Neobank

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A neobank is a type of direct bank that operates exclusively using online banking without traditional physical branch networks that challenge traditional banks. [1] [2] [3]

Contents

Europe

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. The former were called challenger banks and the latter were called neobanks.

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.

Asia

Bangladesh

The concept of neobanks was first noted in Bangladesh around 2020. [4] [5] These banks would be digital only with customer accounts not connected to any particular branch. [6]

India

In India, a neobank is a class of digital-only or online bank that operates without physical branch locations. [7] They typically have lower operational costs, which can sometimes result in lower fees and more competitive interest rates for their customers. Unlike in Europe, the regulatory environment in India is complex, with stringent regulations that govern banking and financial services. Neobanks often partner with well-established, traditional banks to provide services and adhere to these regulations.

Neobanks in India typically offer a range of financial services, including savings accounts, current accounts, debit and credit cards, and other banking services. They focus on providing a seamless and user-friendly digital banking experience to a younger audience, with features like instant account setup, easy money transfers, and expense tracking. Some neobanks also target specific customer segments, such as millennials, and offer features like budgeting tools and investment options to that demographic.

Indian neobanks primarily operate in Indian rupees and may have limited cross-border services. International transactions are often handled in partnerships with traditional banks.

Related Research Articles

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Online banking, also known as internet banking, virtual banking, web banking or home banking, is a system that enables customers of a bank or other financial institution to conduct a range of financial transactions through the financial institution's website or mobile app. Since the early 2000s this has become the most common way that customers access their bank accounts.

<span class="mw-page-title-main">ICICI Bank</span> Indian private sector bank

ICICI Bank Limited is an Indian multinational bank and financial services company headquartered in Mumbai with a registered office in Vadodara. It offers a wide range of banking and financial services for corporate and retail customers through various delivery channels and specialized subsidiaries in the areas of investment banking, life, non-life insurance, venture capital and asset management.

A direct bank is a bank that offers its services only via the Internet, mobile app, email, and other electronic means, often including telephone, online chat, and mobile check deposit. A direct bank has no branch network. It may offer access to an independent banking agent network and may also provide access via ATMs, and bank by mail. Direct banks eliminate the costs of maintaining a branch network while offering convenience to customers who prefer digital technology. Direct banks provide some but not all of the services offered by physical banks.

<span class="mw-page-title-main">Zopa</span> British financial services company

Zopa Bank Ltd. is a British online bank which offers deposit accounts, personal loans and credit cards. It began as the world's first peer-to-peer lending company in 2005 and gained a full banking licence in 2020. The peer-to-peer side of its business closed in December 2021.

Financial inclusion is the availability and equality of opportunities to access financial services. It refers to a process by which individuals and businesses can access appropriate, affordable, and timely financial products and services which include banking, loan, equity, and insurance products. It is a path to enhance inclusiveness in economic growth by enabling the unbanked population to access the means for savings, investment, and insurance towards improving household income and reducing income inequality

<span class="mw-page-title-main">Spice Money</span> Indian rural fintech company

Spice Money (SML) is an Indian Rural financial services company headquartered in Noida. It was founded in 2000 by Dilip Modi, who serves as the chairman and group CEO of DiGiSPICE Technologies. SML is a subsidiary of DiGiSPICE Technologies. It provides financial services, such as money transfer, cash deposit, account opening, bill payments, mini ATMs and more services. It engages with local individuals (Adhikaris) to assist its customers with banking requirements. In 2024, the company reported having 1.4 million Adhikaris on its platform.

Simple was an American neobank based in Portland, Oregon. It was recognized as the first neobank and operated between 2009 and 2021.

<span class="mw-page-title-main">Starling Bank</span> Challenger bank in the United Kingdom

Starling Bank is a British bank, occasionally referred to as a digital challenger bank or neobank, providing current and business bank accounts in the United Kingdom. Starling Bank is a licensed and regulated bank, founded by former Allied Irish Banks COO, Anne Boden, in January 2014. Since its founding, it has received over £500M of funding.

<span class="mw-page-title-main">Revolut</span> British financial technology company

Revolut is a global neobank and financial technology company based in London, England. It offers banking services for retail customers and businesses. It was founded in 2015 by Nikolay Storonsky and Vlad Yatsenko. It offers products including banking services, currency exchange, debit and credit cards, virtual cards, Apple Pay, interest-bearing "vaults", personal loans and BNPL, stock trading, crypto, commodities, human resources and other services.

