In this modern age, traditional banks often bring to mind monolithic brick-and-mortar, slow processes, lots of paperwork and outdated services. This has been the style of most traditional banks before the boom of fintech – a far cry from customers’ expectations in the digital age.Neobanks came about as a result of bridging the gap between traditional banks and customer expectations. These digital-only, fintech are creating banking platforms that promise a seamless banking experience at lower costs to customers.
What is a Neobank
Neobanks are financial institutions that offer digital-only banking services to customers. They operate exclusively online without physical branch networks and tend to maintain low operating costs.
The offerings of neobanks are usually limited compared to that of traditional banks. However, they offer certain innovative services traditional banks cannot offer or regular banking services in fresh and interesting ways.
Neobanks emerged as a challenger bank to traditional banks in terms of customer engagement, reach and user experience in 2017. They leveraged technology and artificial intelligence to compete with traditional banks on these grounds and quickly scooped up market share. However, it must be noted that neobanks are different from challenger banks.
Difference between Neobanks and Challenger Banks
Neobanks operates exclusively online, purely digital, without physical presence at all like branches. They reach out to customers through mobile and web-based applications only and usually do not own a banking license. Instead, they partner with an existing traditional bank to offer licensed banking services.
Challenger banks on the other hand are digital-first banks licensed to offer banking services just like a traditional bank. They leverage innovative digital banking technologies as well as maintain a limited physical presence.
Difference Between Neobanks and Traditional Banks
Traditional banks are the conventional brick-and-mortal banks we’re conversant with and they have been around for over a century. Neobanks have only been around for a decade and were part of the earliest forms of fintech companies.
Here’s how neobanks are different from traditional banks:
Service platform
Traditional banks have an extensive physical presence, larger than challenger banks. The largest traditional banks may establish branches even outside their home countries. Neobanks delivers its services through mobile and web-based platforms.
Today, most traditional banks have online banking products that offer customers simple digital banking services such as account opening, payments, loans and even support. However, they may not be as efficient or technologically driven as digital banking services offered by neobanks.
This is because neobanks tend to focus on a specific banking niche like loans or payments and offer highly innovative services that traditional banks cannot compete with. For example, SoFi bank exclusively offers student loans with zero fees for overdrafts up to a certain amount. The loan options are also more diverse than student loans offered by traditional banks, often infused with other financial services such as active and automated investing, cryptocurrency trading, credit cards, and retirement accounts.
Support and Client Relationship
Traditional banks favour the in-person customer support model with just enough done in terms of online customer support technologies. However, the in-person support model is beneficial for servicing special clients, for example, high net-worth individuals (HNWIs) or offering relationship management services.
Neobanks invest heavily in digital support tools like chatbox, self-service and more and maintain a limited amount of in-person relationships or support staff. Most support activities happen online virtually and procedures are flexible compared to traditional banks.
Costs and Bank Fees
Operating virtually and with a thin staff count means neobanks maintain an extremely low operating cost compared to traditional banks. This allows them to offer many banking services at drastically reduced or zero costs.
In Nigeria, for example, Kuda Bank allows customers to make up to 25 bank transfers to other banks per month for free. The same amount of transactions monthly would cost a regular bank user up to NGN15,000 (USD36) per year. Chime, one of the world’s largest neobank offers checking (called “spending”) and savings accounts, both at zero monthly fees.
Neobanks Setup Structures
There are three types of neobank structures that anyone looking to launch a neobank can adopt. Let’s see them below:
Independent Neobanks
Standalone neobanks are neobanks built from scratch to serve that specific niche within the banking industry or deliver particular banking services. You would need to acquire a virtual banking license from regulators and build out the banking technologies needed to power the platform. After that, your neobank can operate online without any physical offices.
The biggest advantage of standalone neobanks is betting on an excellent user-oriented approach and user experience. A good example of a standalone neobank is Revolut, It focuses on credit card operations and provides interesting currency conversion rates offered along with personalized rewards over an outstanding user interface.
Subsidiary unit of a non-banking organisation
Non-banking businesses such as fintechs can launch digital banking products. MyBank by Alibaba Group is one of such and one of the most popular neobanks in China. The bank focuses on individual loans and extends credits to small and medium-sized businesses.
Neobanks introduced by fintech giants are often very competitive and capture new markets quickly, especially through price undercutting. Traditional banks have a hard time keeping up with these types of banks as they cannot reduce their rates to compete in the market.
Subsidiary unit of a traditional bank
Traditional banks may introduce a digital-only banking platform as a subsidiary of their bank to keep up with digital banking competition. These neobanks often leverage the banking license of their parent banks and can offer a broader range of banking products compared to standalone neobanks.
ALAT by Wema Bank is an example of a neobank structure and one of the most successful of this model in Nigeria. As noted earlier, this is different from online banking applications managed by most traditional banks. The banking product must exist as a standalone product outside its parent bank.
