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Aneobank is a type ofdirect bank that operates exclusively usingonline banking without traditional physicalbranches. In contrast to direct banks, in many cases, neobanks do not have their ownbanking licenses, and instead rely on partner banks.[1][2][3] They typically have lower operational costs, which can sometimes result in lower fees and more competitiveinterest rates.
The concept of branch-free, digital-first banking traces back to telephone-only and internet-only banks of the late 1990s and early 2000s (for example, ING Direct in the Netherlands/UK), which already emphasised low cost and online customer onboarding.[4]Following the global financial crisis of 2008, consumer trust in established banking institutions declined significantly, creating an opening for new digital-first entrants.[2]Between about 2010 and 2015, a number of fintech firms began offering banking-like services via apps; the term "neobank" began gaining traction from around 2017 onward.[5]
From the mid-2010s onward, especially in Europe and then globally, a number of dedicated digital banks emerged (for example, Monzo Bank in the UK, Revolut, Nubank in Latin America), expanding rapidly in customers, product breadth, and geographic footprint.[6]By the early 2020s, the neobank model had become mainstream enough to attract attention from regulators, incumbents, and investors alike, with scrutiny around profitability, regulation, and sustainability.[7]
Neobanks typically share features like:
Growth is driven by mobile adoption, digital expectations, open banking regulation, and rapid scale via technology.[2]Adoption is higher among younger, digitally literate populations and in countries with supportive regulatory frameworks.[7]Profitability pressure, competition, and regulatory headwinds are notable challenges.[12]
Neobanks can follow several regulatory/licensing paths:
Neobanks remain subject to regulatory requirements for deposits,know your customer (KYC),anti-money laundering (AML), and data privacy.[15]Digital models can create new operational and third-party risks.[16]
The term "neobank" gained popularity in 2019, but the term’s origins are older.[17][1] The term is used to describe fintech-based financial providers that were challenging traditionalbanks. There were two main types of company that provided services digitally: companies that applied for their ownbanking license and companies in a relationship with a traditional bank to provide those financial services. The former were called challenger banks and the latter were called neobanks.The term "challenger bank" is used in theUK to refer tofintech banking startups that emerged after the2008 financial crisis. Their services may be accessed by clients through their respectivecomputers ormobile devices.
Neobanks are operational inAustralia and include banks such asUp,Judo Bank, andAlex Bank.[18]
The concept of neobanks was first noted inBangladesh around 2020.[19][20] These banks would be digital only with customer accounts not connected to any particular branch.[21]
InIndia, a neobank is a class of digital-only or online bank that operates without physical branch locations.[22] Neobanks often partner with well-established, traditional banks to provide services and adhere to regulations.
Neobanks in India typically offer a range of financial services, includingsavings accounts,current accounts,debit andcredit cards, and other banking services. They focus on providing a seamless and user-friendly digital banking experience to a younger audience, with features like instant account setup, easy money transfers, and expense tracking. Some neobanks also target specific customer segments, such asmillennials, and offer features like budgeting tools and investment options to that demographic.
Indian neobanks primarily operate inIndian rupees and may have limited cross-border services. International transactions are often handled in partnerships with traditional banks.Federal Bank has partnered with Jupiter and Fi in the neo-banking space.[23]
Neobanks inIran are legally digital branches of banks.Central Bank passed a limiting law in 2022 which bans banks from starting mobile "neo" bank apps that have their own core.[24] There are a number of active programs such asOmid Bank,Tobank,Wepod and Zpod Kidzy,[25]Bank Mellat Plus.[26] Iranians need Identity national smart cards and video confirmation to open an account.[27]
Report fromSwedish police indicates that neobanks are popular with criminals and are frequently used in criminal transactions.[28][29]
Den som gör en sökning i olika mediedatabaser på ordet neobanker kan notera att de börjar dyka upp runt 2017 i olika tidningar och annan media. Det är emellertid först i år, 2019, som användning av ordet tar fart. Och det på allvar.
Neobanker och deras tjänster är dock också attraktiva för kriminella aktörer som utnyttjar dessa kanaler för att tvätta sina svarta pengar eller för att finansiera allvarlig och grov brottslighet, såsom finansiering av terrorism. Underrättelser vittnar om kriminella aktörer som flitiga användare av neobanker. (transl. However, neobanks and their services are also attractive to criminal actors who use these channels to launder their dirty money or to finance serious and serious crime, such as terrorism. Intelligence reports indicate that criminal actors are frequent users of neobanks.)
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