The root “neo” in Greek means “young” and “new”. So, neobanks are, in fact, the common banks, only updated and upgraded. And as in the realities of the 21st century, almost always to update means to digitize and to pass to the Internet, neobanks are, in fact, conventional banks, but with no physical branches; and using mobile applications and websites to provide their services.
- Customer confidence in banking: UK – 33%, France – 33%, Germany – 40%, Italy – 24%, USA – 37%, Thailand – 89%, Malaysia – 86%, Philippines – 77%, China – 72%, India – 70%.
- The UK itself has witnessed over 30 challengers applying for a banking licence in the past four years, but just 8 banking licences were granted by regulators between 2010 and 2015.
Like their cousins in FinTech, they do not have a banking license (i.e. they rely on a partner bank to operate, so technically they are NOT a bank).
The product they offer is the current account (which is a ‘core’ banking service);
The attractive feature of Neobanks is that their current account products are usually improved by additional features as Personal Financial Management tools, bookkeeping tools, etc.
Examples : Simple, Moven, Holvi, Monese.
Main source of confusion: These type of fintech players are confused pretty often with the below-explained ‘new challenger banks’. This is perhaps due to the fact that the label neobank might be misleading since as I mentioned, they are not technically a bank.
Source : Kantox