Building a Neobank with Finslack
Finslack is a digital banking ecosystem helping businesses build banking capabilities into their non-banking products or launch full-scale financial products such as a neobank. Finslack’s bank-in-a-box model allows you to design and launch a functional neobank within 21 days at cost-effective rates. Learn more here.
57 Comments
Keep Reading...
Banking Software, Banking Technology December 5, 2022
2025: 10 Banking Technologies That Would Change the Banking Space by 2025
Banking as we know it has changed since the introduction
Banking Technology, Uncategorized November 17, 2022
FinTech Startups: 9 Growth Hacks for Fintech Startups in 2021
In 2019, 48 fintech unicorns around the world had a
Banking News, Banking Technology October 30, 2022
Is building a Digital Bank worth it Today?
Digital banks exploded onto the banking scene years back, vying
binance norādījuma kods 4 months ago
Thank you for your sharing. I am worried that I lack creative ideas. It is your article that makes me full of hope. Thank you. But, I have a question, can you help me? https://www.binance.com/lv/join?ref=WTOZ531Y
binance Бонус за регистрация 3 months ago
Your point of view caught my eye and was very interesting. Thanks. I have a question for you. https://www.binance.com/bg/join?ref=IJFGOAID
codice binance 3 months ago
Can you be more specific about the content of your article? After reading it, I still have some doubts. Hope you can help me. https://www.binance.info/it/join?ref=53551167
Vytvorit úcet na binance 3 months ago
Your point of view caught my eye and was very interesting. Thanks. I have a question for you. https://www.binance.info/cs/join?ref=V3MG69RO
Открыть счет на binance 3 months ago
I don’t think the title of your article matches the content lol. Just kidding, mainly because I had some doubts after reading the article. https://www.binance.com/ru/join?ref=P9L9FQKY
bonus di riferimento binance 3 months ago
Your point of view caught my eye and was very interesting. Thanks. I have a question for you. https://accounts.binance.com/it/register-person?ref=PORL8W0Z
binance nos registro 3 months ago
Thank you for your sharing. I am worried that I lack creative ideas. It is your article that makes me full of hope. Thank you. But, I have a question, can you help me? https://www.binance.com/pt-PT/join?ref=IJFGOAID
創建binance帳戶 3 months ago
Your point of view caught my eye and was very interesting. Thanks. I have a question for you. https://www.binance.info/zh-TC/join?ref=IJFGOAID
вдкрити акаунт на бнанс 3 months ago
Your point of view caught my eye and was very interesting. Thanks. I have a question for you. https://www.binance.info/uk-UA/join?ref=PORL8W0Z
najlepszy sklep 2 months ago
Wow, marvelous weblog layout! How long have you ever been running a
blog for? you made running a blog look easy. The overall look of your site is
magnificent, let alone the content! You can see similar: sklep internetowy and here najlepszy sklep
sign up binance 2 months ago
I don’t think the title of your article matches the content lol. Just kidding, mainly because I had some doubts after reading the article. https://accounts.binance.com/en/register-person?ref=P9L9FQKY
dobry sklep 2 months ago
Wow, superb weblog format! How long have you been blogging for?
you make running a blog glance easy. The whole look of your website is
great, as neatly as the content material! You can see similar: sklep online and here dobry sklep
najlepszy sklep 2 months ago
I couldn’t refrain from commenting. Perfectly written! I saw similar here:
sklep and also
here: najlepszy sklep
Pers”onliches Konto erstellen 2 months ago
Your point of view caught my eye and was very interesting. Thanks. I have a question for you.
binance 2 months ago
Thanks for sharing. I read many of your blog posts, cool, your blog is very good.
Tworzenie konta na Binance 2 months ago
Can you be more specific about the content of your article? After reading it, I still have some doubts. Hope you can help me.
ustvarjanje racuna na binance 2 months ago
Your article helped me a lot, is there any more related content? Thanks!
sklep internetowy 2 months ago
Hi! Quick question that’s totally off topic. Do you know how to make your site mobile friendly?
My site looks weird when browsing from my iphone 4.
I’m trying to find a template or plugin that might be able
to correct this problem. If you have any suggestions, please share.
Thanks! I saw similar here: Sklep internetowy
e-commerce 2 months ago
I am sure this piece of writing has touched all the internet people, its really really good piece of writing on building up new web
site. I saw similar here: Najlepszy sklep
Създаване на личен профил 2 months ago
Thank you for your sharing. I am worried that I lack creative ideas. It is your article that makes me full of hope. Thank you. But, I have a question, can you help me?
e-commerce 2 months ago
Howdy this is kinda of off topic but I was wondering if blogs use WYSIWYG editors or if you
have to manually code with HTML. I’m starting a blog soon but have no coding knowledge so I wanted
to get guidance from someone with experience. Any help would be greatly appreciated!
