What are neobanks?
Neobanks are 100% digital. They run exclusively through mobile apps, with no brick-and-mortar premises. They offer customers a user-first design, and promise low cost banking operations. There are more and more neobanks around, drawing in millions of users and rivalling traditional banks, although they don’t technically hold the same status.
Don’t confuse neobanks with digital banks, which are usually the online-only arms of bigger players in the banking sector. You may have heard of the San Francisco based neobank Chime, which is the leader in the US at the moment. But brands like N26, Revolut and Monzo are also bringing over their expertise from Europe, where the online-only trend is further ahead. All were created in the late 2010s.
Ease of use is one of the main advantages with neobanks. New customers just need to download an app and can open an account without too much hassle. Other services like fund transfers, online payments and cash withdrawals are similarly user-friendly and inexpensive. Most of the time, there aren’t any income requirements or monthly maintenance fees. The interfaces are simple and foreign exchange fees are low. Some even have features enabling users to monitor their spending in certain areas and set monthly limits.
A recent neobank adoption study by Finder estimates that 54.4 million Americans already use digital-only banking services. falling coins That’s over 20% of the population. What’s more, a further 22.5 million intend to open a neobank account in the coming months.
While the digital-only nature of neobanks may seem most suited to millennials, it’s actually Generation X who use them the most. 30% of Gen Xers have made the transition to neobanks, compared to 27.2% of millennials. Baby boomers are the least likely to have a neobank account, with an adoption rate of just 8.4%.
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