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What AI-based Sentiment Analysis Can Tell Us About Fintech and Neobanks

Over the past decade, fintech firms have set out to reinvent banking and financial services. One major market trend is the growth of the neobank, a new type of bank that is 100% digital. Instead of using physical branch networks, neobanks service customers using software and applications, allowing customers to transact on their mobile devices and providing accounts with much lower fees and more features. This trend to digitizing banking and the exchange of value is a natural progression of the information revolution to embrace digital.

Fintech is an exciting market that continues to grow. According to Gartner, global fintech market value is expected to reach $309.98 billion at a CAGR of 24.8% through 2022. Neobank adoption has been slow since the first ones appeared in Europe in 2012, but that’s starting to change. The rate of adoption began increasing in 2016 and recent market research has shown the following:

  • The number of clients at top neobanks in Europe has more than doubled each year since 2016 (source)
  • 5 million Americans (8.8% of total US population) intend to open a digital-only bank account in the coming months (source)
  • In 2018, the neobank market accounted for $18.6 billion, with a 46.5% CAGR projected for coming years (source)

To understand market sentiment surrounding the neobanks portion of the fintech market, traditional companies undertake market surveys of potential neobank customers. Surveys, as all market researchers know, are a valuable research tool, but the media also creates and influences perception, which begs the question: What is the media perception of neobanks?

Media Perception and Sentiment: Neobanks

To answer that question, the Rehinged.AI platform analyzed 4,269 news articles discussing neobanks. In this instance, we’re analyzing news content for “trust” over time, specifically from Q4 2017 through Q4 2019.

Our sophisticated natural language processing and linguistic algorithms can interpret more accurately how the media is perceiving neobanks. This is because the Rehinged.AI platform measures sentiment at the entity level, whereas existing industry-standard AI tools calculate overall sentiment for an entire body of text (such as an article).

Here’s the result of our AI-platform’s analysis of how the media is measured for “trust” when discussing the term neobank:

Neobank - Fintech - AI Market Intelligence Trust


What does this chart tell us about the level of trust in neobanks? Considering zero as a neutral score, over the past two years we’re seeing an increase in trust from considerably below zero to nearly neutral. That’s a meaningful trend towards more trust.

Here’s a similar analysis for the term “acceptance”:

Neobank - Fintech - AI Market Intelligence Acceptance


This chart tells us the following:

  • For the 4,269 news articles analyzed over the past 24 months, the overall tone of acceptance for the term “neobanks” has increased. While the acceptance has increased, it moved from slightly negative to neutral on acceptance to a hair above neutral.
  • Acceptance has increase to slightly positive. Seeing this trend for both acceptance and trust tells us neobanks are being written about more favorably and are getting closer to a broad market acceptance.

 

Media Perception and Sentiment: Traditional Banks

We can also compare the term “neobank” to three individual neobank brands and three major financial institutions for “trust.” Here, you can see the significant drop in trust regarding Wells Fargo (due to their ongoing scandals).

Wells Fargo - AI Market Intelligence Lack of Trust

When we view the trust for Varo, a neobank brand in the US (available at thousands of Green Dot Network ® locations nationwide, including Walmart, CVS, Rite Aid, Walgreens, 7-11, Dollar General, Family Dollar, Albertsons, Safeway, Kmart and Kroger), we see that trust spiked in Q219, which is a positive sign that overall trust is increasing.

Neobank - Fintech - AI Market Intelligence Varo

 

Takeways

 

So what's the upshot? Using our advanced NLP-based sentiment analysis of thousands of news media stories, we are able to observe:

  • a general trend of rising trust and acceptance sentiment for neobanks as a segment, though the overall trust and acceptance scores are still neutral;
  • a sharp drop in trust sentiment for traditional bank brand Wells Fargo related to public disclosure of unethical business practices;
  • a sharp rise in trust sentiment for the neobank brand Varo and the traditional brand Bank of America during the Q2 2019, and for neobank brand Moven in Q3 2019.

 

Test Drive It Yourself

Here is the interactive view attached to our real-time feed.

Hover over the trend lines or click on the brand names on the X axis. Create a demo account here to change the variables and view the articles that comprise each data point. You can also view more live examples. We’re also planning on releasing a comprehensive Fintech Market Intelligence Dashboard later in the year, so creating a demo account will get you on the early-access invite list.

From inside your demo account, you can:

  • Use the top controls to change the perception metrics, timeframe or zoomed view
  • Click on a point to view the articles on the right
  • Click on names at the bottom of the graph to add or subtract them from your view

 

Rehinged.AI Platform Capabilities

This is just one example of how we use the Rehinged.AI platform to gain market intelligence. We’re able to point our proprietary AI platform at different content sources to interpret different objects and perception metrics. This provides answers to many of the questions that marketing executives, product managers or the C-Suite have over the course of a year.

Customer use cases include:

  • Brand perception
  • Trend monitoring and evaluation
  • Product comparison
  • Brand monitoring
  • Product feature importance
  • Market acceptance
  • Competitor monitoring