The Impact of Neobanks on Traditional Retail Banking: A Case Study of GTBank, Ogun State
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Background of the Study:
Neobanks, which operate exclusively through digital platforms, are emerging as disruptive forces in the financial services industry. In Ogun State, GTBank is experiencing increasing competition from these agile, technology-driven entities that offer streamlined, customer-centric services at lower costs. Neobanks leverage cutting-edge technologies such as cloud computing, artificial intelligence, and data analytics to provide a fully digital banking experience that appeals to a modern, tech-savvy clientele (Ibrahim, 2024). Their innovative business models bypass the need for physical branches, enabling them to offer lower fees and faster services, which in turn attract younger consumers and underserved segments. The rise of neobanks challenges traditional retail banks to rethink their operational strategies and customer engagement practices. GTBank is forced to innovate and enhance its digital offerings to remain competitive in an increasingly digital market environment. However, traditional banks have the advantage of established customer trust, extensive branch networks, and comprehensive product portfolios, which neobanks may lack. This study examines the impact of neobanks on traditional retail banking structures at GTBank in Ogun State, exploring both the competitive pressures and potential opportunities for collaboration. It investigates how neobanks influence consumer expectations, service standards, and market dynamics, while also assessing the strategic responses of traditional banks to maintain their market share (Okafor, 2023).
Statement of the Problem:
The emergence of neobanks has created a disruptive environment that challenges the traditional retail banking model. GTBank in Ogun State faces intense competition from digital-only banks that offer faster, cheaper, and more user-friendly services. This disruption has led to concerns about declining customer loyalty and market share for traditional banks. Additionally, traditional banks struggle to match the agility and cost efficiency of neobanks due to their legacy systems and entrenched operational structures. The pressure to innovate rapidly while maintaining regulatory compliance and customer trust poses a significant challenge. Furthermore, customers are increasingly expecting seamless digital experiences similar to those provided by neobanks, forcing traditional banks to invest heavily in technology upgrades, which can be costly and time-consuming. These challenges underscore a critical gap between the evolving demands of the modern banking customer and the capacity of traditional banks to adapt. This study seeks to investigate the impact of neobanks on traditional retail banking practices at GTBank, identify the specific areas where traditional banks are vulnerable, and propose strategies to enhance competitiveness in a digital-first market (Chinwe, 2023).
Objectives of the Study:
• To assess the impact of neobank competition on traditional banking operations at GTBank.
• To identify the areas in which traditional banks face challenges in matching digital-only service offerings.
• To recommend strategies for traditional banks to enhance their digital capabilities and customer engagement.
Research Questions:
• How do neobanks affect customer expectations and service standards in retail banking?
• What challenges do traditional banks like GTBank face in the digital era?
• What strategic measures can traditional banks adopt to compete effectively with neobanks?
Research Hypotheses:
• H₁: Neobanks significantly influence customer perceptions of service speed and cost efficiency.
• H₂: Traditional banks that invest in digital transformation experience improved customer retention.
• H₃: Strategic integration of digital innovations enhances competitiveness against neobanks.
Scope and Limitations of the Study:
This study focuses on GTBank’s operations in Ogun State, analyzing customer feedback, market trends, and digital performance data. Limitations include rapid technological changes and potential biases in customer perceptions.
Definitions of Terms:
• Neobanks: Digital-only banks that operate without physical branches.
• Traditional Retail Banking: Conventional banking services provided through physical branches and legacy systems.
• Digital Transformation: The adoption of digital technology to fundamentally change business operations.
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