Can banks beat neobanks at their own game?

Neobank growth has peaked but the sector's population will continue to expand. One out of three new neobanks is predicted to be a 'speedboat,' an operating unit created by a traditional banking institution with the mission of disrupting from within the industry.

A source of angst for neobank creators and the investors who back them may suggest a potentially successful strategic direction for traditional institutions large and small that are willing to double down on neobanks’ blueprint and create their own alternative providers.

In fact, consulting firm Simon-Kucher says that one out of three neobanks being formed now already have an incumbent bank or a larger financial services organization as their parent. The firm expects this trend to not only continue, but potentially accelerate.

In a sense this amounts to things coming full circle, with traditional institutions disrupting the startups that disrupted them. And they are doing so with advantages that most neobanks have not had.

Perhaps more significantly the trend also means that traditional institutions increasingly are disrupting their own industry from within.

 

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