If you’re tired of visiting your bank’s local branch and waiting in long lines to complete financial transactions, a neobank might be your saving grace. Neobanks are digital-only banking platforms that promise a seamless experience, allowing you to complete your banking needs online.
Many customers are switching to neobanks due to the online platform’s convenience. Research has found that the growing demand for convenience among customers in the banking sector will likely drive the global neobanking market growth by 53.4 percent between 2022 to 2030. If you’re interested in streamlining your finances by switching to a neobank, learn more about neobanking below.
How Neobanks Work
Neobanks are digital banks that operate entirely online, so you can fulfill all your banking needs from the comfort of your couch. Many traditional banks use outdated infrastructure and legacy systems. In contrast, neobanks use digital services and products to make banking services more accessible, flexible, and scalable for customers.
Setting up a neobank is a simple process that requires you to download the app, create a checking account, and set up your payees. You will also receive a debit card that you can use to make purchases and request ATM cash withdrawals.
Types of Neobanks
Not all neobanks are actual banks. Some neobanks have their own banking license, while others partner with traditional banks with a pre-existing digital banking infrastructure to deliver front-end digital services, known as banking as a service (BaaS).
- Full-Stacked Neobank: A full-stacked neobank operates using its own license while offering a broad selection of services with no association with a traditional bank.
- Frontend-Focused Neobank: A front-end-focused neobank is a financial technology, rather than a bank, that collaborates with traditional banks to offer FDIC-insured digital banking services.
Benefits of Neobanks
Neobanks are equipped with a wide range of features that make financial management simpler for customers, differentiating them from traditional banks. If you want to join the world of seamless digital banking, here is what you need to know about neobanking to make an informed decision when making the switch.
Seamless Account Opening Process
Most neobanks offer a smooth opening and online setup process, in contrast to traditional banks, which require more paperwork and branch visits. Once you’ve compared a few neobanks and found the best fit for your business, you can browse the company’s website or download the app to get started from the comfort of your home.
Multiple Checking Accounts
Neobanks allow you to open multiple checking accounts with low account fees, a major draw for many businesses that practice budgeting methods like envelope budgeting. Different accounts can help you organize your money and better keep track of your spending.
Low Fees & Minimum Balances
Traditional banks have physical branches to maintain, making them unable to offer customers no-fee accounts and requiring a minimum balance in their accounts to avoid charges. Neobanks, on the other hand, operate entirely online, minimizing their operation costs and allowing them to offer accounts to customers with low fees and minimum balances.
Convenience & Accessibility
One of the most remarkable features of neobanks is how simple it makes money management for customers. With neobanks, you can access your account anywhere 24/7 without visiting a brick-and-mortar branch. Most neobanks also have efficient customer teams to assist you at any time.
Switching to a Neobank
Conducting everyday tasks, such as depositing checks or making payments without hefty fees, is convenient with neobanking. Now that you know how neobanks work, the different types available, and their many benefits, you can make an informed decision when comparing neobanks to find one that best fits your financial needs.