Fintech post pandemic: Are travel propositions key to success for Neobanks?
In the first era of Fintech disruption, Neobanks and Fintech Issuers made travel a core point of difference to incumbent banks. Travel propositions helped fuel rapid customer growth for Issuers as diverse as Revolut, Curve, Monzo, Starling, LunarWay, Bunq, N26 and more, all of whom offered a combination of
· Competitive pricing points, and
· Increased functionality (real-time pricing and multi-currency wallets).
Customer surveys consistently emphasized the value and functionality that these new entrants offered for tourists, regular travelers and international workers as a key driver of customer adoption, with these entrants extending their relevance to consumers from this important starting point.
Over the last 18mths, the relevance of travel features dropped in line with the severe reduction in international travel due to Covid-19. Now that international travel and working is set to rebound, these benefits will return to drive customer adoption again. Travel will, once again, be a hygiene factor for Fintechs looking to disrupt banking sectors by rebuilding and rethinking traditional services.
Competitive Pricing
One of the key insights that drove the growth of Fintechs and Neobanks was that customers were not getting value from their traditional banks for cross-currency spend and that this “value-gap” would drive customer behaviour. New entrants consistently highlighted savings vs. traditional banks and built consumer brands around that difference.
Today, this value gap remains to be fully exploited, with Issuers like Aion and Bunq continuing to highlight pricing differences of 2-3% vs. their local competitors. New entrants looking to exploit this gap will also benefit from the increased transparency on FX charges imposed by EU regulators under CBPR2. This simple regulatory change will drive further customer awareness of this “value-gap” and means that travel will again play a key role in differentiating Fintech and Neobank Issuers from traditional Issuers.
Multi-Currency Wallets & FX Product Functionality
The first phase of Fintech disruption also highlighted customer demand for new functionality such as real-time exchange rates and multi-currency wallets. The ability to hold, spend and receive money in a foreign currency in their primary local currency bank account was a paradigm shift. For Gen Z and Millennials, who have become accustomed to living, working and travelling across the globe, this functionality creates clear value and will increasingly be seen as a hygiene factor for Neobanks and Fintech Issuers looking to target that sector.
This poses a challenge for Issuers that have achieved early market penetration and are now looking to leverage travel functionality to fuel adoption. Building a successful multi-currency wallet product requires the smooth integration of multi-currency customer account ledgers, FX markets and operational functions to ensure funds flow to the schemes and 3rd party accounts in the correct manner. Typically, Fintech and Neobank Issuers are skilled in one or two of these areas, but not in all three and finding an effective partner to combine these requirements will be key to success.
As the world economy recovers post Covid-19, there is a real opportunity for Fintech and Neobank Issuers to build on their pre-pandemic era success by focusing on Travel as a key differentiator. In this space, new regulations (CBPR2) and the continuing demand for multi-currency wallet functionality create a defined path towards success for those Issuers that can bring the right product to market.
About Cambrist
Cambrist is an award-winning technology company enabling payment card Issuers & processors to better manage the foreign exchange requirements of their card programmes. Our proprietary SaaS platform simplifies the adoption of advanced customer features such as multi-currency wallets and enables compliance with new transparency regulation at a reduced cost. Our technology, combined with our team of industry veterans & experts, supports customers around the globe.
Learn more about Cambrist at www.cambrist.com or contact us at info@cambrist.com
