‘A sea-change’: understanding the advantages of neobanking for business

Banking has undergone a major revolution over the last decade, with the ubiquity of mobile phones bringing a new understanding to the meaning of convenience.

As more and more of our lives have shifted online, the way we engage with personal and business finance has changed – but it may yet change even more. To understand a little more about the changes we are seeing today and what we should expect in the future, Olegs Cernisevs, an expert in the banking sector since 1998 and current CTO of the neobank Blackcatcard, explains the role of neobanking in our contemporary world.

According to Mr Cernisevs, “Neobanking represents a sea-change in the way people interact with banks”. He states that businesses, for the most part, have no need for comprehensive and difficult banking products. Therefore, he argues that although fintech companies are limited in what they can provide, this limitation is also their strength, because what they offer is exactly what both individual and corporate clients need. “We can service payment accounts, issue cards, make payments – and that is absolutely enough to service the majority of customers,” he says.

The real benefit of neobanks like Blackcatcard is the seamless interaction they allow customers to have with their finances, powered by digital technologies. In principle, the products of a bank and a neobank are similar. “What we offer is much the same as traditional banks,” explains Mr Cernisevs. Although “the product is essentially the same. It is in the interaction that the major innovation of fintech lies; how customers interact with us, how we respond, how we present the products in an intuitive, customisable interface.”

To talk more about the advantages of this neobank, we can analyse its service for entrepreneurs. Any businessman can open a corporate account with Blackcatcard in a very simple way. They must first open an account as an individual customer and then become a beneficiary to open a corporate one. It is a process that is done entirely online and remotely, in a single app or web page, and is designed to be as simple as possible, so it is extremely quick and easy. This way Blackcatcard effectively solves what is an increasingly pressing problem for businesses in Malta and Europe.

But what if we are talking about an entrepreneur with goals of expanding into several markets and not developing in just one? Will managing a corporate account remain that simple? In this case, Mr Cernisevs comments that, of course, a business owner may want to set up in different countries, but manage everything from one interface.

“This would be a challenge, probably an insurmountable one, if that person is working with a traditional bank,” says Mr Cernisevs. “But with Blackcatcard, that person can see all their business accounts, all the payments, in one screen, saving them time and energy and allowing them focus on what is most important – their business”.

In addition to these corporate services, Blackcatcard also gives the B2B sector a payment gateway solution. Thanks to this set of corporate products, a company based in Malta, for example, but with suppliers or customers in another country, can therefore be closer to its partners, resulting in faster payment clearance.

“The difficulty businesses are facing to open accounts is ultimately a hindrance to trade and a barrier to growth,” Mr Cernisevs says. “People open accounts in other countries to be able to conduct business more quickly and efficiently. There is a lot of talk about the Single Market. But we need to understand that when it comes to banking, the EU is anything but unified”. Indeed, one of the guidelines of Blackcatcard’s work is to overcome these obstacles, typical of the banking system.

On the other hand, Mr Cernisevs adds that the some benefits Blackcatcard presents are rooted “in the small things”.

For example, the company has been using biometric parameters to verify documentation for years, adding additional layers of security without creating barriers to a smooth user experience.

“Customers don’t know we are doing all this – it’s all under the hood. But by investing in this, we are keeping our customers and their money safe.”

The overriding objective, then, is to provide an intuitive user experience by providing an application that “looks easy, despite having a lot of technology, a lot of verification” going on behind the scenes.

“We work hard to orchestrate all these different processes without letting anything intrude on the simplicity of our product.”

It is worth highlighting that the neobank understands the characteristics of different industries, so it designs its products to meet the needs of all parties involved, i.e. both merchants and customers. For example, ecommerce and gaming customers and merchants bring their own set of requirements, and Blackcatcard is also prepared to provide these merchants with the services they need.

“Many of the major payment systems have a lot of procedures to protect customers, but are perhaps less interested in providing the same protection to merchants,” says Mr Cernisevs.

“Every online seller is unfortunately familiar with customers who abuse the protections afforded to them to engage in what is, ultimately, fraud, such as by claiming that transactions were not authorised.”

Blackcatcard, when integrated in the business payments process, provides a mechanism to avoid all the costs incurred when an entire infrastructure needs to be utilised for such returns.

“Our system can be configured so that when a customer authorises a payment, there is no possibility of chargeback – without lessening any safeguards for customers.”

The system invites customers to confirm their payment using a familiar two-factor verification procedure, minimising friction while ensuring that both parties benefit from a secure transaction.

“So in principle, this is the same as a regular card transaction, but solves the problem for merchants,” says Mr Cernisevs. “I don’t think this will be a majority of payments, but it definitely makes life easier for those businesses that do not want to have a special department working on chargebacks.

“It is very easy to integrate, from the perspective of the business, and just as easy from the perspective of the customers.”

Another advantage of neobank systems like Blackcatcard is the future-forward approach they bring to the integration of products like cryptocurrency.

“Through our innovative platform, we are able to offer an entire payments ecosystem by partnering with licensed crypto providers and including their products in an easy-to-use way,” explains Mr Cernisevs.

“By merging different providers and different services into one product, we are able to offer our customers an integrated payments experience.”

This approach – of absorbing different services within the same application – has a lot of untapped potential, and Mr Cernisevs is confident that it could also, in time, include some form of limited credit capability.

However, he is wary of talk about neobanks taking over the banking space, and makes it clear that there is little scope – or indeed desire – to do so.

“Traditional banks are not interested in small businesses which just want to have payments. They have a large staff, and a lot of people working on credit and other financial products, but when it comes to payments, it’s a service they largely operate because they have to. This is the segment we are taking, and we are able to offer customers a better experience because we are focused on our approach”, claims Mr Cernisevs.

Of course, the fintech industry in Malta is relatively young. But it is noted that it’s at a new stage of development through the collaboration of players with each other. It is within this process that Blackcatcard is developing through extending its list of partners to expand options and embedded services for B2B customers.