Unpacking Neobanks for SMEs — Chapter 6 | Branding
Unpacking Neobanks for SMEs is an article series by Arival Bank analyzing the SME neobanking landscape from the lens of the user experience journey.
About Arival Bank
Arival Bank is an award-winning digital banking startup for international startups, freelancers and small businesses that are typically underserved by traditional and digital banks. Arival Bank partners with some of the hottest fintechs on the market to deliver a full suite of financial products and tools hand-picked to help you run your business.
If you haven’t done so, do check out our previous chapters here.
Chapter 6: Branding
Branding matters for every business, as it represents its promises to its customers and forms its identity. In a market as saturated as neobanking, with banking functionality that at times may be perceived as indistinguishable, crafting a strong and distinct brand matters even more because it enhances the quality of the user experience. In this chapter, we explore:
- What are the elements of a strong brand?
- How are SME neobanks branding themselves?
- Branding for scale.
Branding and Engagement for SME Neobanks
We compiled the SME neobanks’ target users, mission, and user engagement channels in the tables below. We will refer to the displayed information throughout the chapter.
Disclaimer: All information displayed are merely our own observations after garnering information from the neobanks’ websites, or listening to comments made by their representatives in podcasts or interviews. They are not official company statements made by the neobanks.
The Foundations of Good Branding for Neobanks
Branding is not merely about having a nice looking logo, a clean looking webpage, or the design of your marketing materials. It is the foundation of the user experience because it provides the set of expectations the user has for the product. Essentially, the brand is the user’s perception of the neobank.
Crafting a strong brand stems from a few key elements, which we will discuss in detail. These elements should be conceptualized in the below order from top to bottom.
- Story and Mission (Why was the company started?)
- Values (What beliefs drive the company?)
- Target users (Who is the product/service for?)
- Positioning (How is the value proposition differentiated from the competition?)
- Design (How should the brand identity be visualized?)
- Voice (How is the neobank communicating to users and the public?)
- User Engagement (How is the neobank building community and engagement?)
Story, Mission, Values
The neobank’s story and mission can be garnered from one simple question: Why did it all start?
That is the foundation of the brand identity: the problem that the neobank is trying to solve. Penta states its founding story very clearly here.
Our founders, Lav, Luka, Jessica, Aleks, Igor, and Sir, all serial entrepreneurs, many times had terrible experiences with their business banks. After the brief research in February 2016, they found out that thousands of businesses all over Europe were frustrated with their business bank as well… It was clear that the majority of banks just didn’t care about small businesses or startups. This was a turning point when they decided to tackle the problem and build the best business banking solution for SMEs.
We see that the story of Penta was born out of frustration with the traditional business banking landscape in Europe. This story sets a perfect backdrop for the company’s mission: “On the mission to disrupt business banking in Europe and worldwide.”
The story and mission are important because they reflect the neobank’s culture and goals. They define its purpose for existing and reflect the company’s values. Reading Penta’s story and mission imbues the reader with a sense that this is a forward thinking neobank that seems to have a genuine desire to build an awesome business banking experience.
These values help with customer acquisition especially if they resonate with the target customer base. There may be many other small businesses that have similar problems with their banks and identify with the Penta story.
Potential users derive the neobank’s values from the way it portrays its story and mission. NorthOne’s story is that small businesses and freelancers have been left behind by big banking, and NorthOne wants to “make the financial system more inclusive”. The values being brought forward in the user’s mind is that of inclusivity and accessibility. These become their expectations of the product.
The story, mission and values of a neobank build a foundation for creating a connection with users by creating positive expectations on how the product can help them. Delivering on those expectations will help build long-term brand loyalty.
Target Users and Product Positioning
The neobank’s target customer must be identified before delving into the nitty gritty of designing the brand. Who is the product for? What are their goals and values? The answer to these questions should inform how the company’s product should be positioned relative to competitors.
Let us take Wise’s example. Their target customer is the modern business owner. They can own a Shopify store to sell their own products, or run a design agency. These are entrepreneurs who are ambitious risk takers. They are productive and want to be paid quickly. Therefore, they want the most forward thinking tools and products to help them grow their business.
