Are Neobanks the future of FinTech?

Tandem is one of the many growing ‘Neobanks’ that is being set up to help people use money digitally, ultimately, being better with it. Difa Niculescu is the IT Director at Tandem Bank, a bank that is on a mission to modernise the technical architecture and infrastructure of banking.  He discussed with Software Testing News why he feels the need to digitise the economy and what he thinks Fintech means in an ever-evolving digital world.

‘Neobank’ is a term that brings together tech and finance, how does your firm relate to this?

If you look at the banking industry, you’ve obviously got your nine banks that really control about 83% of the banking population. That’s been decreasing over the last few years. We’re a mobile-only bank. So, we operate strictly out of our app. And we offer a variety of products and services out of our mobile app and really, were seen as the new generation banking. We are a digital bank that reflects more in modern society and is looking really to disrupt the banking industry.

What do you think the biggest thing happening in FinTech is right now?

I think everyone in digital banking is trying to find its market fit. So, if you look at the most impressive challenge of banks, thus far, I think customer growth has been a big focus. But really, no one’s quite [thinking about] profitability. And I think that’s because a lot of the banks are focusing on the good digital experience but they don’t really have the proposition that’s going to ensure that that they are really sustainable businesses that offer a variety of products. So, we need to think of the breadth and depth that can go back to the old fundamentals of earning interest, which is ultimately how banks earn money.

There’s also more generally a drive, especially with the younger generations, around using your mobile phone for everything. The work that people do is changing… I don’t think it’s necessarily about taking away jobs, I think it’s more about the roles that people undertake in their daily lives as we naturally shift towards a more digital and cashless society in the UK.

If we move towards a cashless society, is there a chance that some people might get left behind?

If you’ve grown up in a world without the internet and things like mobile apps, then adapting to a changing society [could be hard]. I’ve even seen councils refer to online-only methods, so even government institutions have been moving towards online use. So, I think there will be an element of society that can be isolated.

I know there’s been a lot of government programmes trying to encourage people to learn computing, or think of people’s career prospects in terms of people’s day to day engagement with technology. I think it’s going to be vital that people do try and acquire those skills, otherwise, I think there’s a good chance that they could become isolated.

What else are you doing with tech?

We’ve been using machine learning for a number of years now. Things like our ‘auto savings’ products are underpinned by a lot of machine learning. What we do is we take the open banking, we look at customer’s spending behaviours and we determine what’s safe to save. So, if for example, if a customer has £1000 in their bank account, we look at their profile and think, actually you don’t have £1,000 in your bank account you’ve got £200 left because you have £800 worth of bills to the end of the month. So, we believe you’d have to say £200 is safe to save. We can give insight into the sort of spending behaviours and keep what people have in terms of affordability safe.

In terms of developing FinTech, what have you done that you’ve been most proud of?

When you work in a start-up such as ours, every day you’re proud of what’s been achieved. We were paper and pens talking about a good idea and before you know it, we acquired somewhere around 800,000 customers.

When I think of the digital journey going from a traditional on-premise to a more modern cloud-native technology stack, and when we take a look at the some of the products where we’ve helped enable things such as auto savings, there’s a lot to be proud of.

What are you doing in terms of security?

One of the big areas we’re going to focus on in the future is identity. So, understanding an individual’s identity, their life cycle with Tandem and throughout the technology states, that’s something where we’re putting a lot of time into at the moment.

In terms of things like biometrics and algorithms, there’s many facets to identity and really tying them all to one person, verifying that they are who they say are, and thinking of how we identify is a big thing to think of. Because we want to give a really seamless experience to our customers around identity.

Where do you see the future of Fintech going?

I think there’s still a lot of work to do to truly disrupt banking. I think there’s a huge way to go in terms of offering customers a very diverse set of products that will really entice them to make the choices to migrate. I don’t think we’ve quite seen that yet and I think that’s reflected in the sort of customer numbers of the most successful banks. I think there’s a reason that we’re called a challenger bank because it is a very difficult market to break. This is because it’s been over 100 years of using the same tools and methods and the same banking products.

More and more people are using mobile technologies and digital technologies in their everyday lives. I think it’s only natural that all the generations slowly but surely adopt these over time. If we look just a few years back you know our phones weren’t even smartphones and now they are the be all and end all of tech. I think it’s the same as some companies being born in the cloud and it’s the same as some generations being born into a world where mobile phones or smartphones can do absolutely everything. So, in terms of adoption, I think you’ll see a rapid increase throughout the various generations and in adopting more modern digital offerings.


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