Digital Banking Data for Emerging Market Predictions

Rebekah Paul |
 05/19/23 |
6 min read

Digital Banking Data for Emerging Market Predictions

The world of digital banking is shifting, and technology is the culprit – at least in this report! What are the big takeaways? Our Impact of Technology on Finance Services 2023: Digital Banking report shares all, and we have a snapshot to share below.

What are the evolving customer needs in this rapidly changing consumer landscape? New demands dominate the financial services sector, including privacy and security and the meteoric rise of digital banking.

We share a few key takeaways below, but the report highlights so much more, including:

  • Key companies in the sector
  • The strategies each company employs to drive change and carve out a niche
  • And the corresponding sentiment each generates in the market

It also shares predictions for where the space is headed to inform strategic planning in the coming months. Check out the preview below!

Key Takeaway #1: Goodbye retail banking, hello neobank (and what is a neobank anyway?)

Not much good comes out of a global pandemic. Still, it did launch us instantly into the very center of the digital banking revolution, forcing us to take neobanks (online-only banks with no brick-and-mortar presence), and mobile banking applications very seriously. And in some cases, it became our only option.

The rise of smartphones and mobile apps helped and we could manage our finances from anywhere, at any time, which became critical during the pandemic. The need for social distancing and minimal physical contact added to the attraction, and a surge in demand for services followed.

Neobanks, with their low environmental footprints, are hugely popular among younger consumers. They are user-friendly, with a mobile-first approach, and have highly competitive fees. They’re also great for people in areas with limited access to physical bank branches.

Being online only means the overhead costs are low, which allows for competitive interest rates and fewer fees. All standard financial services are offered through websites and mobile apps—and their entry is significantly shifting the banking landscape.

Considering both Post Volume (bubble size) and Passion Intensity (strength of emotions), in addition to Net Sentiment, and evaluating the results in the NetBase product’s Brand Passion Index, we see a variety of nontypical banks emerge as the top contenders where customers are genuinely enthusiastic about their mobile apps. Chime Bank takes the lead, followed by Varo Bank, US Bank, and Bank of America.

bubbles showing passion intensity around nontypical banks

So, what do people really think about neobanks though? Are they here to stay, or would we prefer to go and stand in line at the brick-and-mortar bank downtown? When answering this, we uncovered some interesting differences between genders, concluding that traditional banks should seriously heed feedback from female customers since they tend to share negative experiences on social media and engage with others who’ve had similar experiences.

engagements around typical and nontypical banks

Overall, consumers have the highest Net Sentiment toward mobile banking speed (72) and usability (72). This is followed by convenience (52) and security (47). Although still positive, consumers have the lowest Net Sentiment towards privacy (39) and accessibility (23).

net sentiment around mobile banking

Key Takeaway #2: Shift to virtual credit cards and digital wallets, but are they safe?

Demand for mobile wallets and contactless payments has surged, but consumers remain concerned about data breaches and cyber-attacks.

To combat this, banks are now using methods like tokenization and encryption, including disposable virtual credit cards, which are temporary payment cards linked to a customer’s primary bank account. They use a unique virtual card number for each transaction, reducing the risk of fraud and information theft. The technology aligns with the conversation volume surrounding it, as it’s still in the early days, but the adjacent digital wallet conversation is exploding, predicting more entrants in the space:

digital wallet conversatins

Disposable virtual credit cards are also a popular payment method for people wanting to use cryptocurrency to make online purchases. Some cryptocurrency providers allow users to link their cryptocurrency wallet to the virtual card, making it easier to convert to fiat currency.

Mobile, or digital, wallets are increasingly popular; when combined with virtual cards, they offer an added layer of security and are widely used for both in-person and online transactions.

Key Takeaway #3: Will popular peer-to-peer payment platforms prevail?

Absolutely yes. P2P platforms are leading the way toward a cashless society. We can no longer imagine life without PayPal, Venmo, Zelle, Revolut, and others. But these platforms also come with risks, including scams and fraudulent transactions.

Users need to take precautions and use secure passwords and two-factor authentication. Overall, consumers view P2P payments positively regarding safety for online shopping (86) and cryptocurrency (60), but are more cautious about using platforms such as PayPal and Zelle for sending money to family and friends due to the higher risk of fraud.

crosstab showing payment conversation sentiments

Despite these risks, the simplicity of P2P payments is what consumers appreciate most. Using NetBase Quid® we found that a big chunk of conversation about using P2P happens in the cryptocurrency space.

