Neobanks - Did you know!
The increasing use of mobile technology and banks loosing people’s trust for traditional banks following the economic crisis make this a fertile time for new financial firms.
Neobanks is gaining media attention. Neobanks can be characterized in various ways. To understand how these banks differ from traditional banks, it may be useful to look at how they relate to a pillar of traditional banking: the right to offer banking services. All traditional banks have their own bank license, but one way to group Neobanks is based on how they acquire the right to operate.
Neobanks being one of the startup collection to manage your money digitally. Everything from the account-opening process to the customer service experience is unlike traditional banking. Neobanks existense started in 2010 with varying degrees of success. Today the landscape is shifting, with some neobanks acting more and more like traditional banks, even as traditional banks try to compete with the neobanks by launching stand-alone brands. It is important to know that neobanks are usually not banks.
How does Neobank differ from traditional banks:
•Low cost structure: no monthly fees, no withdrawal costs and low reloading fees.
•Large ATM networks with no fees.
•No overdraft fees
•A simple and engaging mobile experience.
Some neobanks also provide ways to use retail facilities for making deposits, reloading their accounts or paying bills
Disadvantages of Neobanks:
•No branch access
•No personal touch
•No deposit option of physical cash
That is not to say neobanks themselves aren’t evolving, and this criticism might not be true within a few years.
Future of Neobanks:
•Likeky to expand into new product lines
•Traditional banks will tap into this market fir their benefit.
Neobanks are called Challenger Banks in Europe.