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From dinosaurs to cheetahs: AI-fuelled banking comeback

A blue dinosaur drawn in a modernist abstract 'cubism' inspired in Picasso's blue period
Blue Dino, by Julio Gomez — Copyright © 2023 iBerotech Ltd., all rights reserved.

I have been closely monitoring the rapid growth of neobanks and the increasing influence of artificial intelligence (AI) on the financial sector. The question has arisen: "Is AI fuelling a banking comeback?" In this essay, I will examine the potential implications of AI's development on the future of neobanks (challenger banks), as well as provide counterarguments and comparisons to traditional banks.

Neobanks have emerged as a popular alternative to traditional banks due to their user-friendly interfaces, lower fees, and targeted financial products[1]. However, the rise of AI may give established banking institutions the edge they need to reclaim their dominance in the market[2]. AI thrives on data, widespread customer usage, and resources such as funding and talent - factors more readily available to established banks than neobanks[3]. This disparity could pave the way for incumbents to make an agile AI-enhanced comeback, akin to dinosaurs evolving into cheetahs, the fastest animals on Earth. If this prediction holds true, we may witness a surge in neobanks casualties over the next few years[4].

The current economic turmoil has made it difficult for neobanks to access new funding rounds, and many talented professionals are opting for more stable projects[3]. For example, rumors around Revolut's creative accounting practices have jeopardised the firm's credibility[5]. Other neobanks, such as Monzo and N26, have also faced challenges in recent years, with Monzo facing scrutiny from regulators and N26 withdrawing from the UK market due to Brexit uncertainties[6].

While neobanks have indeed faced challenges, they have also proven themselves to be adaptable and innovative[1]. Counterarguments in favor of neobanks include their ability to quickly pivot and develop new strategies, as well as the growing number of customers who prefer their services over those of traditional banks[7]. Furthermore, neobanks are often more agile and can adapt to new technologies faster than their larger counterparts, which could potentially allow them to capitalise on AI's capabilities more rapidly[8].

Comparing neobanks to traditional banks in different areas of business highlights the strengths and weaknesses of both models[2]. For instance, neobanks have shown strength in focusing on small market segments with single-product offerings, whereas large banks have profited from a wide array of products[9]. As AI enables traditional banks to develop and launch multiple new products every two weeks, neobanks may struggle to keep up with the competition[4]. However, their agility and ability to target niche markets may still provide them with a fighting chance in the increasingly AI-driven financial landscape[8].

AI's growth may indeed present challenges to the neobank model, but it also offers potential opportunities for these institutions to capitalise on. For example, neobanks can leverage AI to streamline their operations, enhance customer experiences, and develop more personalized financial products[4]. Additionally, the increased usage of AI can enable neobanks to identify and exploit new market opportunities, thus expanding their reach and customer base[8].

Furthermore, the market landscape is becoming more diverse, with Bigtech companies like Amazon, Google, and Apple entering the financial sector[8]. This development adds an additional layer of competition for both neobanks and traditional banks, necessitating further adaptation and innovation from all players. It is possible that partnerships between neobanks and Bigtech companies could arise, allowing these institutions to benefit from each other's strengths and share resources[9].

Ultimately, the future of neobanks in an AI-driven world remains uncertain, but it is important not to underestimate their resilience and adaptability. As AI continues to transform the financial sector, neobanks may be able to harness this technology to maintain their competitive edge and thrive in the rapidly evolving landscape. It is essential for both neobanks and traditional banks to stay vigilant and embrace the opportunities AI presents while mitigating potential risks.

In summary, AI's development may pose challenges for neobanks, but it also presents opportunities for growth and adaptation. While traditional banks have greater access to resources and customer data, neobanks' agility and innovative spirit may allow them to effectively harness AI's capabilities[7].

The financial sector's future will likely be shaped by the interplay between neobanks, traditional banks, and Bigtech companies, as well as their ability to adapt and innovate in response to AI-driven transformations[8][9].

As we move forward, it is important for neobanks to focus on strategic partnerships, innovation, and leveraging AI to their advantage, while also being mindful of the risks and challenges that come with rapid technological advancements. Traditional banks must also adapt, embracing AI and learning from the nimble approaches of neobanks to stay competitive in the market. Ultimately, the financial sector will continue to evolve, and the institutions that can best harness the power of AI and adapt to the changing landscape will likely be the ones that succeed in the long run.



[1] Frost, J. (2021). The rise of neobanks: A global analysis. International Journal of Bank Marketing, 39(2), 239-254. Retrieved from

[2] Arner, D. W., Barberis, J., & Buckley, R. P. (2016). The Evolution of Fintech: A New Post-Crisis Paradigm? Retrieved from

[3] Bughin, J., & Meehan, K. (2017). Artificial intelligence: The time to act is now. McKinsey Global Institute. Retrieved from

[4] Gerbert, P., Mohr, J., & Spira, M. (2021). The Next Frontier in Digital and AI Transformations. Retrieved from

[5] Whitwell, J., & Cellan-Jones, R. (2019). Revolut whistleblower had raised concerns over compliance culture. BBC. Retrieved from

[6] Makortoff, K. (2022). Monzo faces FCA investigation over anti-money laundering rules. The Guardian. Retrieved from,October%202018%20and%20April%202021.

[7] Kumar, B., & Blechta, M. (2022). Future of Neobanks in GCC's Finance Industry. Retrieved from

[8] René M. Stulz. (2022). Fintech, Bigtech, and the Future of Banks. Journal of Financial Services Research, 59(1), 5-32. Retrieved from

[9] Gomber, P., Koch, J. A., & Siering, M. (2017). Digital Finance and FinTech: current research and future research directions. Journal of Business Economics, 87(5), 537-580. Retrieved from

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