What is the Definition of a neo-bank:
A neo-bank is a digital bank, accessible only via a mobile application (neobanks are also called mobile banks). In reality, a neo-bank is not a bank but generally a payment institution that relies on technological innovations to formulate offers more in line with the expectations and behaviors of banking users. Their success lies in their ability to aggregate several technological solutions to offer the best services in defined areas at competitive rates (management tools, payment, UX, fluid and ergonomic application … etc.).
What are the advantages of a mobile bank?
The pros of mobile banks are their 100% simplicity, their near-free, and their ergonomics. The customer can manage his bank account with more comfort and responsiveness through innovative mobile applications and features. The subscription of a bank account in a neobank is completely dematerialized and fast (takes just a few minutes).
These digital banks are aimed at a wide audience because they do not impose barriers to entry (no income requirement or outstanding amount). They can, therefore, accommodate people in all financial frailty or those who have had to deal with payment incidents causing their enrollment in FCIP or a situation of banking prohibition. Neobanks do not accept overdrafts, which limits their administrative needs to verify the user’s profile.
Mobile banks include in their offer a bank account associated with a conventional bank card or a card with systematic authorization (Visa or MasterCard). The customer of a Neobank manages his bank account via a mobile application. NeoBanks place particular emphasis on their usability, the fluidity of navigation and the features put in place to seduce the user. The user experience is thus at the heart of their concern.
To attract customers and to find a place in a sector where large banking groups reign, they also rely on their attractive rates. In addition to free account maintenance fees and access to a generally free credit card, they try to attract certain customer segments such as travelers, young people or professionals. They formulate adapted services and offer aggressive tariffs with complete transparency, especially for payment and withdrawal transactions in foreign currencies.
The differences between a neobank and an online bank?
An online bank is a real bank, while a neobank is just a payment institution:
The term neobank or digital bank is causing some confusion, especially when comparing them to online banks. The main difference is their nature. An online bank is a real bank, moreover, a subsidiary of a traditional/physical bank. It, therefore, has its technical structure and quality services. On the other hand, a mobile bank is still a payment institution for the time being, even though more and more of them are seeking and obtaining a banking license at the European level from the authorities, or even being bought by a major banking group. They must, therefore, rely on a bank to operate and secure deposits of money.
A neobank is 100% based on a mobile navigation for connection support:
Historically, online banks have surfed the democratization of the internet to develop their services. Their interface was thus worked for desktop media (desktops then laptops). The neo-banks, banks been 100% digital, have benefited from a switch from computer navigation to mobile navigation (smartphone, tablet). They have therefore built their applications thinking only of the mobile support, which implies changes in approach in terms of usability, design and content formats.
Online banks offer slower registrations because they need to claim and analyze supporting documents. On the other hand, a mobile bank(neobanks) develops a more direct, less time-consuming customer journey, with no barriers to entry and no commitment.
Bank users are increasingly interested in the features included in the digital banking offer. NeoBanks are very advanced in this area, which is logical since it is the heart of their strategy. The immediacy is particularly valued (registration in a few minutes, account balance in real-time, alert notifications, crowdfunding, online kitty, transfers by simple phone number, etc.). Online banks are confined to classic features, although they are currently putting a lot of effort into improving their mobile apps and catching up.
In terms of rates, online banks continue to be the best, because of lower structural costs (no physical agencies and fewer staff), they are particularly aggressive in winning new customers. And some do not impose a barrier to entry by maintaining free or by punctuating a limited participation. They also offer boosted rate booklets and attractive welcome bonuses. NeoBanks/Mobile banks charge maintenance fees or charge certain transactions such as the withdrawal of cash in euros, especially since they can not rely on their own ATM network.
Number of customers:
Apart from the large banking groups that largely hold their own in terms of the volume of their client portfolio, online banks and neo-banks are trying to grab market shares. They still share some 4.4 million customers who have chosen to open a bank account in an online bank. In France, usa and many countries, online banks are still ahead of NeoBanks.