  • Latin America leads the way in neobank adoption, with the majority of adults in Brazil having both a digital and traditional bank account
  • Neobanks see higher adoption among younger age cohorts and lower-income consumers
  • Satisfaction and usage of neobanks exceed that of traditional banks, especially in Latin America
  • Ease of use and accessibility drive neobank adoption, while lack of in-person support and security concerns are among the leading complaints for customers of neobanks

Banking goes digital as mobile apps become the dominant method of accessing bank accounts

The majority of adults access their bank account via a mobile app on their smartphone, with adults in Latin America seeing the highest adoption, and those in the U.S. and U.K. trailing. 

  • Overall, online access via laptop, computer, or tablet trails far behind mobile usage
  • ATM access is among the most popular methods of accessing bank accounts
  • Across all countries, less than one in five people access their bank accounts via phone call

Neobanks see growing adoption among lower income consumers and younger age groups

Neobanks are largely adopted as a complement to traditional banks, with more consumers opting to do business with both a traditional bank and a digital bank rather than solely with one or the other.

Lower income and younger consumers are driving the move toward digital as mobile-only banking and lower barriers for approval provide alternative access to banking apart from traditional services. In the U.S., Brazil, and Argentina, less than half of adults have only a traditional bank account, instead adopting digital-only, or both digital and traditional banking.

Digital banking customers are more satisfied with their neobanks than with their traditional banks

There are, however, signs that neobanks pose a competitive threat to traditional banks, as overall satisfaction toward digital banks is higher than traditional banks among customers who have both types of accounts.

  • 63% of patrons in the U.S. are very satisfied with their digital bank, compared to 55% of those who use traditional banks
  • 59% of patrons in the U.K. are very satisfied with their digital bank, compared to 51% of those who use traditional banks

Latin American countries see an even greater satisfaction gap between the two solutions:

  • In Mexico, satisfaction toward digital banks is 15 percentage points higher than that of traditional banks (77% vs 62%). Argentina sees a similar disparity (66% vs. 53%).
  • Satisfaction with traditional banks is lowest among patrons in Brazil, with satisfaction toward digital banks almost twice as high as traditional banks (73% vs 40%).

Usage of digital banks rivals that of traditional banks. Among those with both types of bank account, usage varies by country:

  • In Brazil, 50% use their digital bank more often than their traditional bank, nearly 5 times the number who use their traditional bank more often (11%). Only 4 in 10 (39%) use them both equally.
  • In Mexico, only 1 in 6 (16%) people use their traditional bank more than their digital bank, while twice the number use their digital bank more often. Rather, the majority use both equally (50%).
  • Consumers in the U.K. remain more reliant on traditional banks, with 43% say they use their traditional bank more often, while only a quarter (25%) use their digital bank more often.

Ease of use and accessibility drive neobank adoption, while lack of in-person support and security concerns are among the leading complaints for customers of neobanks

Superior user experiences are driving the adoption of neobanks, rather than advertised advantages such as lower fees and higher interest rates. Fluid approval processes and mobile app ease of use are among the top reasons for choosing a digital bank, along with ease of managing money and always-available service.

Frustrations with the digital-only experience also arise: having no in-person customer service is the leading complaint among digital bank customers in the U.S. and U.K., while concerns over security and a lack of in-network ATMs are the leading complaints in Brazil, Mexico, and Argentina.

Read more about our polling methodology here

Click through all the results in the interactive toplines below:

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