It’s a good time to take a hard look at neobank apps. Is the new banking revolution all that it’s made out to be? And what about the traditional banking incumbents – are they making good on their promise to exploit digital opportunities and catch up? I believe that the next wave is upon us, but when recently asked to elaborate, the traditional route felt insufficient, so I decided to investigate another way, with a bit of non-traditional AI based analysis.
Let me digress to say that one of the greatest thing about Linkedin is that we meet new people who challenge our views. One such individual is Patrick McConnell, author, consultant, IT guru for banks, and believer in facts. Patrick challenges me more on these pages more than anyone else. This article is the direct result of a discussion we had on one of my postings and I am grateful for his contribution and friendship.
There are many ways to look at neobank’s successes. I am only going to look at their apps, getting an idea of what their users are saying and thinking. This approach is limited intentionally; I’m curious to see what they’re actually delivering to their customers.
In the macro scale, a recent report on “brand value” for the UK’s incumbent banks showed a loss of $US 2 billion in brand value. This could be mostly attributed to the neobank Monzo. While this certainly indicates the banking revolution is well underway, the analysis is a) derivative and b) not people oriented. It doesn’t capture the way customers are relating to their new banks.
So to get closer to the client I went directly to the bank app reviews on the Google Play and Apple App stores for the UK. Here are the results for leading Neobanks versus leading incumbents. Note that I say “leading” Neobanks. This is why Atom with only 618 reviews on Apple’s App store was not included, or Tandem with 3,700 reviews. I have also chosen to keep Natwest and RBS separate, even though they are one entity, because they face out with two different apps.
Neobank app ratings compared with incumbents in the UK
Top rating of 5
The neobanks are giving the incumbents a good beating when it comes to designing software that people want to use, and net significantly higher average ratings. Perhaps this is no surprise, but it’s interesting to see how far behind some of the incumbents are. That said, neobanks may struggle as well; N26 seems to be having some problems with its UK app design.
One thing is clear from this table. The number of reviews indicates that when it comes to putting apps on phones, the incumbents dominate the neobanks – only Revolut edges into their range.
Otherwise, this data point is inconclusive. The numbers are tantalizing, but it is difficult to draw any firm conclusions other than a rough relative comparison. The number of reviews doesn’t necessarily correlate to the number of actual downloads. In addition, when tallying the number of reviews, we must remember that some of these apps have had very long lives on the app store and certainly predate the arrival of neobanks.
As for ratings scores, so far the Neobanks appear to be winning, but what do people really think of their apps when they write a review? To find out more, I put AI-driven sentiment analysis to work on the comments available on the Google Play store.
(If you’re not familiar with these programs, in broad terms they measure sentiment (positive or negative) and emotional content, specifically Joy, Anger, Disgust, Sadness and Fear.)
My methodology is limited by the demonstration software I used (https://natural-language-understanding-demo.ng.bluemix.net/), which was not designed to take in large data sets. Given this limitation, I capped the number of reviews for each app to 30 to ensure that each had the same sample size. Note also that only the Google Play store gives access to a large number of reviews on a desktop platform. Apple’s app store only allows reading all reviews on their mobile app. Given these factors, the sampling won’t be definitive, but it nonetheless lends useful insights.
Sentiment for App Reviews on Google Play
Positive sentiment signifies an overall sense of satisfaction
Analysis for the emotion “Joy” for app reviews on Google Play
Sentiment analysis attempts to understand what clients are telling us at a deeper level as they communicate about their experiences with these apps. It’s clear that neobanks Starling and Monzo are not just delivering on their promise to improve banking, but slaying their competition.
But not all of the neobanks are able to deliver. For banks that were supposed to make banking easy, Revolut and N26 both scored fairly negative sentiments from their users. N26 in particular scored low in the app ratings, which correlated with the negative sentiment and low level of the emotion “joy” when compared with other banks. (Which naturally begs the question if there can be such a thing as joy when using a banking app. I think we can agree that with this parameter, relative comparisons are all we can make.)
What is interesting, if not shocking, about this analysis is that not a single incumbent scored a positive sentiment from their clients. I am the first to admit that the emotional content scores of limited samples should be taken lightly. I do think, however, that the more robust sentiment analysis says something worth listening to.
So do neobank app users have more joy? Yes they actually do, but certainly not all of them. In fairness only the top players appear to be delivering on their promises. And just to make things interesting a few of the incumbents also scored well but had high negative sentiments.
While the battle has not yet been won by neobanks there are at least clear signs from both Starling and Monzo that they’re onto something. That they elicit such positive sentiments for their apps, which ultimately define their overall service, is impressive and noteworthy. Incumbents take note, people really can like their bank.
So are neobanks delivering the banking revolution to their users as promised? I think so, though I wish the results were more compelling. Starling and Monzo appear to be on a level unto themselves with both app ratings and user sentiment. The lead that they have on incumbents is significant; they have customers that truly believe they’re doing something different.
Are incumbents going to catch up? No, the leaders have too much of an advantage in this regard, and even the laggards will remain out of reach.
This assertion is based on one more critical piece of data available to us on the app stores: the number of versions of apps that the banks are producing. Neobanks are producing new versions of their apps every few days while incumbents may be on a 2-week to one month cycle. With higher rated apps it’s clear that neobanks aren’t just fixing bugs, but doing what they do best, rolling out new features and better service at a blinding rate. The neobanks are simply going to pull further away with every new version.
Why incumbents can’t catch neobanks. On the Apple App store Starling had 7 Versions in 46 days, HSBC had 9 Versions in 198 days