The surge of new entrants riding the digital wave
Banking has traditionally been a conservative industry that enjoys relatively high barriers to entry due to regulations that restrain access for non-bank competitors. New digital technologies—driven by cloud, mobile, social, and analytics—have drastically lower entry barriers. Regulators in many countries have also relaxed regulations to encourage innovations in the banking industry. As a result, many new all-digital financial services firms, unencumbered by older less agile systems are aggressively pursuing customers by addressing their needs in new and distinct ways.
For instance, Chinese internet giant Tencent created WeBank hoping to capitalize on its vast user base of microblogging and peer-to-peer chatting services. E-commerce leaders such as Tesco in Europe, Rakuten in Asia-Pacific, and Walmart in the US have also entered the banking sector. Globally, entrepreneurs and even traditional banks are creating digital-only banks or neobanks. BankMobile, Number26, Atom, ZenBanx, and NuBank are just some of the names appearing in recent financial news. These neobanks have something in common—digital technology is at the core of their value proposition.