Digital Banking Evolves from Community Banks to Neobanks

When an established US community bank rolled out a new digital banking platform and Greece launched its first fully ECB-licensed neobank in September, community banks got a much-needed boost toward competing more fully with large neobanks.

Digital banking has come a long way since the early app-based services that defined neobanks in the 2010s. Today, thanks to increasingly widespread integration of frameworks like Open Banking and countless fintech tools and services, the industry is moving towards full-fledged platforms offering cash-flow forecasting, unified account management, data-driven insights and more. New research from the Exploring M&A Trends and Challenges in Banking Report, fielded  in April 2025 by TechStudio™, an Energize Marketing® company, and FIS® show that banks, particularly community and regional banks reliant on legacy technology, are using merger and acquisition deals as a strategic lever to modernize, integrating proven technologies, boosting efficiency, and delivering seamless digital experiences. Forty percent cite IT modernization and operational efficiency as critical post-M&A drivers.

First Fed Bank adopts Apiture’s digital banking platform

The platform-based approach to financial services management is a defining characteristic of neobank innovation, as exemplified by First Fed Bank’s recent adoption of Apiture’s digital banking platform in September. The goal is to deliver better customer experiences with enhanced self-service and granular administrative controls, along with unified account views and advanced cash management tools. The update also enables banks to analyze customer behavior and offer personalized recommendations.

Community banks, being smaller locally owned financial institutions, have long struggled to keep up with the larger players, which have been quicker to adopt high-tech digital tools. However, by working with a specialized platform provider, First Fed Bank can incorporate features matching those of large neobanks while still being a traditional financial institution at heart—the sort that many consumers still trust more than digital-only banks. Moreover, the integration of AI-driven insights demonstrates that even small institutions are recognizing the need to adopt advanced analytics to stay competitive.

Snappi becomes the first Greek bank to receive an ECB license

Neobanks—or at least the characteristics that have come to define them—have long been getting the upper hand when it comes to customer experience. However, in an industry where trust and stability are non-negotiable, many consumers fear that the relative lack of regulatory oversight compared to traditional institutions could put their money at risk.

While the European Central Bank (ECB) started granting licenses to digital-only banks with the launch of the Single Supervisory Mechanism in 2014, national authorities have largely been left responsible for licensing and regulation. However, on September 8, Snappi became Greece’s first fully accredited digital-only neobank, officially launching the same month.

Snappi also stands out because, unlike most challenger banks that rely heavily on chatbots for client service, it offers 24/7 live support staffed by people. It’s also fully integrated with Greece’s domestic DIAS payment system, offers a zero-free structure for account maintenance, and a 3% interest rate on deposits up to €1,000. 

Both of these events highlight the converging digital transformation paths for traditional community banks and neobanks—both of which have to walk the fine line between adopting new capabilities and retaining customer trust.