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A neobank is a type of direct bank that operates exclusively using online banking without traditional physical branch networks that challenge traditional banks.[1][2][3]

Europe

Main article: Neobanks in Europe

The term neobank has been in use since at least 2016[1] to describe fintech-based financial providers that were challenging traditional banks. There were two main types of company that provided services digitally: companies that applied for their own banking license and companies in a relationship with a traditional bank to provide those financial services. The former were called challenger banks and the latter were called neobanks.

The term "challenger bank" is used in the UK to refer to a number of fintech banking startups that emerged in the wake of the 2007–2009 financial crisis. Their services may be accessed by clients through their respective computers or mobile devices.

Asia

Bangladesh

Idea of neobank started floating in Bangladesh around 2020.[4][5] These banks would be digital only with customer accounts not connected to any particular branch.[6]

India

In India, a neobank is a class of digital-only or online bank that operates without physical branch locations.[7] They are different from traditional banks in that they don't have physical branches and typically have lower operational costs, which can sometimes result in more competitive fees and interest rates for their customers. Unlike Europe, the regulatory environment in India is complex, with stringent regulations that govern banking and financial services. Neobanks often partner with well-established, traditional banks to provide services and adhere to these regulations.

Neobanks in India typically offer a range of financial services, including savings accounts, current accounts, debit and credit cards, and other banking services. They focus on providing a seamless and user-friendly digital banking experience to a younger audience, with features like instant account setup, easy money transfers, and expense tracking. Some neobanks also target specific customer segments, such as millennials, and offer features like budgeting tools and investment options to that demographic.

Indian neobanks primarily operate in Indian Rupees and may have limited cross-border services. International transactions are often handled in partnerships with traditional banks.

References

  1. ^ a b "Digital Economy Outlook" (PDF). BBVA Research. 2016. p. 12.
  2. ^ Ballard, Barclay (October 11, 2018). "The unstoppable rise of neobanks". World Finance. Retrieved 31 December 2018.
  3. ^ "What is a neobank?". Business Standard India. 6 May 2022. Retrieved 14 May 2022.
  4. ^ "Bank Asia to establish neobank". The Financial Express. Retrieved 2024-03-26.
  5. ^ Parvez, Sohel (2023-08-06). "NRB Bank plans to introduce neo-banking services". The Daily Star. Retrieved 2024-03-26.
  6. ^ Hasan, Md Mehedi (2024-01-25). "Bangladesh plans more licences for digital banks in push to go cashless". The Daily Star. Retrieved 2024-03-26.
  7. ^ Vaidhyanathan, Jaya; Aashika, Jain (2021-11-21). "What Is Neobanking And How Does It Work?". Forbes Advisor. Retrieved 2023-10-21.