I saw similar here: Sklep online
ecommerce 2 months ago
Hey! This is my first visit to your blog! We are a group of volunteers and starting a
new project in a community in the same niche. Your blog provided us valuable information to work on. You have done a outstanding job!
I saw similar here: Sklep online
ecommerce 2 months ago
Hey! Do you know if they make any plugins to help
with Search Engine Optimization? I’m trying to get
my blog to rank for some targeted keywords but I’m not seeing very good results.
If you know of any please share. Thanks! You can read similar blog here: Najlepszy sklep
Analytical Agency 2 months ago
It’s very interesting! If you need help, look here: ARA Agency
“oppna ett binance-konto 2 months ago
Thank you for your sharing. I am worried that I lack creative ideas. It is your article that makes me full of hope. Thank you. But, I have a question, can you help me?
M~a gii thiu binance tt nht 1 month ago
Can you be more specific about the content of your article? After reading it, I still have some doubts. Hope you can help me.
https://hitman.agency/shop/ 1 month ago
Hey there! Do you know if they make any plugins to assist with Search Engine
Optimization? I’m trying to get my site to rank
for some targeted keywords but I’m not seeing very good gains.
If you know of any please share. Thanks! I saw similar
article here: Backlink Building
hitman.agency 1 month ago
Howdy! Do you know if they make any plugins to help with
Search Engine Optimization? I’m trying to get my blog to
rank for some targeted keywords but I’m not seeing very
good success. If you know of any please share. Kudos!
I saw similar blog here: Scrapebox AA List
Открыть счет в binance 1 month ago
Your article helped me a lot, is there any more related content? Thanks!
online pharmacy birth control pills 1 month ago
top online pharmacy india
azithromycin brand name canada 4 weeks ago
azithromycin mexico pharmacy
ダッチワイフ 4 weeks ago
シリコン ラブドール ダッチワイフについての最も完全なガイド（2）DollLover27 –クリーチャープリントテディ–パート3ラトビアの女性は巨大なお尻を持つ正確な愛の人形150cmフルシリコンセックス人形に変わります
can i cash a torn check 4 weeks ago
Discover the power of privacy with TornadoCash! Learn how this decentralized mixer ensures your transactions remain confidential.
lisinopril 20mg 4 weeks ago
buy zestoretic
Δωρεν λογαριασμ Binance 4 weeks ago
Thank you for your sharing. I am worried that I lack creative ideas. It is your article that makes me full of hope. Thank you. But, I have a question, can you help me?
Hal87 3 weeks ago
Wow, fantastic weblog layout!
How lengthy have you been blogging for? you made
running a blog glance easy. The full glance of your website is magnificent,
let alone the content! I read similar here prev next and
that was wrote by Thaddeus62.
Giuseppe98 3 weeks ago
Wow, marvelous blog layout!
How lengthy have you been running a blog for? you make running a blog glance easy.
The full glance of your website is excellent, as well as
the content material! You can see similar here prev next and it’s was wrote by Santos65.
canada cloud pharmacy 2 weeks ago
happy family store pharmacy india
Iscriviti per ottenere 100 USDT 2 weeks ago
Your point of view caught my eye and was very interesting. Thanks. I have a question for you.
dul kadini sikcem 2 weeks ago
naturally like your web site however you need to take a look at the spelling on several of your posts. A number of them are rife with spelling problems and I find it very bothersome to tell the truth on the other hand I will surely come again again.
Owen Fosbrook 1 week ago
Watch Out: How Best Onlyfans Pornstar Is Taking Over And What You Can Do About It most Popular Pornstars
zithromax azithromycin 1 week ago
azithromycin 500mg cheap
www.binance.com Регистрация 1 week ago
Thanks for sharing. I read many of your blog posts, cool, your blog is very good.
buy lisinopril 10 mg 1 week ago
lisinopril tabs 20mg
туры на байкал из оренбурга 1 week ago
Хотите познакомиться с величием Байкала, отправившись на увлекательные байкал экскурсии из Иркутска? FanatBaikala.ru предлагает разнообразные варианты для тех, кто хочет окунуться в мир этого удивительного озера.
Почувствуйте атмосферу приключения с байкал экскурсии из Иркутска и откройте для себя его потрясающие достопримечательности и красоты.
Или может быть вы предпочитаете групповые экскурсии из Иркутска, чтобы поделиться впечатлениями с другими путешественниками и насладиться общей атмосферой приключения?
Выберите подходящий вариант для себя на сайте FanatBaikala.ru и отправляйтесь!
