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University assignment

To what extent could Revolut enhance their positioning in the Retail Banking environment, particularly by reinventing the "Customer Journey" of Y & Z generations?

Subject:

Sources:

Citation Style:

Outline

Executive summary

Introduction

Overview

Definitions

Types and forms of fintech

Body

Methods used

Discussion

Finte(KAPLAN)chs

Neo-banks

Revolut

Customer satisfaction

Comparison between neo-banks and old banks

Future trends

Conclusion

Recommendation

References

Abstract

Due to global change in financial and economic sections, models of financial services also keep changing. This is enhanced by the use of new technologies in the banking sector which improve financial services like money transfers, insurance, payments, and deposits. fintech is such an industry whose main mandate is to develop and implement new technologies in the finance sector. My report and research aimed at identifying current trends in banking technologies, their impact, and limitations

Introduction

After Barack Obama in 2008 won the elections, the event led to economic failure which highly affected the banking system and led to the interruption of the stock exchange market and degradation of trust levels which banks had maintained earlier. After this financial crisis, the banking sector adapted and made new modifications to banking activities, its management, and its regulation.

The changes and development in the technology sector led to the emergence of FinTechs. FinTechs refers to as new technologies that are aimed to improve the quality of offering services and automating the usage of those services(Juengerkes, 2016). This technology is embedded on computers and mobile devices to control activities in the finance sector for business firms.

As technology advanced from fintech there emerged Neobanks. these are banks run online and are accessed through the internet by use of web-based or mobile-based applications. They do not have bank branches and uses the digital media platform to offer financial services (Hopkinson, Klarova, Turcan. & Gulieva, 2019).

In this report, we will formulate a thesis to show the impacts of Neobanks and the effects of the current trend in the banking system .evolution of technology is on a daily move and is becoming very popular. banks need to progressively adapt to it. Neobanks have to lead to an increase in accessibility, security, and attractiveness of the banking system. they offer services like currency exchanges, debiting and crediting, depositing and saving, and budgeting.

Revolut is a one-stop Neobank operating across Europe and contains a specialized license that enabled them to operate in all countries from the European Union(EU). Other versions of Neobank include neon, N26, and ZAK.

Development and changes in the banking sector are on the move as there are new technologies day in day out. This adds new functionality and customer satisfaction hence transforming the banking sector.

Methods

The main purpose of this study is to report on the financial innovations that are used in the banking sector. Scientific knowledge is obtained through theoretical and empirical methods, comparisons, and logic analysis to come up with new technologies which solve current problems experienced in the bank industry.

Discussion

Through the development of Neobanks, digital banks partner with the traditional and acquire virtual licenses allowing them to run without necessarily having to open branches. A conducive environment with fewer regulations and changing customer needs have led to the general growth of the technologies in the banking system. Digital banks have benefits like low operational cost which makes banks offer customers services at lower prices.

A robust Neobanks should be data-oriented and easy to service. It should have a faster and intelligent system on which it operates. digital banking architecture comprises intelligent data processing and security during access and in storage facilities. Banks have transactional and customer data which are organized in tables and columns and stored in a repository like a relational database management system.

Traditional databases were slow, hard to maintain, and could not process unstructured data, relational database management systems( RDBMS) solve this as it has more storage, contain drivers, memory, and high power, it uses the vertical scaling up a mechanism to handle workloads.

Non-relational databases like NoSQL are used to process big data which is structured or unstructured.it uses horizontal scaling(Klein, Gorton, Donohoe, Pham, & Matser, 2015). This makes NoSQL be used in the digital banking system which provides the best solution for traditional databases.

NoSQL vendors include aerospike who offers a multi-cluster system that enables Neobank to have databases in several areas without necessarily adding more resources, provide a resilient database platform to maintain security, and have audit trails at low TCO. can be used across different sectors like finance and industries.

Aerospace also uses real-time business intelligence data to make decisions that are analyzed by artificial intelligence and machine learning for modeling and designing databases. Nosql provides regulation compliance by integrating internal and external data into a firm.

In conclusion, digital banking requires obtaining and process data in real-time and by use of loosely coupled architectures. NoSQL uses technology to process large chunks of data to obtain useful information from them.

Revolut has changed from using Postgres databases and has started using international databases like Exasol which uses data-driven technology, data science and has an OLAP database system. this system acts as a central repository and takes less time to process data and make decisions.

Customer satisfaction

There are a lot of financial innovations today which create customer satisfaction and create competition in the banking industry. The current best trends include:

Blockchain is used to centralize services, enhance security to transactions process and improve real-time speed. blockchains have been widely used in master cards and visas and cryptocurrencies.

Robo-advisor is a help program that gives directions and helps customers with no or less experience in investments. It gathers information from a customer through an online form and creates an investment portfolio based on the objectives given. they are fast cheap and efficient.

Financial ecosystem which integrates multiple services in one platform and allows precessing of bot online and offline customers data.

Big data allow the processing of large chunks of unstructured data to track customers' behavior.

Through big data analysis, a bank can get information about a customer regarding his or her creditworthiness, personal management, cost optimization, security threats and risks, customer satisfaction rate, and anticipation and prediction.

Peer-to-peer lending connects money borrowers to money lenders securely and reliably.

