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 |
|
Australia |
|
|
Australia |
|
|
Australia |
|
|
Australia |
|
|
Australia |
|
|
Australia |
|
|
Brazil |
|
|
Brazil |
|
|
Brazil |
|
|
Canada |
|
|
China |
|
|
Denmark |
|
|
Egypt |
|
|
France |
|
|
France |
|
|
Finland |
|
|
Gulf (U.A.E) |
|
|
Hong Kong |
|
|
Hong Kong |
|
|
India |
|
|
India |
|
|
India |
|
|
Italy |
|
|
Europe, United States |
|
|
Japan |
|
|
Korea |
|
|
Mexico |
|
|
Netherlands |
|
|
Philippines |
|
|
Poland |
|
|
Russian Federation |
|
|
Russian Federation |
|
|
Spain, Europe |
|
|
Sweden |
|
|
United Kingdom |
|
|
United Kingdom |
|
|
United Kingdom |
|
|
United Kingdom, Australia, USA |
|
|
United Kingdom |
|
|
United Kingdom |
|
|
United States |
|
|
United States |
|
|
United States |
|
|
United States |
|
|
United States |
|
|
United States |
|
|
United States |
Source: Neobank Market
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