It’s clear that we have become more reliant on technology and mobile devices. Digital transformation means that queuing up in brick and mortar stores or restaurants has faded, being replaced by online food delivery platforms and e-commerce sites. We can order what we want with a tap of a finger. The same online nature can also apply to banking services. Large banking corporations are adopting mobile banking solutions to fulfill customers’ banking needs quicker. At the same time, they must compete with more tech-savvy banking corporations. Enter the neobanks alternative.
What is a Neobank?
Neobanks are financial technology companies that offer a range of financial services, such as setting up a checking account or making international transfers. They’re conducted 100% online, meaning that they don’t have a physical presence in the form of a branch that you can visit. Their services most likely can only be accessed via a mobile app or website. Therefore, it’s unlikely for you to meet a representative in the flesh; you can only reach them by telephone, email, or live chat.
Benefits of a Neobank
Neobanks is built around convenience. As neobanks are online-based, they can be accessed anytime and anywhere via your mobile phone or desktop. This is a stark contrast to traditional banking that has specific operational hours. Due to it being a digital-native company, neobanks tend to innovate at a much faster pace to meet customers’ wants and needs when compared to a traditional bank. Moreover, transfers can be received instantly without a lengthy process of verification or confirmation.
Neobanks typically have no physical branches, which means they have a lower overhead than traditional banks. This often translates to lower fees and better interest rates for customers. Some have no monthly fees and no minimum balance to create and maintain an account, like Airwallex. As the mobile workforce becomes the norm, it’s not uncommon for companies to outsource employees beyond their home country. Neobanks offer a much better exchange rate than a conventional bank, along with a more affordable transfer rate. This will enable businesses to save even more.
Downsides of a Neobank
Neobanks are relatively new to the finance space, so they don’t have a proven track record yet. Additionally, they offer more lean services than their traditional counterparts. With no branch available, customers who prefer face-to-face interactions may be reluctant to switch to a neobank, especially older generations. This can ultimately lead to limited growth.
The bottom line
Neobanks is a great option for those looking for a banking account with low fees that can be accessed and monitored via a smartphone. However, neobanks are a new player in the industry; they often offer fewer services than a traditional bank, so if you’re looking for a comprehensive banking solution with business loans and the like, a conventional bank is your best bet. Regardless of your banking choice, Lanturn is here to help you manage your money and investments effectively with our qualified experts. Contact us now!