Differences between traditional bank model and fintech based digital bank and neobanks models

The banking landscape had experienced significant changes during the last decade when new types of competitors emerged out of the technological developments and the developments of the fintech industry. The disruption coming from innovations in financial technology has a major impact on the bank business models and consequently, its utilization leads to the creation of technologically advanced bank models. Accordingly, the comfortable position of traditional bank business model has been interrupted with the development of digital bank model and neobank model. While certain similarities may be found between the digital bank and neobank models, significant differences have been identified between these two models and the traditional banking model. Namely, some of the critical differences are located in the level of operational costs, operating efficiency, client acquisition costs, ability to process data and difference in the organizational design. Hence, it could be said that the fintech related business models may take over a substantial portion of the market share from conventional banks as long as they overcome their limitations