Neobanks are financial institutions that only conduct transactions via online methods. The offerings of a neobank usually have many limitations and difficulties compared to traditional banks. The compact model often allows neobank’s customers to enjoy fewer fees and higher interest rates than the average.
Find out how neobanks work, what they offer and what their customers expect?
Neobank is a financial technology company that provides financial services such as payments, money transfers, online shopping through an application using the internet and does not have any branches or transaction points. Neobanks attract tech-savvy consumers who don't use cash and prefer to use smartphones.
Neobanks develop on the platform of blockchain technology and artificial intelligence (AI). By eliminating traditional points of the transaction and going online completely. This helps new banks in terms of physical costs, large fixed costs.
Neobanks do not provide the same services and do not have a common structure for them. Besides, they also have changed and been more modern than traditional banks, especially:
Developers come up with a solution to minimize top-neobanks into a smart finance application based on customers’ demand. It’s not hard to use and there are not many financial barriers. As a fintech operator, this requires digital banks to upgrade not only finance but also technology. Besides, The requirements relating to KYC are always on top priority.
For consumers who are savvy and prefer to use smartphones, it is very easy to create a digital account for themselves. Obviously, this requires a bank account to protect consumers' wallets. Additionally, customers do not need to give their signature or other security papers other than taking photos of identity cards.
Banks’ services are similar and different from physical-banks. Such services include:
Most neobanks do not offer credit accounts or, or if available, they will be limited to avoid currency risks and reduce unnecessary costs. However, some neobanks provide loans to individuals and businesses through partner’ banks and credit companies.
How Neobank Work - Neobank meaning
Some neo-banking startups proliferated in the first period, so they still face many difficulties in the procedures and regulations of the State Bank. It is an important commitment to become a traditional bank, so many neo-banks are allied directly with physical banks.
Large-scale banks also recognized the market's need for neo-banking and began launching similar services to cover the market. In addition to the purpose of attracting new customers and retaining loyal customers, this is also the way to help traditional banks do not fall behind the 4.0 society that is expanding every day. Bank of America, for example, also had to be supported by a "financial assistant" and use artificial intelligence to establish a neobank called "Erica" that could be used for smartphones.
Clarify the pros and cons of Neobanks
Therefore, are neobanks really safe for users? And what is the future of neobanks?
Luckily, they are just as safe as traditional banks. Neobanks also have to obtain all kinds of permits and approval of the state bank (SBV). As mentioned above, they have to have similar services to state banks and some basic services required to be in a "bank".
"Your money is still in your pocket in a safe way."
Neobanks are raising big bucks to compete with traditional banking institutions not only in proliferated markets but all over the world. Let's find out who they are, the best of neobank in the world, the leading company of the fintech industry.
N26 is the best neobank. It builds the N26 branding in European Internet Bank with its head office in Berlin, which offers its services in the EU, UK, and USA. …
London neobank Revolut is considered to be one of the tops in the digital banking sector. The company is equally growing up in Europe as well as in the Asia-Pacific region and the Americas.
Monzo is considered to be the best neobank in the world. Monzo set the record when it led to raising £1m in under 2 minutes, using the Crowdcube investment platform.