Growth and Future of Neo Banks – A Survey

Digital transformation in banking enhanced competition, business sustainability, and improved customer service. Covid 19 Pandemic accelerated the acceptance of neo- banks worldwide. The present study aims to investigate two broad objectives. First, to identify the factors affecting customer choices for neo-banks versus traditional banks; second, it examines the future of a neo-bank using a survey method. Data collected from a final sample of 79 respondents with accounts with traditional bank and neo-banks in Chicago, United States of America, is analyzed using factor analysis. The study found five key factors - bank’s popularity, services offered, ease and accessibility, fee structure, and banking experience and security as significant drivers of customer choice. In addition, results show that customers are unwilling to permanently shift their banking relationship to neo-banks and would like to retain their accounts with traditional banks.