The effects of Neobanks on the Irish consumer and barriers to adoption
Authors
Curran, Sean
Issue Date
2024
Degree
Master of Business Administration in Project Management
Publisher
Dublin Business School
Rights holder
Rights
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Abstract
The impact felt because of Ulster Bank’s and KBC withdrawal from the Irish market has left nearly a million Irish customers looking for a new bank and switching their accounts. With fewer options in the market, Irish consumer choice has been further constrained and limited to essentially the two pillar banks. On the face of things, the impending departures would appear to consolidate AIB, BOI and Permanent TSB’s position. Though the trajectory of banking in Ireland is changing, high street banks disappearing from streets in towns, akin to the dot com bubble, neo banks such as Revolut have increased in popularity and are expected to soar in signups, especially amongst the younger generations and are portraying themselves as the future of financial services, with cutting edge digital solutions. Traditional banks are confronting a powerful competitor in the rapid changing world of finance. The shift from traditional banks to neo banks from physical locations to app-based banking has perhaps been advantageous to the younger generation but may be argued it has put the older generation at a disadvantage and hence where the barriers to adoption piece is systemically important to explore. Recent research has uncovered several technology risks and challenges impacting the adoption of technology by the elderly. Approximately 32% of the elderly reported a lack of ICT knowledge as a reason for not using the internet. Additionally, some elderly clients reported that web-based electronic banking is not user-friendly. As a result, technology design should undoubtedly be modified further to accommodate the needs of
elderly users.
An air of superstition and hesitation to change amongst consumers is still seen in the market with neo banks particularly amongst the older cohort, with mounting concerns of neobanks being more susceptible to online fraud and use by criminals to launder money being highlighted by media in recent times. Announcements from key players like Revolut publicly admitting to the discovery of criminal money laundering activity, critiques of their automated compliance
were quick to cite for lack of regulation. The above sets the landscape to review the effects neo banks have on the Irish consumer and potential barriers to adoption. This study employs a quantitative research approach and is underpinned by a review of literature on the topic and research conducted through survey analysis to get to the core of the subject matter and to answer the primary research question. The research uncovered a fragmented market with the 50+ year olds reluctant to utilise the services of neo banks due to technology barriers, where loyalty to traditional banks exists, along with concerns of safety and regulation. The 18+ age cohort are embracing neo banks due to greater flexibility for payments and a view of the pillar banks being antiquated which may be a theme derived from the fall of the so-called Celtic Tiger economy and relaxed regulations and speculative investments. The findings showed a changing and evolving banking system and highlighted the barriers to adoption between age populations and how further work must be carried out by neo banks to not silo certain age groups if further market share is to be gained.
In conclusion the research acts as a barometer for appetite for neo banks in Ireland and indications of future trends which showcases these banks as versatile and playing a role in shaping Irelands banking future.