What comes to mind whenever we hear the word “bank” is the usual traditional bricks and mortar, ATM and loads of paperwork.
There is no one person who will say they are not familiar with this very important institution in the world at large.
Far from what we used to know, technology has brought about yet another digital innovation, now in the banking sector, whereby banking transaction is made easier with just one click. It is called neobank.
A neobank is a financial technology (fintech) firm that gives customers access to online and mobile banking through apps, software, and other technologies.
A fintech firm would usually involve in specific financial services that include checking and savings account.
It is important to note that despite being transparent and nimble in their deals, more than our traditional banking system, a fintech firm still relies on existing megabanks to insure financial products.
It is surprising that despite being referred to as digital disruptors, many of these fintech firms also referred to as neobanks, are transforming the banking sector just like we have the likes of Uber and Bolt transform the face of transportation.
Neobanks are increasingly overwhelming in their growth as they drive a massive number of persons to pitch their tent with them.
Their success story could be tied to the cumbersome work, relatively slow means of transaction and other failings that plague the banking industry today.
Unlike the incumbent banking firms, neobanks use a different type of business model whereby they are able to make good returns on their revenue from the interchange.
Should you consider using neobanks, here are a few things to keep in mind.
The convenience of making all transactions from the comfort of your couch is quite fascinating; from making deposits to transfer and then withdrawals without any hassles.
Interestingly, neobanks do not bother their customers with exuberant fees, transactions are either at zero cost or at a very small rate.
Accounts are easily created with fast processing time, there is no need to wait in a queue.
However, neobanks may not be for everyone. The fact neobanks are operated via apps, software and the internet show that there is no physical space.
Their services are pared-down and focus more on checks and savings accounts. Neobanks do not give out mortgages or loans to customers and there are no physical contact with any in-person for assistance with accounts.
Some of their advantages; lower fees, higher rate of convenience makes them interesting to the younger generation. Its disadvantages, no bank charter, no physical branches, and fewer branches, could be a concern.
The emergence of neobanks is a result of the new digital era we are in and some of the hurdles of the incumbent banking institutions.
Neobanks will only foster quick assess to information, hassle-free financial transactions and create people that have complete control over their money.
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