What is a Neobank?

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What is a Neobank?

🔥 Neobanks are new generation banks which offer banking services over a completely digital platform, in particular mobile apps. Unlike traditional banks, they don't have a brick-and-mortar setup. Thus, users of such banks (only) interact with the bank's mobile apps (or website) to avail banking services.
Although internet banking isn't a new concept, the concept of neobank is still new (thus the word 'neo').

Neobank Business Model

While Internet banking is typically offered by traditional banks to its customers, Neobanks are founded independently of any traditional bank. They typically partner with traditional banks to offer banking services. Using a neobank, customers can avail traditional banking services (deposit, withdrawal, payment, loan etc.) as well as certain niche services usually at a much lower cost that traditional banks cannot offer.

Neobank Examples

Because of gaining extensive funding in recent years, Neobanks have become a buzzword in fintech industry. There are hundreds of players right now in the industry. N26 (Germany), Chime (US), Revolut (UK), Tinkoff (Russia), Nubank (Brazil), just to name few.

Neobank Success Factors

In a growing cashless society powered by smartphone-savvy generations, neobanks are challenging traditional banks with its unique customer-friendly smart banking experience and data-driven, extremely cost-effective business model. They are also called challenger banks for that reason.
Please add below other useful facts regarding NEOBANKS so we get a good overview.
Sources:
Statrys Team (2020), "What are Neobanks?"
Rao, H. (2021)"What is a Neobank? Everything You Should Know", Razorpay
Crasulla (2019), "Neo Banks: Explaining the New Term in Digital Banking", Medium

		Comments by date▼ Comments by rating Rating
		2 Jaap de Jonge Editor, Netherlands
	Properties of Neobanks Neobanks all have one thing in common: they operate exclusively online or via apps. However, their offerings vary and the same applies to the degree of their bank permits and restrictions. They usually offer some or many of the services that traditional banks also provide, like regular banking accounts, mobile apps, debit cards, money transfer, loans, savings accounts, etc. They are particularly popular with people who are good with smart phones, often young people. Their pricing is typically simple, transparent and very low.

		1 Anonymous
	Similar Terms Like Neobanks They are also referred to as online banks, internet-only banks, virtual banks, digital banks, and "fintechs". They are a type of direct bank that operates exclusively online without traditional physical branch networks.

		1 Jaap de Jonge Editor, Netherlands
	Neobanks are Technology-oriented New technologies such as big data, artificial intelligence, robotization, and machine learning are wholeheartedly embraced by neobanks. Some neobanks even go so far as to describe themselves as a "tech company" first and a "bank" second.

		1 Armand Zunder Entrepreneur, Suriname
	Neobank Start Up What do you need to start a Neobank?

		1 Jacques Strydom CEO, South Africa
	New Banks Should Remember the Human! I am 100% pro these new banks as they fit the profile of the current client profile. I would however just like to put my hand up and ask that the following stakeholders be borne in mind whilst operationalising these platforms: 1. CLIENTS - Ensuring a delightful client experience. 2. EMPLOYEES - The human's state of readiness for the new way of doing things (#changemanagement; #humanshift) as this factor is the biggest reason for new initiatives failing.

		0 Meheresh Management Consultant, India
	Are There Any Bank Classifications? As Jaap de Jonge explained "…offerings vary and the same applies to the degree of their bank permits and restrictions". This raises a question: Do international standard organisations provide any classifications based on a bank's permits and restrictions? Let me know your thoughts.

		1 Jaap de Jonge Editor, Netherlands
	Classifications of Banks Based on Their Bank Permits and Restrictions @Meheresh: Interesting question. I am unaware of such standard classifications for banks showing at a glance what bank permit(s) a bank possesses. Such classifications or certifications could be provided by a neutral party on a national, regional (for example the EU, Asian countries) or even on a global level. Hopefully a finance professional can explain a bit more?

		1 Ivan Kohlinsky Management Consultant, Guernsey
	Interesting Development - Hopefully Well Regulated and Well Understood by Potential Customers I hope that these Neobanks either pay directly for their customers' use of other organisations (i.e., clearing banks etc.) cash points, deposit facilities etc, or that the Neobank customers provide these facilities themselves directly. Otherwise there won't be a level playing field and before too long we will be looking at the equivalent of the high street versus Amazon etc. It was bad enough when the clearing banks had arguments with 'ex building societies' etc. and were threatened to only allow their own customers to use their cash points. No 'freeloaders' please! Hopefully I don't need to re watch 'The Matrix' to understand all this. Are we getting old?