Neobanks are driving a digital-first banking revolution

Out with the old, in with the neo

Traditional banking may bring to mind endless form-filling, temperamental ATM machines and wearying queues to speak with advisors. But that’s all changing as neobanks combat such stereotypes head-on with digital-first, software-driven propositions. Here, Hamish White, CEO of SaaS telecom software provider Mobilise, explores how the arrival of neobanks will transform the banking customer experience (CX).

Sometimes referred to as challenger banks, neobanks do away with the traditional bricks-and-mortar set up and operate exclusively online. Customers can complete all the activity one would expect from a bank — making deposits, withdrawing money, money transfers and more.

And they’re popular. As customers seek more digitally-oriented services, neobanks have broken into the mainstream. By 2025, the UK’s cohort of digital-only banks is predicted to capture more than half of the nation’s digital banking customers and almost 40 per cent of adults, Insider Intelligence reports. Elsewhere, in the US, big-name neobank Chime reported to have 12 million customers in February 2021, up from 8 million a year prior.

Why go neo?

Besides ditching the manual form-filling and trips to the high street, neobanks offer a number of other benefits. Because they don’t have physical branches, and the associated rent and utility costs, many expenses that eat away at a traditional bank’s bottom line simply don’t exist. That cost saving is passed onto customers, often in the form of lower fees and higher interest rates for saving accounts.

Unlike traditional banking methods, neobanks cannot rely on the long-standing relationship a customer may hold with their local branch manager. Instead, they must find other ways to deliver outstanding CX. Standard nine-to-five operating hours no longer suffice for today’s customer, who expects service agents to be available to answer their queries whenever required. Not limited to a physical location, neobanks can pull together a global talent pool of agents across the world, enhanced with always-on chatbots to resolve issues immediately.

Another major benefit of using a neobank is its focus on the product stack. An absence of physical banks and monolithic business models means it’s far easier to offer customers services they want. Scaling up comes from building a back end of microservices, which can be expanded upon or altered reactively. APIs can help neobanks embed digital-first features that span a wealth of banking functionalities directly into platforms and apps.

Using an API-led infrastructure creates an unbundling of financial services, where companies can focus on specific niches and demographics, with go-to-market strategies that emphasise agility and the ability to react to what customers are seeking at a given time. Having an API-led platform means neobanks can expand their services far beyond those of traditional banks, with many making strides towards becoming ‘super’ apps with implementation of services such as travel services and cryptocurrency.

Neobanks and eSIM

Embedded SIM, or eSIM, technology has been in the telecoms sphere for several years. However, it truly catapulted into public consciousness in 2022 when Apple launched its eSIM-only model of the iPhone 14 to the US market. Over the past five years, eSIM’s ability to facilitate digital-first telco propositions has become more-and-more understood. What’s also worth understanding, however, is how those benefits can translate into the financial space.

Neobanks boast both a growing customer base and a digital platform that serves as the perfect environment for cross-selling services. In addition to adding more banking services to their offer, neobanks could lean on eSIM to provide a whole other layer to their product stack — embedded mobile connectivity.

Banking app functionality can be extended with a dedicated mobile connectivity space, made available to customers through in-app eSIM activation. Provided a customer has an eSIM-compatible phone, they would not require any additional hardware to access the service. Users can then manage their mobile subscription, provided by the neobank,  through its app. Checking and topping up balance, changing the subscription plan, on-schedule payments setup and access to a support desk can all be managed virtually.

Launching mobile connectivity really isn’t out-of-reach for neobanks, given their already totally-digital infrastructure. Connectivity services can be added via a specialist software development kit (SDK), such as Mobilise’s own eSIM SDK. Using SDK, service providers gain access to APIs that support on-device mobile service management, authentication and provisioning, enabling a plug-and-play solution that reduces the integration effort from months to days.

As a result, companies that are not just typical mobile service providers can launch their own mobile connectivity services. Neobanks are perfectly poised to benefit from SDK — they’re already thriving as digital-first, data-rich service providers, and so offering this extra layer of embedded connectivity will only enrich their CX even further. What’s more, banks can gain from another stream of customer data that can help them to continuously improve and tailor all areas of their service.

Today’s consumers no longer wish to spend their Saturdays waiting in line and getting piled up with paperwork. The success of neobanks serves as a reminder of the agile, digital-first interactions that are truly being sought after today. While mobile connectivity and banking may seem like two separate offerings, uniting the two can bring many advantages to both the new wave of banking and their customers.

About the Author

Hamish White is CEO at Mobilise. Mobilise is a leading provider of SaaS solutions to the telecommunications industry. Focused on delivering highly engaging digital-first service propositions with excellent customer experience, Mobilise has a proven track record, deep industry knowledge and a team of specialists to support clients to building and executing transformational strategies. Learn more about the latest activities and news from Mobilise by visiting