Neobank - The Future of Banking Industry!

Neobanks : The future of banking industry

Neobanks are basically FinTech’s offering digital banking services ranging from faster account opening, mobile deposits, digital debit and credit cards, transferring payments and many more service without the burden of visiting any physical bank. Neobanks are often partnered with traditional banks as they don’t have regulatory licences. Partnered banks provide them a platform to  build digital banking  services on top of the banks such as infrastructure. Neobanks mainly focus on providing a hassle-free banking experience to consumers and SMEs.

The banking industry is evolving and it needs to be updated with recent technological trend  to keep up with the existing consumer demand. However you will be surprised to know, there is a difference between digital banks and neobanks, and how is that? Despite both of them are based on mobile first approach and focuses on providing digital banking services to the consumer anywhere in the world and many times this words are even used interchangeably but there’s a difference. Digital banks are the online subsidiary of an already established bank, while neobanks exist solely online with no physical branch and run independently or in partnership with traditional banks.

 

Neo-Banking versus Traditional Banking: -

Neobanks basically focuses on solving major banking problems faced by the consumer or businesses during the current era. When it comes to traditional banking, they lack some basic consumer requirements in terms of better user experience, value added services, etc. which is better taken care by neobanks. For example offering services such as better way to save money for millennials or manage their financial goals, offering better user experience so that the consumer do not have to call customer care each and every time he faces any issue and especially they use high end problem solving Artificial Intelligence tool in order to solve majority of the issues such as deactivating your card or unlocking your card, etc in just few clicks.

So, these are few ways in which neobanks are different from the traditional banking experience.  Most of the times neobanks often come up with a digital on boarding so that customer can open their account in less than 2 to 3 minutes through a totally digital on boarding process.


How are Neobanks beneficial for SMEs or small businesses?

So technically the businesses are required to use multiple interface in order to operate their business transactions like separate invoice raising tool, separate payment gateway for payment collection, separate accounting system , etc. which becomes a headache for businesses to manage and most importantly it increases their costs. Neobanks found this issue extremely painful and hence they leveraged technology and came up with an alternative tool where it links all the required interface such as payment collection, book keeping, raising invoices, etc in a single process which makes the business banking process completely convenient and stress free. So, these are some niche ways in which neobanks are actually differentiating from traditional banks and this are the benefits which business man looks forward when it compares the traditional banking versus new-age banking.

Neo-banking has been a life changing experience for small businesses as it has totally revolutionised the way the traditional banking works. The small businesses can now focus much more on their businesses rather than worrying about their finances as neobanks has already automated that business banking transaction and it even helps them to manage multiple business accounts through a single app.


Key advantages of Neobanks over Traditional Banking

 1. Better user experience.

 2. Better onboarding experience

 3. Offering different value-added services in a single interface such as integrated payroll for a small business, book keeping, payment gateway, etc.


Challenges faced by Neo-banking

 1. As we know that neobanks rely on traditional banks as they don’t have the license to provide financial services and thus it becomes very important for the consumer to know exactly with which banks are they partnered with.

 2. Digital banking industry is growing drastically and there are already a number of competitors, which makes it difficult for a neobank to retain customers as there are multiple banks who are all set to grab the market share by providing similar services or niche-based services along with some amazing signup benefits, and hence one has to keep up with the trends so that the consumer always gets the best user experience.


Summing up

 1. Fintech companies partner with financial institutions to offer banking services

 2. They offer banking services entirely online.

 3. Provides financial payments and money transfer solutions and many more value-added services

 4. Helps SMEs to automate their business banking system.

 5. Individuals can also opt the services as per their choice and only pay for opted services.


List of Global Active Neobanks: -

One should definetly go through some of the below neobanks websites (especially those operating in your country) so as to gain some better insights and look for all the factors we have talked about in this article such as partner banks, services offered, etc.

Before wrapping up, do comment below and let us know will you choose neobanks over traditional banks, if so, why?

Below is the list of global active neobanks bifurcated as per countries:-

Neobank

Regions

Judo Bank

Australia

Tyro Payments

Australia

Volt Bank

Australia

Xinja

Australia

UP

Australia

86400

Australia

NuBank

Brazil

Banco Original

Brazil

Banco Inter

Brazil

Koho

Canada

MYBank

China

Lunar

Denmark

Dopay

Egypt

Hello bank!

France

Shine

France

Holvi

Finland

Xpence

Gulf (U.A.E)

Neat

Hong Kong

Statrys

Hong Kong

NiYO

India

811 by Kotak

India

InstantPay

India

Soldo

Italy

n26

Europe, United States

Jibuan Bank

Japan

Kakao Bank

Korea

Albo

Mexico

Bunq

Netherlands

Tonik Bank

Philippines

mBank

Poland

Tinkoff Bank

Russian Federation

Rocket Bank

Russian Federation

Bnext

Spain, Europe

P.F.C.

Sweden

220 Bank

United Kingdom

Atom Bank

United Kingdom

Monzo

United Kingdom

Revolut

United Kingdom, Australia, USA

Starling Bank

United Kingdom

Tide bank

United Kingdom

Aspiration

United States

JUNO

United States

Simple

United States

AXOS

United States

Chime

United States

NOVO

United States

VARO

United States

Source: Neobank Market 

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