Institutions gone digital: how banks and insurance companies are being disrupted

Updated: Apr 8



Recent digital solutions and innovation brought considerable changes to all economic sectors. From marketplaces to single-feature apps, digitalisation allows the simplification of processes and increases scalability through automation. This comes with no exception to traditional institutions – in this case, we will talk of banks and insurances – who in spite of developing modern operations, can find themselves disrupted by avant-gardist ventures.

Neo-Banks: changing the way we open bank accounts one phone at a time

You have heard of these companies or surely have an account with them: Revolut, N26, Monzo, Quonto… As an individual or organisation, it takes less than 10 minutes to start accepting money or make transfers. What makes them so powerful? Being 100% online, of course. No more physical branches, reducing costs drastically. Centralised and optimised processes, accelerating market traction. Accessible anywhere at any time, changing the way we think of banking. The other main advantage over traditional banks is that these fintech companies give back to their clients a sense of financial freedom. This is done essentially by erasing transfer fees, reducing FX costs and above all, what customers mindset requires: immediate transaction settlement.

What started as a simple and efficient bank account opening offering, these companies now offer additional services to become a centralised one-stop-shop. You can now get loans through N26, buy stocks on Revolut or gain interest from a savings account on Monzo. Hard for traditional banks to keep the pace with such instantaneous and user-friendly services at the reach of the client’s finger. Some existing features are already ahead of conventional banking services, such as cryptocurrency trading and more recently commodity trading (Revolut taking the step with the possibility to buy and sell gold). No doubt neo-banks will keep adding new functionalities to their offering - consolidating their status of “all-in-one” solution - and unlocking advantages which used to be only accessible to privileged customers.

Digital insurances: the new neo-banks?

They are following a similar product-to-market scenario only at an earlier stage than fintech companies. Insurtech businesses are focused on standalone services such as Alan, a health insurance service provider. Born in Paris, they claim that the last French health insurance licence granted before them was in 1989. All their activities are online: you subscribe to their services through a mobile app, it takes less than 10 minutes to fill the form and their top-notch customer service is accessible by phone, mail or chat. All the benefits are listed on the app for enhanced transparency. And if you want to file a claim: all you need is to take a photo of the required documents, just as much as you send a caption of your dentist’s invoice when requesting a reimbursement. Sound like familiar processes?

Taking a step further, digital company Wefox (which surpassed the 1 billion dollar valuation mark) centralises all of your most important insurance contracts in life. With just a click or tap, you can get quotes, compare and subscribe to health, car or property insurances. Now the question is: will these “neo-insurances” be able to thrive as much as neo-banks or will they get caught up by them, who can be just as agile in addition to having a large customer base? Maybe we’ll see business units or M&As from big guys like N26, or traditional insurance companies might wake up and lead the way.

Fintech and Insurtech have bright days ahead. It is only the beginning and there is still a lot of room to explore different markets, should it be younger generations or Boomers with untapped potential, but also niche markets such as healthcare. Such new tech companies provide non-correlated and appealing investments opportunities for dedicated funds or diversified portfolios. If you wish to know more about how to invest in the VC space or reach a global customer base (including the U.S.), please contact us at info@altariusam.com.

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