Neobank Explained
A neobank is a type of direct bank that operates exclusively using online banking without traditional physical branch networks, thus challenging traditional banks.[1] [2] [3]
Europe
See main article: Neobanks in Europe. The term neobank has been in use since at least 2016 to describe fintech-based financial providers that were challenging traditional banks. There were two main types of company that provided services digitally: companies that applied for their own banking license and companies in a relationship with a traditional bank to provide those financial services. The former were called challenger banks and the latter were called neobanks.
The term "challenger bank" is used in the UK to refer to a number of fintech banking startups that emerged in the wake of the 2007–2009 financial crisis. Their services may be accessed by clients through their respective computers or mobile devices.
Oceania
Australia
Neobanks are operational in Australia and include banks such as Up, Judo, Alex.[4]
Asia
Bangladesh
The concept of neobanks was first noted in Bangladesh around 2020.[5] [6] These banks would be digital only with customer accounts not connected to any particular branch.[7]
India
In India, a neobank is a class of digital-only or online bank that operates without physical branch locations.[8] They typically have lower operational costs, which can sometimes result in lower fees and more competitive interest rates for their customers. Unlike in Europe, the regulatory environment in India is complex, with stringent regulations that govern banking and financial services. Neobanks often partner with well-established, traditional banks to provide services and adhere to these regulations.
Neobanks in India typically offer a range of financial services, including savings accounts, current accounts, debit and credit cards, and other banking services. They focus on providing a seamless and user-friendly digital banking experience to a younger audience, with features like instant account setup, easy money transfers, and expense tracking. Some neobanks also target specific customer segments, such as millennials, and offer features like budgeting tools and investment options to that demographic.
Indian neobanks primarily operate in Indian rupees and may have limited cross-border services. International transactions are often handled in partnerships with traditional banks. Federal Bank has partnered with Jupiter and Fi in the neo-banking space.[9] Federal Bank has adopted a "branch-light, distribution-heavy" model.
Iran
Neobanks in Iran are legally digital branches of banks. Central Bank passed a limiting law in 2022 which bans banks from starting mobile "neo" bank apps that have their own core.[10] There are a number of active programs such as Omid Bank, Tobank, Wepod and Zpod Kidzy,[11] Bank Mellat Plus.[12] Iranians need Identity national smart cards and video confirmation to open an account.[13]
See also
Notes and References
- 29 August 2024. https://web.archive.org/web/20240829071332/https://www.bbvaresearch.com/wp-content/uploads/2016/01/DEO_Jan16.pdf. live. January 2016. Digital Economy Outlook. BBVA Research. 12.
- Web site: The unstoppable rise of neobanks . 29 August 2024 . https://web.archive.org/web/20240829071554/https://www.worldfinance.com/banking/the-unstoppable-rise-of-neobanks . live . . Barclay . Ballard . October 11, 2018 . 31 December 2018.
- News: What is a neobank? . 14 May 2022 . 29 August 2024 . live . https://web.archive.org/web/20240829071706/https://www.business-standard.com/podcast/finance/what-is-a-neobank-122050600048_1.html . . 6 May 2022.
- Web site: https://archive.today/20240829063354/https://www.canstar.com.au/savings-accounts/neobanks/ . 29 August 2024 . 29 August 2024 . 21 June 2023 . Alasdair . Duncan . Nina . Tovey . Neobanks: what are they and what are your options? . Canstar . live.
- Web site: Bank Asia to establish neobank . 2024-03-26 . . 1 September 2020 . en . 29 August 2024 . https://web.archive.org/web/20240829070714/https://thefinancialexpress.com.bd/trade/bank-asia-to-establish-neobank-1598934589 . live.
- Web site: Parvez . Sohel . 2023-08-06 . NRB Bank plans to introduce neo-banking services . 29 August 2024 . https://web.archive.org/web/20240829070939/https://www.thedailystar.net/business/economy/news/nrb-bank-plans-introduce-neo-banking-services-3387401 . live . 2024-03-26 . The Daily Star . en.
- Web site: Hasan . Md Mehedi . 2024-01-25 . Bangladesh plans more licences for digital banks in push to go cashless . 2024-03-26 . . en . 29 August 2024 . https://web.archive.org/web/20240829064543/https://www.thedailystar.net/business/news/bangladesh-plans-more-licences-digital-banks-push-go-cashless-3527496 . live.
- Web site: Vaidhyanathan. Jaya. Aashika. Jain. 31 July 2024. What Is Neobanking And How Does It Work?. 2023-10-21. Forbes Advisor. en-US. 29 August 2024. https://web.archive.org/web/20240829070304/https://www.forbes.com/advisor/in/banking/what-is-a-neobank/ . live.
- Web site: Groww in talks with Federal Bank for neo-banking vertical.
- Web site: Mahsa . Taati . دستورالعمل بانک مرکزی؛ تهدیدی برای نئوبانکها در ایران؟ . 29 August 2024 . https://web.archive.org/web/20240829065018/https://way2pay.ir/348261/ . Banking experts answered in a conversation with the payment method / instructions of the central bank; A threat to neobanks in Iran? . fa . live . 10 December 2023 .
- Web site: ارائه تسهیلات خرد بانکی برای کودکان و نوجوانان در کیدزی . 29 August 2024 . live . https://web.archive.org/web/20240829065406/https://way2pay.ir/362917/ . Amir . Javednia . Providing micro banking facilities for children and teenagers in Kidzi . fa . 6 May 2024 .
- Web site: خط خوردن نئوبانک بازگشت بانک دیجیتالی به متن . Neobank's line is the return of the digital bank to the text . fa . 29 August 2024 . https://web.archive.org/web/20240829065939/https://peivast.com/p/146147 . live. 8 November 2022 .
- Web site: بانکداری الکترونیکی در لباس نئوبانک . 29 August 2024 . https://web.archive.org/web/20240829065722/https://peivast.com/p/102221 . live . Electronic banking in neobank clothing . fa . 26 May 2021 .