Neobanks, No Longer Digital Startups
Anyone will tell you that finance is a global phenomenon, but few could retell its evolution in all its glory, with its complex history of conflict, mercantile trade, meteoric rise and waning influence of empires. The evolution of finance has dictated key moments in history, from the golden age of exploration to the renaissance period, gunpowder and industrial revolutions.
In modern times the romance of banking history is somewhat overlooked by the dominance of the new economic world order, which emerged in the settling dust after world war two. This new order was and still is precipitated upon sovereign fiat currencies and the world where commodities are denominated in US dollars, the global reserve currency.
Eighty years on, for billions of people worldwide, banking is synonymous with names of global banking giants, or nationally recognized banks; both varieties service almost all the needs of customers in distinct sovereign territories and can count on state support in some way or another. After all, banking is complex and governed by a multitude of laws and regulations.
The arrival of the internet in the 1990’s and the Dotcom boom hinted at the wave of change that the sector could be exposed to. Although internet banking was relatively quick to follow, the true impact of digitalization has only relatively recently taken hold over financial service provision. Before this technological change could sweep across the industry, financial calamity would change the history of banking forever.
2008 was a year of reckoning for the finance sector as a whole; banking operations, mechanisms of LIBOR, credit swaps and mortgages were dragged from the shadows, into the light for detailed scrutiny. The light that lays bare the activities of many institutions has yet to fade and to this day it impacts the valuations of many banks. The fallout gave rise to challenger banks and many new regulations, for example to restrain investment activities and maintain adequate capital ratios, but sadly to the average consumer this meant and continues to mean very little.
By 2010 the internet and devices connected to it by cellular networks gave rise to a new era, which is still in its infancy — the era of digitalization had begun. Consumers could demand service from personal smartphones which grow ever more powerful. In the last few years digitalisation has been an accelerator that has been harnessed by Neobanks, the digital banks that utilize cloud computing to deliver banking services to customers directly through smart mobile devices.
Migom Bank is one such Neobank, built in modern times to service a modern world, and is proud to deliver a purpose-built mobile banking solution geared for the future.
The “Whole in One℠” business model of Migom Bank delivered the much anticipated seamless integration of the traditional old European-standard financial services with the cutting edge cryptocurrency banking where crypto assets are demystified and harmonized as equals with fiat money, giving the customers access to both without any sacrifice of the requisite regulatory compliance.
Initially, many well-known Neobanks exploited the digital service gap that traditional banks were slow to respond to but by 2021 many high street banks have narrowed that gap. Although inevitably slow to change course, like a giant tanker turning at sea, once the turn is completed, their momentum and scale continue to ensure a vast amount of market share in over-served markets. However, that gap in digital service delivery has cost them dearly — a generation recollects the events and fallout of 2008 financial crisis and are seemingly content to bank and spend with Neobanks, whilst the high street names still focus on credit card loans and mortgages. As a result many lucrative gaps are still wide open for Neobanks. Migom Bank, for example, is working on bringing a reliable regulatory framework and innovative technology to micro lending against collateralized crypto assets, a brand new and explosively growing niche discovered and populated mostly by unregulated and under-capitalized fintechs. An extremely low overhead of the lending business and high degree of its automation allows Migom Bank to offer higher than average interest on long-term deposits available to its customers.
There are many more examples of how Neobanks provide a viable supplement that is not direct competition to traditional banking. Whilst the era of digitalization disrupted service delivery, and has permanently altered the balance of power that banks have maintained for decades another wave of change looms over the financial industry in its entirety — the rise of decentralized finance is re-writing the balance of power in financial inter-mediation, the role of sovereign currencies and that of central banks. Migom Bank is becoming an active player in the “de-fi” field servicing multiple aspects of delivery of decentralized finance and providing fiat rails for its participants.
In this changing world Neobanks have built a moat around the service gap they filled and now their own stronghold of social capital in the brands to export to new territories — underserved, unbanked and with higher populations than most developed economies. Moving beyond the initial offering of what can be considered plain digital banking, from some well-known identities, some Neobanks are becoming full service digital institutions. Migom Bank is one of the first examples of such evolution. It stands out among its peers by demonstrating the full range of services digital banks can provide.
Migom Bank provides not only personal, private and corporate banking services but also bridges traditional finance with blockchain.
For high net worth clients, Migom Bank can provide global exposure with personalized, custom-tailored, all-remote account management with reliable European custody of assets, highly automated and streamlined compliance procedures and ease of “one-click banking” at the fingertips of its clients. Businesses and high net worth's that need a platform that they can trust to understand their needs and can benefit from corporate finance services, investments in major, global securities markets, streamlined on-boarding, supportive compliance, professional customer service, lucrative deposit rates, innovative lending and the in ultimate account security.
Looking beyond the horizon at the future of the industry, the smaller nimble Neobanks will retain their competitive edge in an ever changing world. Coupled with a lower conversion rate per customer, the economies of scale look appealing on a valuation basis, after all, the lifetime value of a customer coupled with a lean operating model makes for a bright future for digital Neobanks.