Key Takeaway #4: Hygienic payments with contactless capabilities

Contactless payments are ideal for small transactions, such as paying for coffee or groceries. During the COVID-19 pandemic, their popularity grew exponentially due to their ability to reduce physical contact, minimize the risk of virus transmission, and negate the need for germy coins and notes.

Contactless is super-fast and convenient, making it easy to spend money while keeping us germ-free. Mobile wallets, like Apple Pay and Google Pay, offer similar capabilities allowing customers to pay for goods and services without touching cash or cards.

As businesses continue to adapt to the changing payment landscape, contactless payments are expected to gain widespread popularity. In fact, they’re already taking hold across many areas. By examining discussions related to contactless payments in the Quid product over the past two years, we can observe that the most frequently discussed use cases among consumers are online shopping (15), food delivery (14), bus fares (12), travel and entertainment (11), such as theme parks, theaters, and airlines, stadium access (8.8), hotels (8.1), car parking (8), EV charging (6.3), and the London Underground (6.3).

conversational clusters about online shopping

Key Takeaway #5: Has that crazy kid Crypto grown up at last?

A thousand times, yes. People in the early 1900s looked at the first motor vehicles and said it would never work and in the 1980s, the same about mobile phones and the internet. Like these things, and unbelievable as it may seem, cryptocurrency is here to stay.

Cryptocurrency payments have surged in popularity recently, with many merchants now accepting Bitcoin and others as payment. It has advantages over traditional currencies, with better privacy, lower transaction fees, and faster transfer times.

The decentralized ledger system, or blockchain, gives greater security and transparency, so it’s difficult to alter or manipulate records. Also, cryptocurrency payments can be anonymous using only a wallet address, providing increased privacy for users.

Cryptocurrency is handy for those not having access to traditional financial services in remote or underbanked areas. By using a cryptocurrency wallet, users can easily send and receive payments without the go-between of a traditional bank account or credit card, providing a greater level of financial freedom and autonomy.

Also, cryptocurrency payments are fast and efficient, allowing for real-time transactions without intermediaries or third-party service providers that may add additional fees and delays.

There are concerns, however about the volatility of the cryptocurrency market. It can be difficult for businesses to accept cryptocurrencies as payment if the value of a payment received in cryptocurrency changes significantly before it can be converted into traditional currency.

There are also concerns about the lack of regulation in the cryptocurrency market, making it more difficult for it to be accepted where legal implications are unclear. Finally, the environmental impact of cryptocurrency payments is also a concern, with the mining process requiring significant amounts of energy.

Key Takeaway #6: Enter the disruptors

In recent years, there have been investigations into creating cryptocurrencies by banks, referred to as bankcoins or central bank digital currencies (CBDCs).

The potential benefits of bankcoins and CBDCs include increased efficiency, lower transaction costs, and enhanced security. Transactions can be settled instantly and securely without intermediaries, and all transactions are recorded on a public blockchain ledger, with greater transparency and lower risk of fraud.

While bankcoins have not gained much awareness, there has been a significant increase in conversations around central bank digital currencies (CBDCs) since late 2022. CBDCs make up nearly all the discussion volume during this period, suggesting a growing interest in this area.

graph showing rising bankcoin conversations

But, the development of bankcoins and CBDCs also poses significant challenges and risks. One of the main issues is regulatory compliance because they must adhere to anti-money laundering (AML) and know-your-customer (KYC) requirements just like traditional currencies. Also, privacy could be an issue given that all transactions are recorded on a public blockchain ledger.

The Future of Digital Banking

The report covering the Impact of Technology on Finance Services 2023: Digital Banking highlights the rapid pace with which technological advancements have revolutionized how we conduct our financial business. Mobile and virtual banking and digital and contactless payments have become increasingly popular due to their convenience and speed, offering a trouble-free experience for users.

While the benefits of bankcoins and CBDCs seem significant, they also pose challenges and risks and might even fundamentally disrupt the traditional banking system.

While the industry continues to evolve, it is critical for businesses to stay ahead of the curve by embracing new technologies and strategies while at the same time prioritizing security, user experience, and compliance with regulations.

Be sure to download the report to learn more and reach out for a demo when you’re ready to capture insight specific to you!

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