Identifying these key traits of their target customer base allowed Wise to brand and position their product as one that can positively add value to these business owners. They understood that positioning the Wise business bank account as disruptive and efficient would appeal to their users. They built their own payment rails, Instant by Wise, that allows users to transfer money directly to Visa debit cards instantly. They advertise their supposed ability to open accounts in less than 90 seconds.
Doing all of these helped Wise position their product to be one for modern business owners.
The key takeaway here is that the positioning of the product and the target customer profile’s needs and values has to be aligned for a successful brand.
Depending on the state of the competitive landscape, it might be a good idea to have a narrow target user persona.
Casting a wide net to target “small businesses in Europe” may be a difficult proposition given that there are so many other competitors that claim to be the best small business neobank as well. In Chapter 1, we talked about segmentation, i.e. identifying and targeting sub-segments. This is especially important for the future of the neobanking landscape because segmentation is newer way in which neobanks can compete with established ones who have claimed the narrative of “serving the underserved small businesses” for themselves.
Design
Understanding the target customer and your product positioning is essential for building the foundation for your design. The design of your brand identity, from the logo and interface to font choice, is a vehicle for representing neobank’s product positioning. If a neobank like Wise wishes to brand their business bank account as disruptive and for modern digital entrepreneurs, their design has to reflect that.
This comes from an intricate brainstorming and crafting of the neobank’s design assets, which are the tangible elements that will determine how its brand is perceived.
We will not be diving deep into the ins and outs of choosing the right font or colors. Rather, let’s take a look at some of the SME neobanks’ web pages.
As we have mentioned earlier, Wise prides itself on being “modern”. A first look at their webpage shows a distinct brand identity that tries to reflect the forward thinking nature of product. The bright red screams of passion, youthfulness and ambition. The simple, clean and uncluttered web design feels dynamic and modern.
Tide and Aspire’s brand identity are different because they want to portray a different set of values. Tide’s blue color scheme, together with a more basic web design, makes the brand appear more stable and trustworthy. This helps them appeal to a wider demographic of businesses. Aspire is similar in that regard, being a pioneer in the SME neobanking space in Southeast Asia. These two neobanks have “blander” designs because they want to appeal to a larger customer base than Wise.
Getting the brand design right is crucial in improving the user experience. NorthOne underwent a rebranding towards the end of 2020. Here are screenshots comparing their old and new webpages.
NorthOne’s new design looks somewhat more conservative upon first glance. Their main target customers are what they term “the backbone of the American economy”, i.e. underserved small businesses in traditional industries like retail, restaurants, real estate and beauty or health services. This new design helps align their positioning as a dependable banking partner for these small businesses, portraying the values of being a reliable “backbone” with its less flashy dark brownish colors and old-fashioned Serif font. NorthOne communicated that the new brand design was meant to “improve user experience”. That was done by aligning the design with the values of their target user persona, as well as their product positioning.
Voice
An often overlooked part of branding is voice. Brand voice refers to the tone of communications, be it to the public or from customer support representatives to users. It is the persona any content or communications take on. This is important because the way a company communicates impress upon people the culture and values that it upholds.
An example of a brand voice in action is Holvi. Their product offering is tailored towards self-employed individuals, which they call “Makers and Doers”. The value proposition is based around alleviating the stress of these freelancers, helping them manage their finances and work-life balance more effectively.
The word “balance” is used many times in the their blog posts and webpage copy. This is not a coincidence. Holvi recognises that a freelancer’s life can be hectic, lacking boundaries between personal and work time. Managing finances can only add to the hassle, and that is where Holvi wants to step in to add value by giving time back to the freelancer.
This subtly impresses upon the user that Holvi possesses a culture of mindfulness (their zen-like web design helps too) and empathy for the struggles a freelancer faces. Holvi’s brand voice helps to build a relationship of trust with the user by empathising with them.
They even wrote an open letter in their blog to freelancers, which ended with the following words.
There will be hardships, sure. There will always be hardships. This life doesn’t let anyone off easy. But there will be meaning in the suffering you endure. Obstacles you encounter will challenge you to grow. Each sacrifice will build character, knowledge, skills. And there will be purpose.
