What is a Neo-bank?
Neobanks, also known as fintech banks, are digital-first financial institutions that provide banking services such as debit cards and checking accounts without having a physical branch. These banks focus on delivering customer-centric, digital-only financial services to simplify banking processes.
Neobanks have gained significant popularity in the financial industry in recent years due to their low fees, easy-to-use platforms, and innovative credit analysis methods. Additionally, they offer access to credit cards, checking accounts, and financial tools to people who previously did not have access to traditional banking services, promoting financial inclusion and improving their financial well-being. By 2026, there will be an estimated 350 million neobank customers, more than doubling since 2021.
One key difference between neobanks and traditional banks is that Neobanks offer money management and financial services exclusively through online platforms. In contrast, traditional banks provide various online and in-person services.
Neobanks generally offer limited core digital banking services, mainly for savings and making payments. Traditional banks provide financial services such as car loans, mortgages, credit cards, and investment accounts.
Another notable difference is that neobanks often offer their services with low or no fees and provide tools to protect financial health, which may not always be available with traditional banks.
With the recent surge in interest in neobanks, it's reasonable to question the benefits you'd gain if you switched to neobanking.
- Since neobanks do not require physical bank branches, they can economise on administrative costs. As a result, neobanks can typically offer consumers zero or minimal fees and no minimum balance accounts.
- Neobanks are quite simple and user-friendly. Hence, you can easily create an account in minutes.
- Neobanks provide an easy method to deposit checks, manage your funds, and make payments. Because neobanks are entirely digital, they are available 24 hours a day and may be accessed from anywhere in the world at any time. You only need a mobile phone or computer and an active internet connection.
- Moreover, neobank applications may include capabilities that enable users to invoice, collect, and pay bills through a simplified user interface. These applications may be linked with your favourite accounting software to make bookkeeping more convenient and hassle-free.
Scallop is the world's first regulated neo-banking app that allows users to manage their crypto and fiat on a single and secure platform. It has multiple features like an IBAN account, Scallop Card, and Banking account. You can learn more about the Scallop app here.