NEO-BANKS VS. TRADITIONAL BANKS: A COMPARATIVE ANALYSIS OF CUSTOMER TRUST AND DIGITAL EXPERIENCE

Abstract

The evolution of financial technology has given rise to neo-banks, digital-only financial institutions that operate without physical branches, offering customers seamless, technology-driven banking services. This research article examines the comparative dynamics of customer trust and digital experience between neo-banks and traditional banks, exploring how digital innovation, security perception, and service quality influence consumer confidence and satisfaction. While neo-banks are celebrated for their agility, personalization, and user-friendly digital platforms, concerns regarding data security, regulatory compliance, and lack of physical presence continue to affect customer trust. Conversely, traditional banks enjoy a legacy of reliability and institutional reputation but often struggle with technological adaptation and user experience gaps. Using a mixed-method approach that combines literature review, surveys, and secondary data analysis, this study identifies the determinants of customer trust in digital banking ecosystems and evaluates how digital experiences shape consumer preferences. Findings suggest that while traditional banks continue to dominate trust metrics due to long-standing relationships and regulatory assurance, neo-banks are rapidly gaining credibility by leveraging transparency, ease of access, and technological innovation. The study concludes that the convergence of trust-building mechanisms and enhanced digital experience will define the future of banking competitiveness, emphasizing the need for a hybrid model that integrates traditional reliability with digital efficiency.