Oh, there will be purpose.
And it will be yours.
Sincerely,
Holvi
If you are a freelancer, hopefully that’s something you can resonate with.
There are infinite types of brand voices. Holvi’s example serves to show how one can be built with empathy. Many other neobanks have different ways of crafting their own.
User engagement
User engagement is an integral part of the customer experience. Every neobank has some variant of core banking functions and perhaps some 3rd party integrations that assist the user in managing their business finances. A neobank that engages its users is one that actively builds a sense of community, providing additional value beyond the basic banking account.
In this regard, we believe that SME neobanks have much to improve on. Almost every one of them has the basics: a simple blog with business tips, maybe some customer stories showcasing their lives as entrepreneurs. Few go beyond these base levels of user engagement to differentiate themselves.
Mercury stands above its competition, having multiple channels tailored towards engaging its target users: tech startups.
Series Tea is a podcast series featuring successful entrepreneurs and investors that focuses on topics that are very important for many scaling tech startups: product market fit, raising money, pivoting through a recession, etc.
Mercury Raise is a platform for connecting startups raising seed rounds with a network of investors.
These two user engagement channels add a ton of value for startups using the Mercury bank account. The solidarity built by Mercury in such endeavors go a long way in instilling brand loyalty.
Many other neobanks should follow in Mercury’s example and put their creative hats on to think of ways to engage their user bases. Writing small business tips on the blog page is not going to cut it anymore when everyone else is doing it too.
Branding for Scale
Having a strong and engaging brand means that users resonate with the values that the neobank puts forth alongside its key value proposition. This helps the neobanks scale its customer acquisition because it enables its marketing efforts. It is easier to market when there is a consistent brand identity that resonates with a target customer market.
This ultimately impacts the bottom line positively because more engaged users will use the neobank’s services more. We need only look at the UK consumer neobank battleground for an example. Revolut earns more revenue per user compared to Monzo and Starling because a higher proportion of its users are active daily.
There has been a lot of noise in the industry around the concept of blitzscaling. The term refers to the strategy of grabbing marketshare so quickly that competitors would not be able to retaliate. It is cost-inefficient as it relies on the brute speed of scaling.
You can have millions of users by burning marketing money (typically investor capital) and pricing at a loss, but that is not sustainable. How many of those new users will be actually be engaged and active? How many will be ambassadors for the neobank’s brand?
There is no doubt that brand loyalty is a foundation for successful unit economics. Neobanks should not be pressured to scale if they have not gotten their branding right especially in a post-pandemic environment where capital may not be cheaply available. Instead, we believe that scaling profitably requires an authentic brand and clear value proposition for target users in the current competitive neobanking landscape. That means obsessing over the key elements of branding that we have talked about in this article.
Conclusion
We have talked about the many elements of building the foundations of a strong brand: Story, Mission, Values, Target Users, Positioning, Design, Voice and User Engagement. A successful neobank would have conceptualized and aligned all of these elements to make a consistent brand identity.
Ultimately, neobanks are handlers of the money experience. Potential customers have to trust them in order to put their money with them. Without physical branches or a long history of banking, neobanks have to earn that trust. That starts with branding. There will be a subconscious association with the thoroughness and thought that went into crafting a consistent brand identity. This will translate into the trust the user places on the neobank to hold their money.
Finally, a brand should not be just about how the company appears to users. The values it portrays should be in the company’s DNA. This means the team has to be invested in the brand’s values and feel a sense of ownership. This begins with a manifesto and a common consensus on the company’s values. If that cannot be set in order, it will be a tall task to build a consistent and strong brand identity from its varying elements.
We hope you learned more about the ins and outs of branding for SME neobanks. At Arival, we are building a kick-ass team of collaborators that strongly believes in making the dream of an unstoppable fintech bank a reality. If you think you have what it takes to join a diverse team of passionate problem-solvers, we want to hear from you!
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official views of any of the featured companies. This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. Assumptions made within any analysis are not reflective of the position of any featured company, but are instead observations made by the author.