Zenitbet1.com 6 days ago
Казино Зенит zenitbet1.com
По вопросу регистрация бк зенит вы на верном пути. Зеркало официального сайта Zenitbet спокойно работает на территории России и абсолютно надежно. Вы можете без опасений вписывать свои персональные данные и быть уверены в том, что данные не могут быть заняты другими источниками. Также средства на вашем счету находятся под защитой. Комфорт в том, что сайт идентичен официальному и Вам не потребуется привыкать к новой картинке. А еще не понадобится проходить вторичную регистрацию, если вы уже были зарегистрированы. В зеркале хранятся Ваши данные, вводите их и заходите в свой профиль.
купить кованые перила 6 days ago
Металлические перила – это прекрасный выбор для частного дома, особенно если вы ищете долговечность и стиль. Перед тем как сделать заказ, обратите внимание на качество металла и тип защитного покрытия, которое поможет избежать коррозии. На сайте a-kovka.ru вы найдете разнообразие моделей металлических перил, которые могут быть адаптированы под любой архитектурный стиль. Профессионалы помогут вам выбрать оптимальное решение, сочетающее в себе красоту, безопасность и удобство.
Добро пожаловать в кузницу “А-ковка” кованые перила для лестницы – ваш надежный партнер в создании красивых и функциональных перил для вашего дома. Мы находимся в Москве, всего в 91 километре от МКАД, и готовы предложить вам широкий выбор кованых изделий, выполненных опытными мастерами.
Наша цена доступна для любого покупателя, а качество наших изделий всегда остается на высоте. Мы используем современное оборудование и материалы высокого качества, чтобы каждый заказчик остался доволен результатом. Кованые перила не только придают вашему интерьеру изысканный вид, но и являются прочным и долговечным решением для вашего дома. Закажите перила в нашей кузнице и убедитесь сами в высоком качестве наших изделий!
Zenitbet1 6 days ago
Промокоды для Зенитбет zenitbet1.com
Если Вы искали зенит слоты в интернете, то заходите на наш сайт прямо сейчас. Зеркало, как правило, регулярно блокируют и нужно его искать еще раз. Благодаря сайту zenitbet1.com больше не будет сложности в поиске. Мы каждый день проверяем и обновляем ссылку на вход зеркало ЗенитБет. Возможно подписаться на рассылку и Вам на почту будет приходить свежая информация о входе на сайт.
hd porn 4 days ago
I very delighted to find this internet site on bing, just what I was searching for as well saved to fav
Helen Battles 4 days ago
Wonderful web-site you have there. https://adddirectoryurl.com/listings218675/explainer video company india (Kirby (https://liteblue-postalease16926.blazingblog.com/26938956/getting-my-www-explainervideo-in-to-work))-video-company-india
Karine Blakeney 4 days ago
I am sure this article has touched all the internet viewers, its really really pleasant article on building up new weblog. https://www.provenexpert.com/explainer-video-company-india/
Mellisa Aldrich 4 days ago
Hello there, neat internet site you’ve got at this time there.
https://www.Blackwhitereadallover.Com/users/explainer video company (https://hotmaillogin94692.dreamyblogs.com/27249909/not-known-factual-statements-about-www-explainervideo-in)_video_company_india
Alberto Nott 4 days ago
It’s remarkable in support of me to have a site, which is good for my know-how. thanks admin https://www.Thesirenssong.Com//users/explainer_video_company_india
индивидуалки от 40 москва 2 days ago
Шлюхи Москвы devkiru.com
По запросу проститутки кантемировская Вы на верном пути. Наш надежный веб сайт оказывает лучший отдых 18 плюс. Здесь есть: индивидуалки, массажистки, элитные красотки, БДСМ. А еще Вы можете отыскать требующуюся девочку по параметрам: по станции метро, по возрасту, росту, цвету волос, стоимости. Всё для Вашего комфорта.
индивидуалки в кузьминках 1 day ago
Дешевые проститутки devkiru.com
Если Вы хотите купить индивидуалки преображенская площадь в Мск, то прямо сейчас переходите на указанный сайт. Мы предлагаем заказать самых недорогих проституток в столице. Но в этом вопросе, цена не значит плохое качество. Всего лишь у девушек в этой категории не так много опыта, и принимают они в квартирах чуть дальше от центра и не очень фешенебельных. Не нужно волноваться, что дешевая цена может испортить Ваш отдых, скорее — наоборот. Возможность шикарно провести время по выгодной стоимости-дважды приятнее.
canada happy family pharmacy 1 day ago
online pharmacy delivery dubai
devkiru.com 18 hours ago
Проститутки с выездом devkiru.com
По запросу проститутки москвы по районам Вы на правильном пути. Наш проверенный интернет ресурс оказывает отборный отдых 18 плюс. Здесь представлены: индивидуалки, массажистки, элитные красотки, БДСМ. А также Вы можете найти нужную девочку по параметрам: по станции метро, по весу, росту, цвету волос, карте. Всё для Вашего комфорта.