Neobank
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A neobank (also known as an online bank, internet-only bank, virtual bank or digital bank) is a type of direct bank that operates exclusively online without traditional physical branch networks.[1][2] The term "challenger bank" is used in the UK to refer to a number of fintech banking startups that emerged in the wake of the 2007–2009 financial crisis. Their services may be accessed by clients through their respective computers or mobile devices.
The range of services provided by neobanks is not as broad as that of their traditional counterparts. The business model they tend to apply also differs from incumbent banking institutions' model — a large portion of the income of neobanks is mainly made up of transaction fees received when customers pay with their debit card.[3] Some neobanks specialize in limited products such as checking or savings accounts, but others have expanded to offerings like bills payments, loans, transfers, payment cards, and more. Neobanks usually target customers who are technologically adept as well as unbanked sectors “who would benefit from low-entry financial solutions in place of the more bureaucratic, established banks.”[4]
History
The term neobank has been in use since at least 2016[1] to describe fintech-based financial providers that were challenging traditional banks. There were two main types of company that provided services digitally: companies that applied for their own banking license and companies in a relationship with a traditional bank to provide those financial services.
Neobank vs. Digital Bank
The neobank term is normally used interchangeably with digital banks, but there are still some differences between the two. While digital banks offer the similar services to neobanks and exist primarily online, they are usually part of a larger, more traditional bank, often acting as their parent bank’s all-digital arm. Neobanks, on the other hand, are independent entities with no association to other banks.[5]
Neobanks Across the World
Chime is one of the most recognizable neobank brands in the United States, with over 12 million users in the country. Varo and Current are also two other neobanks popular within the US. In the United Kingdom, on the other hand, Revolut is a renowned neobank that been expanding to other outside the UK. Meanwhile Brazil’s Nubank is the largest financial technology firm located in Latin America. N26 is one of the more popular names in Germany as well.[6] Tonik, another fintech company, is the first neobank that launched in the Philippines.[7]
References
- ^ a b "Digital Economy Outlook" (PDF). BBVA Research. 2016. p. 12.
{{cite web}}: CS1 maint: url-status (link) - ^ "The unstoppable rise of neobanks". World Finance. Retrieved 31 December 2018.
- ^ Walden, Stephanie (2021-06-24). "What Is A Neobank?". Forbes Advisor. Retrieved 2021-11-21.
- ^ Sorensen, Emily (2019-09-09). "What is a neobank? How does it differ from traditional banks?". Mobile Transaction. Retrieved 2021-12-02.
- ^ "Statrys | What in the world is a Neobank?". statrys.com. Retrieved 2021-12-02.
- ^ Walden, Stephanie (2021-06-24). "What Is A Neobank?". Forbes Advisor. Retrieved 2021-12-02.
- ^ Mar 19, Mario Alvaro Limos |; 2021. "First Neobank in the Philippines Launches with Impressive 6% Interest Rate". Esquiremag.ph. Retrieved 2021-12-02.
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