The demographics of neobank users are often surprising; it is not only young people who are signing up, but also older age brackets. What is the standard profile of your target customer? What has been key to your customer acquisition success?
Ever since it was established, our model of digital bank offering all banking services turned to the “neo-needs” of a universal customer rather than to a “neo-customer”. I believe our positioning shows that internet banking is not necessarily designed with only young people in mind; it satisfies and appeals to targets in all age groups. This is confirmed by the fact that the average age of our customers is 47, and our fastest-growing target is people in their forties with a very complete profile in terms of needs. In most cases, they have a medium-high income, are well educated, and are willing to try new consumer models. We have the same number of men and women. Among other things, this is perfectly in line with our gender diversity commitment, as shown by 45% of our bank managers being women.
In these days after the pandemic, we have realized more than ever how digitalization is increasingly necessary and widespread among all age groups. As we were born digital and technological, we have always aimed at making things easier and providing an excellent experience. We are the ones who adjust to the customer and do not ask the customer to adjust to us - this is an essential rule and a winning one. Just to mention an example: our bank’s name and logo were chosen involving all our customers and we were awarded the Efma world prize for customer experience, precisely because of how we offer our services through a very natural language.
If you allow me to say so, I would define Banca Widiba as a “new modern bank” and not simply a “neobank”.
There is sometimes a perception that neobanks are convenient for travel purposes but people maintain a different primary bank account for most of their banking needs. How do you convince people to use neobanks as their primary bank, where they keep a majority of their money and turn to for all of their financial needs?
We are a complete bank with a circular business model, where customers can do everything in a more convenient, modern, and easier way. Thanks to customization and the power of data, we offer customers all the best of what they may find useful, starting from their habits and needs. We have over 700 pieces of information on each of our customers and, thanks to these data, we offer individuals only products they are interested in and tailored to their needs. When a new customer turns to us, the process is very quick, easy, and automatic. For example, the switch from an account in another bank to ours takes place using the portability service of Widiexpress; all customers need to do is complete an online form.
In terms of all other more complex needs, such as personal investments and the protection of savings (so more than simple day-to-day banking operations), customers who prefer it (or who are unable to manage it themselves) can contact our network of financial advisors, which includes over 500 professionals who are active all over the national territory. We believe that the combination of digital services for simple needs and financial advisors for more complex needs is the bank model that eventually will become the most common.
While neobanks have shown impressive numbers in terms of customer acquisition, the transition to becoming profitable is proving more challenging. How do you make the necessary leap to becoming profitable while still maintaining the pace of your user acquisition?
Having managed to break even three years ago, 2020 was - despite all its complexities - very satisfying for us in terms of growth and profits, the best since the bank was established. Growth was certainly boosted by an increase in the number of customers and a sharp acceleration in collection of asset volumes, but also by the increasing efficiency of the operating machine, which is still very scalable with limited marginal costs.
After reaching the break-even point three years ago the net profit result - as far as we are concerned - has been positive and growing in the last three years, so we believe and are confident that ours is a winning business model that can be further developed in the years to come. Banca Widiba’s main strength is our integrated “human digital” model that, by placing data at the core, helps us collect in real time all the useful information we are receiving (always respecting privacy) from customers and the web, and, therefore, we are able to promptly understand which services and products to offer, with incredible flexibility and considerable response capacity to implement or change ongoing processes that are 100% digital.
Being a bank without branches, customers only interact with you digitally. How do you ensure an excellent customer service experience with interactions being 100% digital? Are there certain advantages or challenges compared to banks that need to manage physical spaces?
Having a very light infrastructure in terms of costs, with latest-generation technology and 100% paperless processes, makes it much, much easier to provide services and manage increasing volumes. In our digital form - our distinguishing trait - we have managed to build a deeper and closer relationship with customers by continuously listening to them. This relationship is, on the one hand, increasingly objective, because it is based on solid data and, on the other hand, it can be totally customized, because we know our customers very well indeed and shape our service based on what they ask of us. As further proof of our position and of Widiba’s “Bank that listens” DNA, we have an official consulting Committee that is made up of customers, the Customer team, which works to support the bank. It is a space shared by the business and the market.
We will invest more and more in artificial intelligence and analytics to further improve interactions with our customers. For example, we aim to valorize and further develop our chatbot (which is already very advanced) by cross-referencing data and interactions on digital channels and social networks.
In addition to digital interaction, we can rely on a network of financial advisors with physical offices where, compatibly with the ongoing emergency, they can interact with customers who prefer physical contact. They can also of course operate and interact with them digitally, like the current health emergency is requiring. We believe that a determining factor for excellent service and bank sustainability is the combination of technology and competence with the human relationship with a professional, who can provide added value through consultancy offered to customers.
A piece of data that is very significant for us is the very high loyalty of our customers and their appreciation of our products, as shown by the high satisfaction rating (4.84 out of 5) among over 1 million answers to our surveys.
What are your international expansion plans? Could you describe the regulatory or technical challenges to becoming a truly global neobank?
In the short term, our plans include further (and more widespread than it is today) consolidation in the Italian market, rather than expanding globally, which, however, we are not excluding as a mid-term objective. We believe that there are still ample opportunities provided by the transformation of the banking industry currently taking place in Italy. Our growth can expand “transversally” in multiple dimensions: adding services in other sectors, expanding towards new targets (e.g. small businesses and private banking customers), increasing distribution channels.
Although we are currently operational within the borders of Italy, it does not mean we are not aiming at moving the borders of worldwide innovation, in order to maintain one of the best practices at a global level. This is also a good opportunity to thank Efma for keeping us always updated on the frontier of international evolution.
How do you see your bank evolving in the next five to ten years? And more generally how do you see neobanks competing in the future banking landscape?
In the coming years we will see the full digitalization process reach its completion, meeting the demand for it, and the transformation of the industry towards a model based on data and digital services. There will be fewer and fewer bank branches but the need for personal interaction with professionals in the sector will remain, and it will be aided by technology. We are heading for some kind of “customized standardization”, which is almost a contradiction in terms, but is something possible through technology, in which simple needs will be delegated to the customer, while complex, higher added value needs will be managed with the help of a professional aided by considerable amounts of technology.
There will also be more and more players from other industries that will enter our sector to cover part of our customers’ financial needs: the banking industry will no longer monopolize banking needs. Conversely, the banking industry will try to expand into other sectors. Simply stated, “Banking not only from banks” and “Banks not only for Banking”.
Open banking will help this process of blurring the edges between industries and will contribute to creating financial ecosystems of producers of services aggregated by different distributors.
To win, it will be essential to retain ownership of the “last mile” of the relationship with the customer: the winners here will be the ones who are able to offer the best user experience.
Put simply, we aim to become the customer’s financial ecosystem in an increasingly interconnected and digital world, without however losing human interaction as a pillar of the customer-bank confidential relationship.