Why Bank with Neobanks? 4 Reasons in a Nutshell

Neobanks are described as digital-first financial technology (FinTech) companies facilitating financial services through mobile and online banking. The adoption of Neobank’s financial services has been on the rise in recent years.

In fact, there were more than 146 million global neobank users in 2021. It is projected that there will be approximately 350 million neobank users worldwide by 2026.

Why are more and more users shuffling their finances to these rapidly emerging financial players? Here are some of the top neobank benefits that will make you take the leap!

1. Lower Fees

Because of the low operating costs, neobanks leverage from lacking physical banking locations and having generally lean business operations. They can pass these savings to users as lower fees and higher interest rates on checking and savings accounts.

Some neobanks even advertise no fees and complete transparency of any fees associated with offered financial services.     

2. Greater Financial Accessibility

Approximately 1.4 billion people around the world remain unbanked. Financial inaccessibility is a highly complex issue that may be attributed to a variety of different factors. For instance, limited banking locations near one’s home or not possessing formal documentation can dissuade people.

This documentation might include financial history and activity (which is necessary for financial institutions to conduct Know Your Customer [KYC] procedures that allows the authorization of the provision of financial products and services to customers). 

Neobanks prioritize digital financial services; anyone worldwide with access to the internet has the opportunity to enjoy a neobank’s products.

Neobanks are also known to accept alternative forms of data and information needed for users to access their offered products. This helps to increase financial accessibility to those that struggle to access financial services. For instance, financial inclusion initiatives in Africa and the Middle East use users’ mobile phone data to establish credit scores for people who find it challenging to score using traditional scoring methods.              

3. Faster Onboarding

Not long ago, one would have to travel to a physical bank location. Then spend hours filling out countless documents to open a checking or savings account.

However, digital-first neobanks are competing with traditional banking institutions by using the latest technologies to expedite the onboarding process. For instance, many FinTech firms are implementing biometric verification technologies to ensure that identifying documentation submitted is being presented by its rightful owners and not a random person.

The Anti-Money Laundering (AML) procedures that financial institutions must conduct when onboarding potential customers are also rapidly digitizing. Neobanks are now able to screen applicants through advanced global watchlists (such as Sanction, Warning, and PEP lists) in rapid time.       

4. Improved User Experience

Although traditional financial institutions have begun to improve the experience of accessing their financial products and services by enabling checking account creation or loan applications via a mobile app, it is no longer sufficient to digitize banking.

Despite offering similar banking capabilities as traditional financial institutions, neobanks are transforming into worthy competitors. Mainly because they are addressing user experience pain points found in traditional banking processes through digital innovation.

Digital innovations within the FinTech space appear in many forms. Such as the improved design of the site and mobile interfaces or the gamification of typically tedious processes. Even with the adoption of advanced technologies to create helpful financial tools (such as robo-advisors, credit trackers, or automated payments).

Also, it is essential to notice that digital innovation within banking is becoming an increasingly attractive selling point for digitally savvy younger consumers. As nearly 57 percent of millennials claimed they would change their bank relationship for a better tech platform.

As traditional financial institutions and emerging challenger banks go head-to-head in the battle of banking, it’s evident that this increasing competitive landscape is making both players prioritize the deciding voice of victory: the user.

It is time for the banking evolution!

In today’s digital age, many people want to simplify their finances and access their money on the go. Neobanks for gamers are perfectly positioned to meet this demand, offering a wide range of features and benefits that traditional banks simply cannot match.

Besides, they are constantly innovating, adding new features and perks to their platform that you wouldn’t want to miss.