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Home » Neo Banking: A Beginner’s Guide To Digital Currencies

Neo Banking: A Beginner’s Guide To Digital Currencies

Digital Currencies

Nowadays, with technology becoming more readily available and cheaper, what was once deemed a luxury has become a necessity. Take banking, for example. It has been a business dominated by notoriously slow traditional banks that have not been able to keep up with the tech-savvy customers who are used to ultra-fast internet speeds and 15- minute food delivery services. Customers have complained of high fees, long waiting periods, security issues, and limited working hours – just to name a few cases among many. Since then, fintech companies have decided to step in and fill this gap by building an all-new kind of bank – the neobank.

The definition of fintech has been rapidly evolving these past few years, and we now have dozens of startups challenging the status quo. Banks and financial institutions have caught onto this trend and started launching their own fintech projects. And as most trends go, neobanks have now made it to the mainstream. So before moving forward and introducing you to the A to Z of Neo Banking, let’s dive into some basics of it.

What is Neo Banking?

A new breed of financial institutions is emerging, and they completely redefine the way we think about traditional banks. These digital-only banks, appropriately named “neobanks,” operate solely online and offer customers all the conveniences of banking, without needing to set foot inside a brick-and-mortar bank. In addition to being a breath of fresh air for popular consumer banking services that until now have been trapped in outdated models, neobanks represent an inevitable wave in finance. Here’s how the neobank ecosystem operates today:

How Does a Neo Bank Work?

Neobanks offer banking services that are delivered through digital platforms without any physical branches. They offer digital solutions for payments, money transfers, lending, and more. There are three types of neobanks. The first is when a traditional bank launches its digital-only initiative in the form of a neobank. The second type is when a traditional bank acquires an existing neobank and merges it with its other digital banking services. And the third type is standalone neo-banks that operate under digital banking licenses.

What are the Benefits of Neo Banks?
Cut-down on Charges: Lowering costs to the bare minimum makes for a leaner, meaner, and more efficient operation. Neobanks don’t have physical branches and are, therefore, able to charge clients lower fees while paying higher interest rates. This makes neobanks more lucrative than traditional banks.

Better UI: Smoother user interface (UI) and more consistent UX means that customers are finding it easier to navigate their way around the site. The days of clicking into 5 different sub-menus before finding what you wanted are finally over.

Save Time and Efforts: Traditional banks are slow in adopting new technologies, but neo-banks are not. Banks that offer online banking products have to manually input the data provided by the user into their existing system. This leads to mistakes and delays of 2 to 3 weeks. Neo-banks on the other hand, automatically sync the data across all devices and receive real-time information on a client’s transaction history or account balances. This results in clients’ being much happier as they no longer have to wait for their statements or go through tedious procedures when they need something done.

Ease of Use: Neobanks offer customers a much more streamlined banking experience. The account can be set up in a matter of minutes, and there is no need to visit a branch or wait in long lines to open an account. Waiting time to see an investment advisor at traditional banks can also be long, but with neobanks, users can access their accounts digitally and make investments from anywhere.

Bottom Line

Neobanks is still new, but their potential for growth is huge. As banks incorporate more features that appeal to the younger generations, neobanks will continue to grow in popularity. The winners in this space will be the neo-banks that can craft a strong brand image and a consumer-friendly user experience while building efficient digital platforms.

FAQs

Neobanks offer businesses several advantages, including automation, cost-cutting, and speed. Neobanks are also innovating much faster than their traditional counterparts, and businesses can be sure they’re ahead of the curve.

Neobanks are banks without physical locations, existing entirely online. They provide digital solutions for payments, money transfers, lending, and more.

Digital banks are an extension of traditional banks, offering traditional services online. Neobanks, on the other hand, offer completely digital services, without any existing physical branch.

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