UK neobanks, once hailed as revolutionary disruptors set to redefine the financial landscape, are now under scrutiny, with many industry commentators questioning their long-term viability.
So what should comms execs in finance know? To find out, we analysed 773 articles published in top-tier UK outlets in the last 12 months. Here are our main findings:
1. Business viability becomes a major reputation pain point
- What’s going on: In contrast to our previous analysis from 2021 where the potential for disruption was the most significant topic surrounding neobanking, our current analysis has revealed a significant shift in the narrative over the last two years. The primary focus now lies on the business viability and profitability of neobanks.
- Why it matters: Media scepticism about the profitability of neobanks can significantly impact their reputation. This is because profitability is often seen as an indicator of stability and longevity in the banking industry, and a lack of it can be construed as a sign of risk or instability. The persistent narrative of potential failure can erode trust and cast doubt among customers, potential investors, and the broader public. As trust is a fundamental cornerstone of banking, any threat to a neobank’s reputation can hinder its growth and market share, particularly in an industry where many are still getting accustomed to the concept of digital-only banks.
- What PR and comms should do: By strategically leveraging public relations to broadcast their profitability milestones, neobanks can counter media scepticism, reshape public narratives, and enhance their organisation’s reputation and influence in high-profile media outlets. Good examples of this include neobanks like Starling, Revolut, and Monzo, which have widely publicised their profitability milestones, using these moments as opportunities to reshape narratives and highlight their robust growth trajectories. The media spotlight was particularly on Starling which recently announced its first annual profit and effectively utilised this opportunity to reshape public perception about its business viability, becoming the most influential challenger bank in our media analysis.
- How Commetric can help: By blending proprietary AI with expert human analysis, Commetric can support PR and comms professionals by providing in-depth insights into the ongoing narratives and sentiments prevalent in the media, enabling them to strategically tailor their communications to address areas of media scepticism.
2. Big Tech invasion: a new PR battlefield for neobanks and traditional banks
- What’s going on: Big Tech companies like Google and Apple are entering the banking sector, leveraging their customer bases, technology capabilities, and brand recognition. For instance, Apple‘s recent announcement of its Buy Now Pay Later (BNPL) service, Apple Pay Later, has generated significant media attention. The media narrative often juxtaposed Apple‘s entry into the BNPL space against neobanking players like Zopa and Klarna. Journalists noted that while these neobanks have built their reputation in this area, Apple‘s global brand recognition and extensive user base could pose a significant challenge.
- Why it matters: This introduces new challenges for neobanks and traditional banks. For neobanks, the narrative of innovation and disruption they’ve carefully cultivated could be overshadowed by the likes of Apple and Google. On the other hand, traditional banks face an intensified challenge as they now have to compete not only with agile, digital-first neobanks, but also with Big Tech firms venturing into financial services.
- What PR and comms should do: Neobanks need to further distinguish themselves, emphasise their unique offerings and values, and actively engage their target audiences. Their PR strategies might need to include more focused storytelling around their customer-centric approach, agile business models, and how they are different from both traditional banks and Big Tech. On the other hand, traditional banks might need to reassess their PR and communication strategies, focusing on leveraging their long-standing reputations, regulatory experience, and deep-rooted customer relationships. They may need to emphasise their expertise in managing complex financial services, their commitment to privacy and security, and their resilience in the face of changing market dynamics.
- How Commetric can help: Our work with leading financial services companies enables us to map out the changing media landscape shaped by neobanks and Big Tech, helping organisations to strategically position their unique offerings, leverage their reputations, and engage their target audiences effectively.
3. Dancing with the disruptors: how traditional banks are turning the tide
- What’s going on: The media debate often focuses on how traditional banks, long considered the bedrock of the financial industry, are adopting digital strategies to compete with the rising tide of neobanks. In this context, Goldman Sachs emerged as the most influential traditional bank in terms of media impact:
Journalists have noted Goldman Sachs‘ move into the digital banking sphere with the launch of Marcus, its online bank, perceived as an attempt to capture a piece of the rapidly growing digital banking market. Similarly, the media spotlight has been on JPMorgan‘s launch of its digital banking brand Chase in the UK. In the meantime, HSBC countered neobank challenge with mobile business banking, while Barclays bolstered its flexible banking strategy as it reduces its branch network in response to changing customer needs.
- Why it matters: The reputation of traditional banks in the digital banking era is critical, as it directly impacts their ability to retain existing customers and attract new ones in an increasingly competitive market. Given the media scepticism around neobanks’ business viability, traditional banks have a unique opportunity to position themselves as stable and reliable alternatives that blend modern digital offerings with proven financial expertise and long-standing customer trust. By emphasising their solid regulatory experience, enduring customer relationships, and their resilience in managing financial crises, traditional banks can promote their brand as a more secure and dependable choice in the evolving banking landscape.
- What PR and comms should do: To keep pace with neobanks and Big Tech, traditional banks need to vividly communicate their digital transformation journeys, positioning themselves as forward-thinking institutions ready to meet the demands of today’s digital-savvy customers. This requires more than just launching online services; they need to underline their commitment to a seamless, customer-centric digital banking experience, similar to what neobanks offer. Moreover, they need to leverage their longstanding brand equity, capitalising on their history, stability, and trust they have cultivated over the years. This narrative can appeal to customers seeking the innovation of neobanks but with the reassurance of a traditional banking structure.
- How Commetric can help: Commetric’s media analytics can help PR and comms executives at traditional banks identify media white space to strategically position their institutions as customer-centric, trustworthy, and resilient in the evolving banking landscape.