Neobanks: Challenges, Risks and Opportunities
Corander, Beatrice (2021)
2021
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-202105189237
https://urn.fi/URN:NBN:fi:amk-202105189237
Tiivistelmä
The Neobanks entering the banking industry and market, risks, as well as challenges relating to them have thus far been subject to hardly any academic research. This provides a strong motivation for this thesis.
The purpose of this thesis is to do research on several aspects of Neobanks from both the customer’s and society’s point of view. The main focus is on the following three facets of Neobanks: (1) challenges, (2) risks, and (3) opportunities, that they have brought with them since their emergence roughly a decade ago. The investigative questions of this thesis are: IQ. 1. What new possibilities have Neobanks brought to banking customers? IQ. 2. What risks are associated with using Neobanks? IQ. 3. Sustainability of the Neobank ecosystem and future challenges on a societal level. These enable answering the research question “What are the challenges, risks and opportunities linked to Neobanks”
To better reflect the challenges and risks associated with the rise of Neobanks, are the laws and regulations relating to the general banking industry with an emphasis on anti- money laundering and terrorism financing, as well as the ‘Know your customer’ (KYC) regulations examined. This thesis additionally investigates the risks related to both Neobanks and the traditional banks that arise particularly from cybercrime associated with technology in the banking industry.
The two largest Neobanks according to European market share were chosen as representatives of the population of Neobanks. Both qualitative and quantitative data were collected, including interviews of financial experts. Through numerical and qualitative summaries of the data the author found that Neobanks may have legally questionable practices related with KYC regulation and that opportunities for money laundering through Neobanks should be taken into serious consideration by authorities and legislative bodies. In conclusion, the future business model, market share and commercial success of Neobanks are difficult to predict, but it can be anticipated that the banking industry will nevertheless face disruptive changes stemming from the widespread adoption of internet technology, rise of cryptocurrencies and the open banking related to EU legislation.
The purpose of this thesis is to do research on several aspects of Neobanks from both the customer’s and society’s point of view. The main focus is on the following three facets of Neobanks: (1) challenges, (2) risks, and (3) opportunities, that they have brought with them since their emergence roughly a decade ago. The investigative questions of this thesis are: IQ. 1. What new possibilities have Neobanks brought to banking customers? IQ. 2. What risks are associated with using Neobanks? IQ. 3. Sustainability of the Neobank ecosystem and future challenges on a societal level. These enable answering the research question “What are the challenges, risks and opportunities linked to Neobanks”
To better reflect the challenges and risks associated with the rise of Neobanks, are the laws and regulations relating to the general banking industry with an emphasis on anti- money laundering and terrorism financing, as well as the ‘Know your customer’ (KYC) regulations examined. This thesis additionally investigates the risks related to both Neobanks and the traditional banks that arise particularly from cybercrime associated with technology in the banking industry.
The two largest Neobanks according to European market share were chosen as representatives of the population of Neobanks. Both qualitative and quantitative data were collected, including interviews of financial experts. Through numerical and qualitative summaries of the data the author found that Neobanks may have legally questionable practices related with KYC regulation and that opportunities for money laundering through Neobanks should be taken into serious consideration by authorities and legislative bodies. In conclusion, the future business model, market share and commercial success of Neobanks are difficult to predict, but it can be anticipated that the banking industry will nevertheless face disruptive changes stemming from the widespread adoption of internet technology, rise of cryptocurrencies and the open banking related to EU legislation.