What is a Neobank?
Neobanks are new generation banks which offer banking services over a completely digital platform, in particular mobile apps. Unlike traditional banks, they don't have a brick-and-mortar setup. Thus, users of such banks (only) interact with the bank's mobile apps (or website) to avail banking services.
Although internet banking isn't a new concept, the concept of neobank is still new (thus the word 'neo').
Neobank Business Model
While Internet banking is typically offered by traditional banks to its customers, Neobanks are founded independently of any traditional bank. They typically partner with traditional banks to offer banking services. Using a neobank, customers can avail traditional banking services (deposit, withdrawal, payment, loan etc.) as well as certain niche services usually at a much lower cost that traditional banks cannot offer.
Because of gaining extensive funding in recent years, Neobanks have become a buzzword in fintech industry. There are hundreds of players right now in the industry. N26 (Germany), Chime (US), Revolut (UK), Tinkoff (Russia), Nubank (Brazil), just to name few.
Neobank Success Factors
In a growing cashless society powered by smartphone-savvy generations, neobanks are challenging traditional banks with its unique customer-friendly smart banking experience and data-driven, extremely cost-effective business model. They are also called challenger banks for that reason.
Please add below other useful facts regarding NEOBANKS so we get a good overview.
Statrys Team (2020), "What are Neobanks?"
Rao, H. (2021)"What is a Neobank? Everything You Should Know", Razorpay
Crasulla (2019), "Neo Banks: Explaining the New Term in Digital Banking", Medium