Log in
Enquire now
Neobanking

Neobanking

A neobank exists solely online without any physical branches and independently or in partnership with traditional banks. This enables them to navigate and comply with the regulatory environment.

OverviewStructured DataIssuesContributors

Contents

Is a
Industry
Industry

Industry attributes

Parent Industry
Banking
Banking
‌
Online banking
Financial services
Financial services
Wealth management
Wealth management

Other attributes

Also Known As
Challenger Bank
Digital Bank
Internet-only Bank
Online Bank

A neobank is a type of direct bank, that operates exclusively online without traditional physical branch networks. It's a wide umbrella of financial service providers. Neobanks can be called financial technology firms that provide digital and mobile-first financial solutions payments and money transfers, money lending, and more.

Neobanks don't have a bank license of their own but count on bank partners to provide bank licensed services. Unlike a traditional banking system, neobanks have an online and mobile first business model. But, like traditional banks, neobanks do make money marginally between money inflow and lending.

Since neobanks are completely digital, they open up a wide window of advantages to a customer.Most Neobanks focus on providing customers with a single product or service, competing with banks on customer service, products and margin to bring the offering to market. As they gain customers, neobanks often expand their offerings.

History

The term "Neobank" became prominent in 2017 to describe Financial Technology-based financial providers that were challenging traditional banks and the traditional banking model. There were two main types of neobanks that provided services digitally to customers:

  1. Neobanks that applied for its own banking license to provide financial services.
  2. Neobanks that partnered with traditional banks to provide those financial services.

Early Neobanks, such as Monzo or Starling Bank in the United Kingdom, quickly grew by launching beta products with an e-Money license (a license authorized by the FCA that ringfences customer deposits so they can't be used to generate profit). As they have grown, some neobanks applied for full banking licenses with the FCA while others have acquired fully-licensed banks to develop their products and services.

Relationship with Robotics

Neobanks are set to have a similar impact on the banking industry that robotics have had on the manufacturing industry. Neobanks use automation tools, artificial intelligence algorithms, and chatbots to cut down on upfront costs and provide a similar or better user experience of traditional banks at a lower cost. They have also provided greater transparency for those customers and reduced the hidden penalties consumers associate with traditional banks. And, in the case of credit, loan, or mortgage approvals, neobanks often cut down on the time for application and approval. This is often done through innovative or new ways of evaluating an individuals credit or automation of the credit application process. Neobanks, in some cases, allow users to pre-qualify for a loan and see interest rates within minutes.

At the same time, as traditional industries found new ways to use robotics in their industries to automate or compete, traditional banks are increasingly adopting the principals and products developed by neobanks or are acquiring the neobanks. And in the same way robotics and automation has reduced jobs in traditional manufacturing industries, Neobanking has reduced the roles of bank tellers, investment brokers, wealth managers, and others throughout the banking industry.

Timeline

No Timeline data yet.

Companies in this industry

Further Resources

Title
Author
Link
Type
Date

Fintech lending is passé, neobank is in. And, it's ICICI Bank winning for now.

Arti Singh

https://prime.economictimes.indiatimes.com/news/73114004/fintech-and-bfsi/fintech-lending-is-pass-neobank-is-in-and-its-icici-bank-winning-for-now-

Web

January 6, 2020

How Will Artificial Intelligence Change The Banking Industry?

Meha Agarwal

https://www.fintechnews.org/how-will-artificial-intelligence-change-the-banking-idustry/

Web

January 13, 2020

India's Neo-Banks: What's So 'Neo' About Them?

Advait Rao Palepu

https://www.bloombergquint.com/business/fintech-news-indias-neo-banks-whats-so-neo-about-them

Web

December 4, 2019

NeoBanking: Is the future of Banking here?

Keshav Bagri

https://medium.com/datadriveninvestor/neobanking-is-the-future-of-banking-here-469148216d15

Web

September 21, 2019

Neobanks and the next banking revolution

PricewaterhouseCoopers

https://www.pwc.in/consulting/financial-services/fintech/fintech-insights/neobanks-and-the-next-banking-revolution.html

Web

References

Find more entities like Neobanking

Use the Golden Query Tool to find similar entities by any field in the Knowledge Graph, including industry, location, and more.
Open Query Tool
Access by API
Golden Query Tool
Golden logo

Company

  • Home
  • Press & Media
  • Blog
  • Careers
  • WE'RE HIRING

Products

  • Knowledge Graph
  • Query Tool
  • Data Requests
  • Knowledge Storage
  • API
  • Pricing
  • Enterprise
  • ChatGPT Plugin

Legal

  • Terms of Service
  • Enterprise Terms of Service
  • Privacy Policy

Help

  • Help center
  • API Documentation
  • Contact Us
By using this site, you agree to our Terms of Service.