What are Neobanks?
Neobanks are a new type of financial institutions that operates entirely online. They are most ideal for the younger generation of students who are no longer satisfied with traditional banking facilities. It is apt for those who want a facility that they could operate and access anytime within seconds from anywhere around the world.
Neobanks were first introduced in Germany and the UK about five years ago. Still, now. They have expanded and spread throughout America, Europe, Canada, Australia, and some parts of Asia.
How does Neobanks operate?
For some people, Neobanks are nothing more than just an app that they use to manage their money and make small transactions when needed. But for people who rely on technology and on the phone, new banks are nothing less than a traditional bank for them and even sometimes more.
For the younger generation, especially students who have limited resources, Neobanks serve the purpose of a purse, a savings account, an investment platform, payment or transfer service, and a personal asset for giving their credit score a kick start; all at once.
All you need to do is download the app on your phone, tab or computer and register for an account.
Most Neobank services are somewhat dependent on traditional banking because they first allow you to link your traditional bank account to your new bank account to transfer the initial funds. This is much more convenient because it helps you to manage your finances more efficiently.
What services does Neobank offer?
Different Neobanks have different distinguished features that make them unique on their own. But there are some basic facilities that offered by all Neobanks that make them more suitable for the younger generation, they are-
- Open a saving or checking account.
- Transfer fund from your account you another individual’s account or a company quickly from the phone.
- Invest in different financial sectors such as fixed deposits, bonds, etc.
- Buy Insurance
- Sanction small amounts of loan when needed
- It can be accessed fully through an online app
What are the benefits of using Neobanks?
- Low costs
In most Neobanks, there is almost little to no regulation and less credit risk. Some basic facilities offered thus distinguishing it allows them to operate at a low cost. The products offered by new banks are cheaper than traditional banks and often do not require any monthly maintenance fees. This is the foremost reason why the youngsters more prefer neobanks.
- Faster processing time
This tech-based service helps its customers save a lot of time while setting up the account or processing transaction requests.
Only a handful of neobank offer loans, and even during applying for the loan, a customer can save a lot of time because it does not require them to fill up a long, lengthy and detailed application form. The youth of today do not like to spend time on anything.
- More convenient than traditional banks
No more standing in long queues and waiting for hours at the bank anymore. Neobanks allows the customers to perform all the tasks on a simple mobile phone app.
- Best suited for the new tech-savvy generation
Neobanks services are operated entirely online. So for this present techo-cool generation of youth, Neobanks are just the right fit.
- Travel friendly
Many students need to travel for education or just like travelling as a hobby. But travelling with too much cash money on self can be dangerous and risky. But you can access a neobank from anywhere around the world which makes it suitable for travelling. And you can transfer money to multiple currencies using Neobanks without having to visit any currency exchange office.
- Customer Oriented
Neobanking is a reasonably new concept. Thus, they still like to offer as much as assistance as possible to attract more users.
Most neobanks are very fluid and try to adapt to new technological changes as soon as possible to be more convenient to their users.
- What are the disadvantages of a neo bank?
There are a few setbacks of using Neobanks, like, If you are someone who gets paid in cash or has to make physical monetary transactions much then neo banks might not be for you.
It is not a significant concern, but some people fear using Neobanks because they think it is unsafe. But contrary to the belief, Neobanks is very much safe, and most of them operate with the highest level of online security.
- What is the future of neobanks?
Neobanks are fast expanding throughout the world. And as predicted, they might soon impact the world financial market shortly.
- Do Neobanks have a bank license?
Neobanks do not have any bank licence of their own, but they operate and provide banking services depending on the bank licence of their partner banks and financial company.
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