Neobanks have garnered a lot of attention over the past few years. They have become an alternative to traditional banking.
In today’s era, you will hear about neobaneo banking again. Neo banks offer more convenience and have also lowered the banking fee significantly. Understanding the neo bank definition is also crucial at this point, and that’s why we are here with a beginner’s guide to understanding the concept.
What’s a Neobank?
A NeoBank is also called a challenger bank. It is the title of a financial institution that functions online and does not have any physical branches. Neobanks offers customers a digital-only experience that is easy to use. Since financial services have gone digital with Neobanks, it is easily accessible and convenient for customers. Neobanks have reduced the banking fee, and the higher interest rates are a thing of the past.
Since there is no physical location of neo banks, they are much more flexible than the usual traditional banks.
Now that you understand the NeoBank definition, you might want to find out the difference between Neobanks, online banking, and traditional banking. As you move forward, we will share the difference between these.
Online Banking Vs. Neobanks
Both online banking and neo-banking offer online banking services, but these two concepts are completely different.
Neobanks operate online, and there are no physical locations. It reduces costs and improves convenience. On the other hand, there is online banking which refers to banking done on the Internet. Only when you open a traditional bank account, can you go online and indulge in online banking.
Online banking, as a concept, is much broader than neo-banking. These days traditional banks offer online banking through mobile and web applications too.
Considering neo banks operate online and do not have physical branches, they focus on improving customer experience.
Traditional Banking Vs. Neobanking
As we mentioned above, neo-banking is solely available through mobile and web applications. Traditional banking requires you to go to a bank and avail the financial services. Traditional banks have a higher fee and it can be a little complicated to comprehend. Neobanks are more transparent, and the fees associated with these are low too.
You can connect with customer support online or by phone for neo banks, but in traditional banking, you may have to be there in person for many financial errands.
We’re all aware that the traditional banking process can be mentally and physically draining, and it can be lengthy too. Neobanks make use of technology to make the process automatic and quick.
The Advantages of NeoBanks
Neobanking is better than traditional banking for multiple reasons.
First, the operational costs are low. Neobanks offer a higher interest rate and lower fees. Banking has become much more affordable with NeoBanking.
Second, customers can now open an account and access the services round-the-click without needing to go to the physical bank. Everything is digitally accessible.
Thus, neo-banking is the present and it is also the future. It saves time and money, and you get 24/7 customer support whenever you feel stuck or have queries in your mind.
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