Neo banks—digital-only banks focused on intuitive services and experiences using modern technology platforms—are as much a product of open finance technology as they are its enthusiastic adopters. Unlike challenger banks, which predate the rise of open finance, neo banks are built from the ground up on innovation and data-driven products and services. Their digital-first and mobile-first approach makes neo banks more like apps than like traditional banks. As they develop and mature their offerings and experiences, however, neo banks may need to seek expertise outside their four walls to scale their solutions and ensure regulatory alignment.
In our recent study “The open finance paradox,” we found neo banks to be far more engaged than other banks—CMA9, incumbents, challenger banks and building societies—with open finance. When seeking to expand, 74% of neo banks said they always look first to open finance as an enabler to offer new products and services that will attract new customers (another 22% said they often do). (See sidebar for more information on our study.)
Neo banks’ current customer base, largely drawn from Millennials and Gen Z, values perks like cash-back and loyalty products that boost purpose and brand. These customers tend to be digitally savvy and more trusting of digital banking services in general.
It’s no surprise, then, that neo banks believe open finance is pivotal to their success and future growth, and they fully embrace it. Ninety-two percent believe open finance is important to their future success—seven times as many as incumbent banks.