For decades, traditional banks have steadily retreated from the street, the market stall and the small business counter. In doing so, they have overlooked millions of everyday clients — micro-entrepreneurs, informal workers and low-income households — creating a vacuum that a new generation of banks has been quick to fill. The rise of neobanks, digital banks and hybrid models is not a technological accident, but a direct consequence of incumbents losing touch with the people they were originally built to serve.
The slow retreat of traditional banking
Conventional banks have increasingly focused their resources on large corporates, institutional clients and high-net-worth individuals. Branch networks have been reduced, relationship managers reassigned, and credit processes centralised. For smaller clients, this has meant higher thresholds, stricter documentation requirements and slower decision-making. In many markets, maintaining a basic account or accessing small amounts of credit has become disproportionately expensive or bureaucratic for the end user.
This shift has been driven by regulation, cost pressure and risk management frameworks that favour scale. Yet the unintended consequence has been a growing disconnect between banks and the communities they once served.
Losing sight of the small client
The “small client” is not a marginal segment. In emerging markets, micro and small enterprises form the backbone of local economies. Informal workers, traders and freelancers may not fit neatly into traditional credit models, but they represent enormous collective volume. By deprioritising these clients, traditional banks have effectively ceded vast markets, especially in Africa, Asia and parts of Latin America.
Without physical presence, local understanding or tailored products, many banks simply cannot assess or serve these customers effectively. The result is exclusion — not by design, but by neglect.
The return of boots on the ground
New banking models have approached the problem from the opposite direction. Neobanks and digital-first institutions have combined technology with local presence, partnerships and simplified onboarding. Crucially, many operate with actual “boots on the ground”: agents, field teams and local partnerships that understand daily cash flows, informal income patterns and community trust structures.
Hybrid banks — blending digital platforms with physical touchpoints — have proven particularly effective. They reduce cost through technology while maintaining human interaction where it matters most: onboarding, education and trust-building.
Banking the unbanked at scale
What traditional banks often view as high-risk, low-margin clients have become the growth engine for new players. By offering mobile wallets, low-cost accounts, instant payments and micro-credit, modern banks are onboarding millions of previously unbanked individuals. Each individual account may be small, but at scale the numbers are transformative.
This approach creates powerful network effects. Once onboarded, clients use services daily — payments, remittances, savings, insurance — generating data, loyalty and long-term value.
A structural shift, not a trend
The success of neobanks and hybrid banks is not a passing trend; it reflects a structural shift in how financial services are delivered. Banking is moving away from marble floors and centralised hierarchies toward mobile phones, local agents and real-time data.
Traditional banks still have capital, trust and regulatory experience. But unless they rediscover proximity to the end user — especially the small client — they risk becoming increasingly irrelevant in the fastest-growing markets of the world.
In the race for the future of banking, those with boots on the ground are no longer the underdogs. They are the ones setting the pace.
Newshub Editorial in Global Finance – 20 January 2026
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