As the digital landscape in Africa continues to enjoy a steady rise and more young people on the continent are preferring to not be physically present at bank locations before they can carry out transactions, neobanks are beginning to find a home among the people.
Operating solely digitally, neobanks are gaining new customers and making good revenue. Such is the rising adoption rate that statistics predict that the neobanking segment in the largest African nation, Nigeria, would grow by 32.62% between 2022 and 2027. The transaction value in the next five years, the projection says, would hit $6.8 million with at least two million users.
Known to provide digital and mobile-first financial solutions regarding money transfers, utility payments, money loans and more, neobanks such as Kuda, Opay, VBank, and Wise are currently driving the adoption rate among digitally aware Nigerians.
To ensure a smooth service, many Neobanks use virtual accounts to scale payment operations and manage large transaction amounts.
How do neobanks utilise virtual accounts?
Virtual accounts are temporary accounts that act like real bank accounts but are only generated online to easily process and reference transactions. Virtual accounts, despite having a unique account number that can perform payments as real accounts, don’t hold any funds.
To easier manage their daily large transaction volumes, neobanks can integrate virtual accounts into their backend and create a virtual account for each customer.
They can easily use these virtual accounts to sort out and balance funds within a customer’s principal account, and can also use them to identify the remitter of funds and the purpose of the transaction.
Due to their uniqueness, virtual accounts integration will allow neobanks to:
- Easily allocate and reconcile payments
- Reduce the volume of outstanding bank accounts and the overhead expenses they attract
- Open and close accounts faster
Can neobanks provide better service with their virtual accounts to adopt more customers?
Neobanks presently have limited offerings compared to traditional banks, although they offer digital products and services that serve the needs of customers. Unique benefits such as lesser restrictions, smoother UI, faster response times, and lower charges that are beneficial to customers, stand them apart from traditional banks.
There are, however, other interesting strategies for non-conventional banks to adopt as digital innovation evolves and they continue to take advantage of the distrust between Nigerians and traditional banks.
One such strategy for neobanks to bump up their adoption rate is providing customers with multiple virtual bank account numbers and bank options for payments.
What does this mean?
The unavailability of different bank options for paying customers signifies one major drawback for virtual accounts. In cases where inter-bank transactions are threatened by technical network issues, customers would prefer to only use their preferred and trusted bank for payments.
This is where Neobanks can go one significant step further. They can provide customers with the ability to choose from more than one bank option for transactions with their virtual accounts.
This is possible with the integration of Bani’s unique virtual account offering, which will allow neobanks to generate multiple virtual bank account numbers for customers to make payments with different bank options.
What is the significance of this offering for customers?
- Allowing multiple bank options for payments will significantly reduce the chances of failed transactions.
- It will give customers more confidence to use neobanks’ virtual accounts for their day-to-day business activities, hence boosting adoption.
- It will also allow neobanks to easily accept payments and integrate more features into their services.
Summarily, neobanks can provide an even better experience and further drive adoption among potential users by providing multiple virtual account numbers and bank options for customers to carry out transactions.
Reach out to our team today to learn more about our unique virtual account offering and how it can be integrated into your neobank. We will gladly guide you through the process.