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Digital transformation of banking services

Banking, just like many other industries, is moving to an online format. One thing to remember is that banks are large complex organizations. Many of them have been on the market for a couple of hundred years. Regulations for any financial services are complicated too. So how does it look in practice? 

The challenge  

Traditionally, financial services and banking have always been some of the most challenging sectors to get into. Most banking names are well known globally, and not too many new ones are born often. Until recently, the market looked stable and conservative in its composition of players.

However, at some point, it started to change. 

New technologies, fast speeds of living created new demands. So banks began the digital transformation by launching web and mobile apps in parallel adding new services and improving customer support. 

At the same time, new laws and attitudes towards industry opened up the door for small companies to enter the space. These startups brought other ideas, technologies, and products, changing the financial sector landscape.

Few such brands have already made quite an impact on the industry—Tinkoff bank, for instance. 

​​Tinkoff Bank is one of the first digital banks. By the number of its clients, it has become the third bank in Russia in 2020.   Banks like Tinkoff are industry disruptors and overtake clients from traditional banks. Other younger startups are still growing and inevitably will further change the scene. 

In this short note, I want to share a few insights on building a neobank and the main drivers for the market transformation happening now.

  1. Online. The banking and financial service industry is moving to its digital version. Client demand today is for accessible, easy, and secure access to financial management from anywhere in the world. We now observe two parallel processes. First, banks are becoming digital, and second, FinTech projects are becoming full-time banks.

  2. Innovative products in banking. New digital assets have been conquering the world for the last few years, and they are slowly gaining worldwide recognition. Services in crypto are now provided by some of the old banks and financial providers. Crypto projects have got more chances to take this niche. This is because they understand the technology and have already worked with it for some years. Among other new services now presented in banks is access to the stock market, saving features, financial management tools. In addition, some banks are following the Super app concept and offer clients a set of services in one single application.

  3. The new client service. Startups are also winning the market by delivering a different comfort level to a client: 24/7 support, remote access, and a friendlier interface. 

  4. Speed. This metric is one of the most critical factors for all of us. It is not only fast transactions; new banking service also delivers quick issue of cards, for example. Issuing a card at Revolut takes one day ( it gets dispatched to you the next day after the order) and around 3-5 working days minimum at Lloyds, HSBC, or other traditional banks. A difference in a couple of days can be a serious competitive advantage. 

  5. Cost. Services delivered/provided by young fintech are always lower or free of charge.

Difficulties to overcome


New laws (such as Open Banking) certainly brought new opportunities for the startups to operate in payment and financial services. However, clear rules for new assets and unified global regulations are still needed to move forward quicker. 

The Product

Designing banking and financial products takes time. At this moment, the product line offered by traditional banks still looks more attractive to a client. So, as a rule, for decisions as mortgages, the consumer refers to its traditional bank. However, neobanks possess more innovative assets, such as crypto, and continue adding new services to their portfolio.

Reputation and trust

The financial industry is associated with trust and reputation. The old banks have been operating on the market for many years, when small projects are still newcomers and yet have to prove their reputation and build their brand. It may take time too. 


Last but not least is the revenue of startups. It is much lower if compared to the bank’s earnings. The business model suggests that startups offering a better service will undertake banking clients. The revenue model is based on smaller commissions but a more extensive number of clients. There are other options, including adding new products which do not exist in banking. 

The market potential 

A global pandemic strengthened the rise of neo banking. Market share of digital banks in 2020 equaled USD 34.77 billion in 2020, in 2021 already reached 47.1 billion, and forecast for 2028 ( which is in seven years from now) predicts around 722.6 billion. Information is taken from Statista. 

The current market still presents only a few players. I believe this is due to the complexity of the product and the extended timeframe required for creating it.

Neobanking or digital banking is one of the most exciting products to build; its impact on the industry is yet to be evaluated. A new level of service delivered today by neobanks ( transfer speed, service cost, availability, customer support) is changing the whole industry to a new level by pushing all those working in this sector into this competition. 

It is an inspiring opportunity to be a founder of one of such platforms. We are applying all the potential of new technologies and financial systems to the Neobank, which will deliver you instant financial management from anywhere in the world.



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Comments: (1)

Andrew Smith
Andrew Smith - RTGS & ClearBank - London 08 October, 2021, 16:33Be the first to give this comment the thumbs up 0 likes

Banking-as-a-Service offers FinTech and neo banks uber flexibility. Good BaaS providers provide "width" in their solution as opposed to depth, by this i mean they dont provide the entire vertical, from mobile app to the underlying infrastructure. No, that results in all neo banks offering pretty much the same type of product set. Rather good BaaS provides width of services that a neo bank can utilise. The vertical aspect is where the neo bank adds value, brings its unique products and services to the market and makes big differences.

BaaS is an exciting enabler, and we are only now starting to see innovative firms utilise it properly. Look at Tide in the UK, a neo bank that is making massive inroads into the business banking sector. It uses BaaS provided by ClearBank, a "broad BaaS provider".....

Igor Chugunov

Igor Chugunov


Credits Blockchain and Payment Platform

Member since

24 Sep 2021



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