For the last decade or so, we have witnessed evolution in many industries. The transportation industry evolved with the emergence of companies such as Uber, and the tourism industry has evolved with the emergence of companies such as Airbnb. A transformation in the banking industry was due – and neobanks are bringing that transformation.
A neobank is a digital bank which often works only through a mobile app and has no physical branches. Neobanks provide a wider user experience than a traditional bank. We have categorized neobanks into the following three categories:
1. Licensed Digital Banks: Startups which are licensed. E.g., Paytm Payments Bank (India)
2. Over the Top: Startups which have tie-ups with other licensed banks. E.g., Monese (UK)
**3. Bank Digital Initiatives: **These are traditional banks with a digital extension. E.g., CBD NOW (UAE)
In this article, we will focus on: 1. Licensed Digital Banks and 2. Over the Top.
How is the service offering different from traditional banks?
Neobanks offer innovative features and offerings that are different from traditional banks including fast account opening, free debit card, instant payments, cryptocurrencies, lower costs, mobile deposits, P2P payments, mobile budgeting tools, user-friendly interfaces, etc. We have discussed some of the top innovations happening in this space below:
Account Opening: Neobanks offer simple and fast online account opening compared to traditional banks. E.g., Joint account opening by Starling Bank.
**International Payments/Remittances: **Neobanks offer the usage of their debit card in foreign countries for no fees and at live exchange rates. E.g., Revolut provides its’ customers with Revolut card, which supports card payments and ATM withdrawals
