THE DISRUPTION OF TRADITIONAL BANKING: A NEOBANKS REVOLUTION A LITERATURE REVIEW

Abstract

The global financial landscape is undergoing a major transformation with the rise of neobanks—fully digital banking entities that are reshaping conventional banking practices. This review paper presents a comparative analysis of neobanks and legacy banks, focusing on critical dimensions such as technological infrastructure, customer engagement, regulatory compliance, operational efficiency, and strategic adaptability. Through a synthesis of contemporary literature, the paper explores how neobanks leverage agile technologies and user-centric models to offer streamlined financial services, in contrast to the often rigid and infrastructure-heavy operations of legacy banks. The COVID-19 pandemic has further accelerated digital adoption, compelling traditional banks to reevaluate their service delivery models. The study concludes by discussing future trajectories in banking, emphasizing the potential for convergence through hybrid models that integrate the strengths of both neobanks and traditional financial institutions. This analysis contributes to a comprehensive understanding of the ongoing disruption in the banking sector and its implications for stakeholders across the financial ecosystem.