We are living in a digital world, and everything around us is being subjected to digitization. This is applicable to banks as well. Along with technological development, a new concept of banking has come to the world. It is known as Neobank. Continue to read and we will share all useful information that you need to be aware of Neobank through this article.
What is Neobank?
By definition, Neobank is a digital, or an internet-only bank. This type of a bank is fully functionally only on the internet. In other words, a Neobank doesn’t have a physical network of branches. The concept of Neobank was initially introduced during the 2005 to 2010 period. They were able to offer much-needed relief to people throughout the financial crisis. People could easily access the services offered by digital banks from their mobile devices and computers.
As of now, Neobanks have evolved, and they offer a variety of impressive services to people. The main income generating source for these banks is coming from transactions fees when customers make payments out of their debit cards.
What makes Neobank so popular?
Neobanks are capable of providing a convenient banking experience through mobile-focused banking. On top of that, people who use Neobanks will be able to get their hands on some eye-catching features as well. For example, it is possible for the customers of Neobanks to get some impressive cash-back or credit rewards.
You can even find well-established Neobanks out there. There is no need to think twice before you work along with such a Neobank. A well established Neobank is capable of offering credit cards, loans, and other investing products as well. Hence, you will be able to work along with a Neobank, in a similar way on how you work along with a traditional bank.
Since Neobanks operate without having any branches, there is no need for them to obtain a license. However, the Neobanks still partner up with traditional banks in order to provide protection to the customers out of Federal Deposit Insurance Corp.
The increasing popularity of Neobanks
The popularity of Neobanks is increasing along with time. For example, there were only 60 Neobanks around the world as of 2018. However, it increased up to 256 by the year 2022. The COVID-19 pandemic created an ideal environment for the development and progression of Neobanks as well.
When more players are coming into the competition, Neobanks came up with the need to innovate. This is where they started providing convenient access to the people with getting direct deposits. On the other hand, the Neobanks provide access to a nation-wide ATM network as well. Some of the Neobanks even offer digital wallets. They provide a convenient and a better banking experience to people.
To survive stiff competition, Neobanks are now looking for ways on how to offer innovative solutions to people out there. On the other hand, we can also see how Neobanks focus on offering specialized services to groups of people. For example, there are Neobanks that provide better services to international travelers and freelancers. If you belong to any of those groups, you may go ahead and get hold of the benefits that are available to you. You will not be able to get those benefits from traditional banks available out there.
Now you know what Neobanks are all about. While keeping these facts in mind, you may go ahead and get hold of the best Neobank available out there. Then you will be able to get impressive returns along with a perfect banking experience.