What is Neo Banks?
A neo bank is a fintech-based bank that operates solely digitally or via a mobile app— i.e., a kind of digital bank without any branches. Neo banks provide digital and mobile-first financial solutions for payments, money transfers, etc. They are trying to fill the gap between what the traditional banks offer and what customers expect. Neo banks rely on bank partners to obtain bank licensing.
Benefits of Neo Banks
- Easy account creation: The process of creating an account with a neo bank is easy and hassle-free. You can create an account in a couple of minutes on your phone without having to go anywhere.
- Seamless international payments: When you have an account in a neo bank, you can use your card to make purchases or transact internationally, with current exchange rates.
- Excellent customer experience: Neo banks provide an enhanced and personalized customer experience. Neo bank apps are convenient and user-friendly, they’re well-designed to suit the needs of a customer.
- Smart & rapid reporting: Once your transaction is made via a neo bank, you will receive your transaction details instantly providing you with an up-to-date balance on your account. The neo-app provides you with an overview of your expenses and a savings goal customized to best suit your needs, helping you manage your finances in a much better and informed manner.
- Transparency: Neo banks provide real-time notifications and explanations of any charges and penalties incurred by the customer.
Difference between Neo Banks and Traditional Banks
- Traditional banks operate out of branches, but neo banks exist solely online.
- Traditional banks offer online banking portals which offer banking at any hour of the day. They are often a division of a bigger bank or union, however, neo banks have no affiliation with a bigger bank.
- Neo banks have no bank licensing, whereas traditional banks have their own full banking licenses.
- Traditional banks charge for nearly everything, but neo banks have fewer operating costs.
- Traditional banks offer both personal and business accounts. However, neo banks offer some personal accounts and services, they target mall and medium-sized businesses (SMEs) and business startups and appeal to more tech-savvy customers.
Future of Neo banking
Despite the COVID-19 pandemic, many neo banks have seen customer bases soar from the need for more flexible banking. Having a flexible workforce and a product and services that can be upheld by staff working from home has been of supreme importance for success through COVID-19. As cash is being discouraged in favor of contactless card payments to limit the virus spread, with the help of efficient payment service providers neo banks will play a hugely important role within the global banking industry during the next few years.