How A Local Pharmacy Evolved Into An Industry Disruptor
The history of the pharmaceutical industry can be traced back almost 4000 years to Mesopotamia (now a region of Iraq), where the first recorded prescriptions were etched on clay tablets.
Digitalization, technological advances, globalization, demographic shifts, and changing customer expectations have transformed the banking sector in the last decade. “Technology is making it easier for customers to switch banks, making relationships much less sticky”, a PwC study on the future of banking stated already in 2015. Young, tech-savvy customers tend to be less loyal to companies or brands than previous generations. Financial products and services are perceived as interchangeable. The relevance of personal relationships with advisors has dwindled. Banking is not a people business anymore. Instead, customized, innovative, and self-serving products or services are the biggest selling point for today’s clients. At the same time, customer expectations are being reshaped by interactions outside of the banking sector. Banking customers now expect the same standards regarding usability and relationship management as in other B2C industries. Banking is one of the slowest industries in adapting to new circumstances “Nowhere is the changing landscape of customer expectations and technology more evident than in financial services”, a whitepaper on customer experience in banking by the international consulting firm Deloitte concluded. Technology has evolved into an efficient enabler for more efficient operations and improved customer experience. Market observers and innovators have long warned that traditional banks must fill the gaps between customer expectations and the status quo. The new generation of banking clients value convenience and prefer to execute transactions remotely – if possible, without direct interaction with the company or organization. However, banking has been one of the slowest moving industries for disruption due to strict regulations and historically change-averse leaders. Neo-banks manage to fill the gaps left by traditional banking Disruptive new entrants – so-called neo-banks – such as Revolut, N26, Monzo, and Upgrade keep winning new customers thanks to better user experiences than traditional financial institutions are currently offering. A neo-bank can be defined as a technology-based bank without branches where all operations are done online. “Due to most neo-banks having fewer overheads like branches, staff to run these branches and a generally slimmer business model, users commonly can enjoy higher interest rates and fewer fees”, the FinTech Magazine writes. The neo-bank product model targets digitally-savvy customers looking for a simple and more accessible way to manage their finances. The goal of the US-based fintech Upgrade, for example, is to eliminate fees on everyday transactions and to offer affordable credit through cards and loans. In just four years, over twelve million people have applied for an Upgrade card or loan. What differentiates neo-banks from digital banks What is the difference between neo-banks and digital banks? While digital banks usually hold a standard banking license and duplicate the infrastructure used by existing banks, neo-banks often operate with their own banking license to provide financial services such as debit or credit cards, currency exchanges, retail payments, money transfers, crypto management, stock trading, or saving accounts. Unlike digital banks, neo-banks are not backed by large financial institutions. Neo-banks are mostly innovative startups aiming to fundamentally differentiate themselves from both traditional and digital banks through their offering, user experience, and way of operations. Most important characteristics of neo-banks: Technology-based banks without brick-and-mortar branches All operations online Distinguishing themselves through better usability, accessibility, and user-friendliness than traditional banks often following the lean startup approach in most cases no backing by big financial institutions From helping travelers avoid exchange fees to the biggest challenger bank: Revolut When talking about neo-banking, the name Revolut will inevitably fall sooner than later. The London-based fintech company Revolut initially helped international travelers avoid horrid foreign exchange fees by letting travelers change money into about 30 currencies at market rates with the Revolut smartphone app and card. In the last years, Revolut has added other banking services to its portfolio: debit cards, virtual cards, Apple Pay, saving vaults that allow Revolut customers to earn interest on their money, commission-free stock trading, crypto, commodities, and further services are continually being developed. The fintech unicorn holds a banking license in the European Union, enabling Revolut to offer its banking products in Europe. In January 2021, the revolutionary fintech applied for a banking license in the UK. The Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) are now reviewing the application. The license will allow Revolut to house, guarantee, and lend out British users’ deposits. In early 2021, Revolut is valued at 5.5 billion USD and among the most successful fintech companies in Europe. Members of the Stableton Marketplace do now the chance to be part of the Revolut success story by participating in the subsequent Revolut funding round. Signup here to learn more. The German neo-bank N26 saw a record transaction volume in 2020 N26 is another well-known European neo-bank example. N26 offers a free checking account, several fee-based accounts, personal loans, and personal finance management tools to categorize transactions, set daily spending limits, and open subaccounts to reach financial goals. The Berlin-based neo-bank reached seven million customers by the end of 2020. More than 1500 employees across eight locations currently work for N26. In total, N26 has raised over 800 million EUR in five years and is valued at 2.7 billion USD. This makes the German neo-bank one of the highest valued fintech companies in the world. With over 5.5 billion EUR monthly, N26 saw its transaction volume at an all-time high in 2020. “Since the pandemic hit, N26 has focused on accelerating our innovation pipeline to keep pace with customers’ changing needs. At a time where digital banking has become even more relevant than before, we extended our card portfolio and broadened our premium subscription offering”, the N26 founders wrote in January 2021. 40 percent of Swiss people know at least one neo-banks It is fair to say that neo-banks are continuing to reshape the banking sector. In Switzerland, neo-banks are already widely popular. According to the Swiss Payment Monitor 2020 created by the University of Applied Sciences Zurich and the University of St. Gallen, 10 percent of the Swiss residents that were surveyed had already used solutions provided by neo-banks at least once by the end of 2019. Forty percent are familiar with one or more of the better-known neo-banks. Survey respondents listed the practicality, straightforward handling, and competitive foreign exchange rates offered by neo-banks as the main reasons for choosing to bank with them. 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