<span class="mw-page-title-main">Banking as a service</span>

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<span class="mw-page-title-main">Zeta (company)</span> Next-gen Banking Tech & Card Issuer Processor

Zeta is a next-gen banking tech company by founders Bhavin Turakhia and Ramki Gaddipati in 2015. The company provides credit and debit card issuer processing, BNPL, core banking and "mobile experiences". Zeta provides its products to banks and fintechs.

Personetics Technologies is a financial technology (fintech) software company. The company's product uses artificial intelligence to analyze bank's customer transaction data in real-time and use this analysis to deliver financial management information.

<span class="mw-page-title-main">TymeBank</span> South African digital bank

TymeBank is an exclusively digital bank based in South Africa, aimed at the lower income market.

<span class="mw-page-title-main">Chime (company)</span> American financial services company

Chime Financial, Inc. is a San Francisco–based financial technology company that partners with regional banks to provide certain fee-free mobile banking services. The company offers early access to paychecks, negative account balances without overdraft fees, high-yield savings accounts, peer-to-peer payments, and an interest-free secured credit card. Chime earns the majority of its revenue from the collection of interchange fees on debit card transactions.

Azlo was an American technology neobank company which provided financial services for small businesses through a mobile app and website. In January 2021, the company announced that it was shutting down, and by the end of March 2021 it had closed all accounts.

Current is an American financial services and software development company (FinTech) based in New York City. It provides mobile banking services through its partner bank, Choice Financial Group.

<span class="mw-page-title-main">SBM Bank India</span> Commercial bank

SBM Bank India is a subsidiary of the State Bank of Mauritius. It was the first bank to receive a banking license from the India's banking regulator Reserve Bank of India (RBI) to establish a universal banking business in the country as a wholly owned subsidiary. It was incorporated on 1 December 2018 as a private sector bank headquartered in Mumbai. It also operates from New Delhi, Bengaluru, Chennai, Hyderabad, Ahmedabad, and in the rural centers of Ramachandrapuram and Palghar.

Tonik Digital Bank, Inc., commonly known as Tonik, is an all-digital bank which was launched in the Philippines in 2021, notable for being the first all-digital bank, or "neobank" in Southeast Asia. Its consumer products range from deposits, payments, debit cards, and loans. It operates with its own bank license issued by the Bangko Sentral ng Pilipinas (BSP), with deposits insured by the Philippine Deposit Insurance Corporation (PDIC). Its holding company is Singapore-based Tonik Financial Pte Ltd. 

bunq International fintech company

bunq B.V. is a Dutch fintech and neobank licensed in the Netherlands within the European Union and operating in 30 European countries. It was founded in Amsterdam where its headquarters are currently located.

The development of neobanks in Europe is a trend in the European financial landscape beginning in the 2010s. Neobanks are a type of digital-only bank that offer financial services primarily through mobile and web applications, with little or no reliance on physical branches. The trend was driven by advancements in technology, changing consumer preferences, and supportive regulatory frameworks. Neobanks provide a range of services, including personal accounts, loans, and payment services, with a focus on user-friendly interfaces, low fees, and innovative features. In 2022, European neobank market have generated over 570B transactions.

References

  1. 1 2 "Digital Economy Outlook" (PDF). BBVA Research. 2016. p. 12.
  2. ↑ Ballard, Barclay (October 11, 2018). "The unstoppable rise of neobanks". World Finance. Retrieved 31 December 2018.
  3. ↑ "What is a neobank?". Business Standard India. 6 May 2022. Retrieved 14 May 2022.
  4. ↑ "Bank Asia to establish neobank". The Financial Express. Retrieved 2024-03-26.
  5. ↑ Parvez, Sohel (2023-08-06). "NRB Bank plans to introduce neo-banking services". The Daily Star. Retrieved 2024-03-26.
  6. ↑ Hasan, Md Mehedi (2024-01-25). "Bangladesh plans more licences for digital banks in push to go cashless". The Daily Star. Retrieved 2024-03-26.
  7. ↑ Vaidhyanathan, Jaya; Aashika, Jain (2021-11-21). "What Is Neobanking And How Does It Work?". Forbes Advisor. Retrieved 2023-10-21.
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