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FinTech
What is Neobank?
Quick answer
A bank or banking service that operates entirely online through apps, without traditional physical branches.
Neobank, explained
Neobanks offer accounts, cards, payments, savings tools, and sometimes loans through a smartphone app. They typically focus on a clean user experience, fast onboarding with digital KYC checks, real-time spending notifications, and lower fees than traditional banks.
Some neobanks hold their own banking licenses, while many partner with licensed banks that hold customer deposits behind the scenes. This distinction matters for regulation and deposit protection, which varies by country. Neobanks often target specific groups, such as freelancers, small businesses, students, or people who are new to formal banking. Their challenges include turning large user numbers into sustainable profits, managing fraud, and competing as established banks improve their own apps.
Related terms
Banking as a Service
A model, known as BaaS, in which licensed banks provide their infrastructure through APIs so other companies can offer financial products.
FinTechFinancial technology: software and services that improve or automate financial services such as payments, lending, and investing.
Know Your CustomerThe process financial and other regulated businesses use to verify customers' identities and assess risks such as fraud or money laundering.
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