If the past month is any indication, the digital banking space could be getting even more competitive, as newer players gain capabilities to compete on the same footing as traditional banks.
This increased competition can be seen on both sides of the globe, with digital-first startups getting, or getting close to achieving, official recognition as banking institutions. Take, for example, Varo Money, the banking FinTech that’s seeking a national bank charter in a move that could allow it to offer services like issuing credit and debit cards, paying interest and making nationwide loans. The move would also put Varo under federal scrutiny and, if successful, could invite new players into the U.S. banking market from the FinTech space.
Meanwhile, across the globe in South Korea, popular messaging platform Kakao recently launched as a digital-only bank and secured over one million customers within its first week of going live.
The August edition of the PYMNTS Digital Banking Tracker™ looks at the rise of new players in the digital banking space, including banking chatbots powered by AI, new investment tools for consumers and live video chat features.
There were also a slew of investments in security-based solutions during the past few weeks by challenger institutions. In the U.K., for instance, TSB announced plans to implement iris scan technology by September, making it the first bank in Europe to use the security protocol. Also in Europe, machine learning is being tapped as a security solution by N26, a top German bank. The bank launched a new service that uses 3D Secure authentication protocol that can analyze customer spending patterns and determine if a recent online purchase raises any suspicious signals.
Some companies rolled out new investment solutions to help millennials meet their investment goals. In the microinvesting space, investment firm Acorns partnered with money management app Clarity Money to provide customers with automated investing tools and a new rewards program that diverts financial rewards into their investment portfolio when they shop with popular brands like Airbnb and Nike.
Speaking of investments, several U.K. startup companies took in millions from venture capitalist investors for a wide variety of banking products. London firm Cleo, for one, netted $2.59 million in VC funding rounds. Cleo’s AI-powered chatbot uses Facebook Messenger to help millennials manage their money across several channels.
Another large investment windfall went to challenger bank Tide, a provider of solutions for SMBs. The firm took in $14 million from a group of investors to expand its London offices. Investors also took interest in new mobile banking app solutions. And one of the biggest fundraising rounds went to financial services firm Revolut, which secured $66 million from investors, bringing its total funding to $83 million. Revolut’s portfolio of solutions include P2P payments, currency exchange and pre-paid debit cards.
Balancing Physical and Digital Innovation
Despite new additions to the digital banking market, don’t write off the physical bank branch just yet.
Recent studies show that not only do customers like having a physical bank branch in their community, they are also likely to abandon the bank entirely if their preferred nearby branch closes. So what’s a bank to do when it comes to weighing cost-savings against innovation investment?
For the August Tracker’s feature story, PYMNTS caught up with Bank of the West EVP of Digital Channels Jamie Armistead, for a conversation about how the bank is working to strike that balance, by collaborating with the FinTech community and investing in tech-savvy bank personnel.
Check out the latest edition of the Digital Banking Tracker for the feature story with Bank of the West, along with the latest headlines and trends from across the digital banking landscape and a provider directory, with over 200 players in the digital banking space.
. . . . . . . . . . . . . . . .
TO DOWNLOAD THE AUGUST EDITION OF THE PYMNTS DIGITAL BANKING TRACKER™, CLICK THE BUTTON BELOW.
About the Tracker
The PYMNTS Digital Banking Tracker™ brings you the latest news, research and expert commentary from the FinTech and consumer banking space, along with the rankings of over 200 companies serving or powering the digital banking sector.