Neo- banks are online banks developed for the finance sector and they offer services at a lower cost.neo banks may be client-oriented or full-service.

In the development of new technologies in the banking sector, new models have achieved customer interaction and satisfaction by creating online help on investments, self-services, and online shopping transactions(Unyathanakorn, & Rompho, 2014).they have also improved their trust through more security and reliability of the online systems and platforms.

Comparison between neo-banks/revolution and traditional banks

Before the evolution of digital banks, traditional banks were used which were situated in a physical location and had branches in different other areas(Temelkov, 2020) They offered decentralized services and involved a customer physically going to the bank to get a service. They could capture limited data, they were slow in transaction processing, had low and old data repositories, and did not offer good security to customers' data.

Through the evolution of the banking industry, new technologies have risen and today you can do financial services through a phone or any online platform. Digital banking has led to the development of technologies such as neo-banks, Revolut, Monzo, N26, and others. Neo-banks have no branches and carry out all financial services online and have secure and robust database technologies for storing data.it also incorporates machine learning and artificial intelligence to process big data hence providing solutions to problems in the banking industry.

Neo-banks have inbuilt features like; high security through user and transaction authentication, data encryption, and secure transfer of data from and out of databases, they have beautifully designed user interfaces for the cards, web, and apps interfaces(Bradford, 2020). This helps to create attention and attract new customers to using them. they have interactive and easy signup and sign-in windows which takes less time to create an account or to perform a financial transaction.

Digital banks are becoming more popular because they offer solutions to most problems experienced in old banks. Digital banks offer services at a lower cost than old banks because they do not undergo overhead costs such as paying rent and bills thus can subsidize their cost on transactions for their customers. Revolut technology offers better customer satisfaction compared to old banks. Through blockchain technologies, machine learning, and artificial intelligence there are built-in platforms where a customer is given help and guided on investments through an interactive online form.

According to a study, for Revolut and N26 banks, they are mostly used by the young generation ranging from twenty-five to thirty-five years it estimates that old people had already existing traditional bank accounts and are not yet willing to adjust and change to new digital banks. The youth are the highest users because they are the people who are evolving with technology and have deep knowledge of them compared to the aged. They are also on the verge of opening new accounts as they are the potential developing investors.

For digital banks like neo-banks to become more popular, they need to create awareness of their existence and benefits through advertisements, the creation of adware, and physical education to the general public. To outshine old banks, Neobanks need to specialize in their services. they need to have a financial strength point to be able to compete with the traditional banks.in conclusion, digital banks have a great advantage over old banks by having a lot of solutions and benefits by they lack popularity and specialization which are key considerations in the banking industry competition.

Conclusion

There is a rapid change in the banking industry. The evolution from traditional banks to fintech has brought to the introduction of new trends, systems, and ways of processing data and transactions. Customer satisfaction, security, efficiency, and reliability have been the main objectives in developing digital banks. digital banks have brought a lot of benefits and offer solutions to problems experienced in traditional banks

. Though traditional banks are on the verge of becoming obsolete they also have a competing power as they have an already well-established connection and high reputation and they have financially stronger than digital banks. New technology in the banking industry has led to the rise of Fintechs like Neobanks, Revolut, N26, Monza, etc.

These banks use machine learning and artificial intelligence to analyze big data and come up with essential information about the customers and market. They store data in non-relational databases like NoSQL which over security and other benefits.

There have been problems relating to the Neobanks. they are only popular to the young generation only .there are regulations by the law that hinder online banks like regulation on lending services offered online, high cost of running the online platforms for the owners, Neobanks are prone to cyber-attacks which may compromise the integrity, availability, and confidentiality of customers data, they also lack a financial muscle to compete with other banks in the old sector.

The banking industry will keep on changing with the technology change and Neobanks need to consider customer satisfaction and market competition strategies for them to grow and gain popularity.

Recommendations

The banking industry needs to incorporate technologies that would improve customer satisfaction and improve efficiency in financial transactions.

They should create awareness to all groups of people about the need and benefits of digital banks

Fintechs should have security built-in features to enhance data protection thus improving confidentiality, integrity, and availability of customers' data. they should also put good authentication mechanisms of users and also on transactions

Fintech should aim at maintaining their reputation by their quality of service through real-time delivery systems

They should specialize in specific financial activities to be able to compete with traditional banks that have a strong foundation already.

References

Juengerkes, B. E. (2016). FinTechs and Banks–Collaboration is Key. The FinTech Book: the financial technology handbook for investors, entrepreneurs, and visionaries, 179-182.

Hopkinson, G. G., Klarova, D., Turcan, R., & Gulieva, V. (2019). How Neobanks’ business models challenge traditional banks.

Klein, J., Gorton, I., Ernst, N., Donohoe, P., Pham, K., & Matser, C. (2015, February). Performance evaluation of NoSQL databases: a case study. In Proceedings of the 1st Workshop on Performance Analysis of Big Data Systems (pp. 5-10).

Unyathanakorn, K., & Rompho, N. (2014). Factors Affecting Customer Satisfaction in Online Banking Service. Journal of Marketing Development & Competitiveness, 8(2).

Temelkov, Z. (2020). Overview of Neobanks model and its implications for traditional banking.

Bradford, T. (2020). Neobanks: Banks by Any Other Name?. Payments System Research Briefing,