How digital banking supports bank marketing

Most of Europe’s biggest banks are traditional banks. But Europe’s fastest growing banks are neobanks. While Banco Santander added 4.5 million new customers in 2023, Revolut (a neobank) added 12 million new customers. Of course, Revolut (which has 38 million customers) will have to continue growing at this pace for many years to match Santander’s 164 million customers.

Many traditional banks will be worried about the rapid rise of neobanks. While 55% of Europeans still bank with only one institution, the landscape is shifting - 25% Europeans now have an account with a neobank, and a third of those people use it as their primary bank. Yet there’s still time for traditional banks to adapt. A 2024 Kearney report shows customers are increasingly using both banking models simultaneously - attracted to neobanks’ digital features and investment options while valuing the trust and security that 45% cite as reasons for staying with traditional banks.

Traditionally, bank marketing has relied on a network of local branches, print advertising, direct marketing and expensive TV campaigns. But in recent years, the evolution of digital banking has fundamentally changed how banks connect with customers, reducing costs, improving targeting and enabling personalised experiences within the product itself.

So how have neobanks leveraged digital banking to grow at such a rapid pace? Can traditional banks emulate their approach? And which model will ultimately prevail, or will the future of banking blend elements of both?

Traditional banks are larger businesses that have a smaller pool of customers to attract. But it’s not much of an oversimplification to point to three key reasons neobanks are growing at the pace they are:

• More cost-efficient product offering: By offering an easily-scalable digital-only service, neobanks can direct investment towards product innovation and customer experience instead of setting up new branches.
• More personalised customer experience: Neobanks can adapt their digital offerings to offer a more personalised customer experience based on capturing and leveraging detailed customer usage data.
• Specialised IT expertise: Neobanks have the expertise and modern infrastructure to excel at digital technology, allowing them to add new features quickly and flexibly. G+D Netcetera can help traditional banks build similar digital capabilities.
• More cost-effective bank marketing strategy: Digital marketing is typically affordable, highly targeted and has a streamlined signup journey.

Compare this to a traditional bank, which has to maintain expensive branches, offer a universal customer experience and often rely on expensive and poorly-targeted traditional media channels as a marketing strategy.

Traditional banks can find it difficult to build an effective digital banking offering. Retrofitting legacy technology systems and lacking in-house expertise means that doing so can be extremely time consuming and expensive. But traditional banks do, fortunately, have options.

While they may not have the in-house expertise to build their own competitive digital banking app, or they may not want to invest the time and money putting that expert team together, they can still offer a market-leading digital banking product by partnering with a third-party solutions provider like G+D Netcetera.

Let’s look at how partnering with a third-party digital banking solution, rather than developing an in-house solution, can help a traditional bank fuel future growth.

The downside of encouraging customers to sign up to banking services in-branch is that there’s a disconnect between a customer seeing an ad and acting on it, which adds friction to the customer journey. Digital banking, on the other hand, can simplify this journey to as little as a single click - the potential customer can click a digital ad on their mobile phone and be directed to an app store to download the bank’s mobile app.

Digital banking enables traditional banks to shift away from expensive traditional marketing channels to more targeted and measurable digital campaigns:

• A customer may search for a specific product using Google, discover the bank’s matching web page, decide that the offering meets their needs, and seamlessly download the digital banking app to open an account.
• A customer may hear a bank’s sponsored ad while listening to a podcast, click the link in the show notes and download the app in a few clicks.
• A customer may see a bank’s targeted ad while scrolling through their social media feed, click to visit a web page with more details, and click another link to download the app to their mobile phone.

While TV ads and billboards are effective at reaching a broad audience and increasing brand awareness, digital marketing allows banks to reach potential customers at times they’re more likely to consider signing up for the bank’s services.

One of the key benefits that banks can promote in their marketing is, instead of simply value for money, the overall value and impact of digital banking.

In the UK it costs around £590,000 per year to run a single bank branch. And while traditional banks spend around £170 each year to service each customer, neobanks spend as little as £20. These cost savings translate to tangible customer benefits through better rates, lower fees and more convenient features.

Digital banking solutions can drastically improve the ‘time to yes’ - the speed at which customers receive approvals for loans, account openings and other services. This faster decision-making can create a more satisfying customer experience while improving conversion rates and sales performance.

Integrating a third-party digital banking app costs a fraction of the amount required to set up a bank branch, and it can serve a far greater number of customers. This greatly reduces the per-customer service cost and allows banks to invest more aggressively to capture market share, since the lifetime value of each customer becomes more profitable.

Additionally, digital banking solutions include features that enhance both efficiency and customer experience. For example, G+D Netcetera’s AI Banking Assistant supports customers by answering their questions within the app, without the involvement of a human customer service operative - thereby making it simpler and faster to access the information they need.

Digital banking allows traditional banks to market themselves based on the same personalised experiences that customers have come to expect from neobanks.

For example, marketing messages can highlight how digital banking apps can capture and analyse a customer’s usage patterns, preferences and needs, and tailor its digital experience in real time - unlike high street branches, where very little is known about the visiting customer and the service options available to the branch staff are limited.

Marketing campaigns could also highlight how a digital banking app could learn through the customer’s spending behaviour that they regularly have money left over at the end of the month, and use that insight to present a suitable savings product and help the customer make the most of their money.

Digital banking apps can also market their range of smart features that traditional bank branches can’t offer. 

Focusing on personalisation-focused marketing messaging is an effective strategy - 84% of people in Germany use digital banking to manage their money, while just 32% of customers visit their branch each month. And it boosts satisfaction and loyalty, too - just 52% of Germans used digital banking services in 2019 compared to 84% today.

Additionally, digital banking offerings can allow marketing campaigns to be tailored for different segments. For example, G+D Netcetera’s Kids Banking app has a tailored design and customised features that are more suitable for a young person’s (and their parent or guardian’s) needs.

While many traditional banks have stayed true to a tried and tested formula, the popularity of neobanks has grown rapidly thanks to lower operating costs, personalised customer experiences and cost-effective marketing. If traditional banks are to compete as effectively, they must consider digital banking as a solution.

But traditional banks often face significant hurdles developing their own digital banking solutions. Doing so requires technical expertise and navigating complex legacy systems which can be costly and time-consuming.

As many customers continue to use both traditional and neo banking services for different needs, the consumer finance market could be evolving toward a hybrid banking model. Traditional banks that add digital capabilities while highlighting their established trust and comprehensive range of services will put themselves in a competitive position.

Digital banking solutions give traditional banks powerful marketing tools. They can help enhance the personalisation, efficiency and innovation of neobanks alongside their own stability, regulatory expertise and established customer trust. And while this digital-first approach will help reduce acquisition costs, it will also help enable more precise targeting, streamlined customer journeys, real-time campaign optimisation and data-driven insights that traditional marketing channels can’t match.

If your bank is interested in partnering with an experienced third-party provider, speak with our experts to see how G+D Netcetera could help.