Everything You Need to Know About Neobanks

Neobanks, the 'neo' prefix standing for new, are recent entries into the world of banking and finance, offering distinct benefits to customers over their traditional financial counterparts. Much like traditional banks, neobanks are financial platforms where users can store money or invest in certain services. Most of the time, a neobank is a financial platform launched by a Fintech business that focuses specifically on one financial service. 

You could find a neobank that specializes directly in saving accounts, investment accounts, or checking accounts. In the industry, neobanks are sometimes referred to as "challenger banks." This name dates back to just after the financial crisis, where UK-based Fintech platforms launched banking alternatives to challenge the banks that had recently failed their customers.

Fintech platforms focusing on taking over a sizable piece of the industry is nothing new. If we look at the past few years, we can see companies like AirBnB and Uber rise to rapidly capture a market segment. Airbnb has over 150 million users per year, competing against the hotel industry by offering something extremely similar. Uber is another example of this, capturing the taxi and cab market by providing personal chauffeurs that you can order from an application.

Neobanks are the answer to the continual failures of the banking industry over the past three decades. A great example of a modern neobank is Boxwind, which provides a whole host of alternative financial investment opportunities to its audience. By capturing customers that are looking for more reliable, supportive, or revolutionary banking services, neobanks have been able to rapidly siphon customers away from traditional finance and into their fintech platforms.

What Makes a Neobank Different From a Traditional Bank?

Most of the time, Neobanks are entirely digital, being an online service that's accessible either through a website or a mobile application – or both! This digital-first approach prioritizes accessibility, allowing people to get started as easily as possible. Equally, because they are built by fintech companies, most neobanks are directly on the pulse of what's new in the world of technology.

Traditional financial institutions are extremely slow to change, taking years to adapt to recent trends in the world of finance and technology. Due to the layers of boards and hierarchy structures, any single change will have to move through several rounds of checks, approvals, and testing before being launched. Most fintech services are a much smaller team, delivering a faster service that gives its users the very best financial tools as quickly as possible.

This tech-first approach has revolutionized this industry, with neobanks rapidly becoming a popular choice for younger consumers. For example, Chime, a US-based neobank, has over 12 million active users, representing one of the largest neobanks that are currently active. Users turn to neobanks because they offer a speed of change, innovative features, and a modern approach to banking that traditional finance has not had for years. 

What Are the Benefits of a Neobank?

Neobanks pride themselves on offering a distinct set of financial services to users. While they still offer savings accounts, checking accounts, or investment accounts, they must bring something extra to the game in order to set themselves apart from traditional finance. It is within this need to push the boundaries that most of the benefits to neobanks lie.

For example, there are a number of user benefits to using neobanks:

• Rates and Fees – Neobanks offer more favorable rates to users, allowing people to get more from their money. 
• Easy-of-Access – Neobanks are accessible to anyone directly through their mobile device. By downloading a neobank application, a user is instantly able to get access to a new financial system, allowing them to rapidly branch into a new way of managing their finances. 
• Integrated Features – Neobanks are also famous for using their fintech platforms to push the bounds of what a banking app can do that little bit further. Beyond just including a savings account, a neobank platform may also have an in-app budgeter or saving planner. By including these additional features, users can get more from their financial applications.

Neobanks are continually innovating, their close relationship with the world of tech allowing them to constantly get better, include new features, and deliver unparalleled financial banking experiences. 

What Are Some Famous Neobanks?

Based on current trends, by the end of 2023, there should be nearly 400 million users of neobanks. This astounding figure demonstrates just how rapidly this industry has grown, with people around the world trading in their traditional finance accounts for a neobank.

Although neobank is a fairly new term, the companies behind these financial applications are far from new. In their midst, there are companies like Alpari and FXTM, both run by Exinity Group. These three have decades of experience in remote parts of the financial landscape, with a strong brand presence on an international scale, making them a trustworthy brand to bank with.

The latter company, Exinity Group, has made another major splash in this world over recent months, announcing the 2023 launch of Boxwind. Boxwind is the answer to the limited financial services that users currently have access to. Instead of forcing users to get their fintech services from several different companies, Boxwind empowers customers by giving them everything they need on a singular platform.

Beyond just offering neobank capabilities, Boxwind will also allow for cryptocurrency trading and investment, bringing a further feather to the portfolio cap of the general public. Alongside other major leading neobanks, Boxwind is demonstrating that the banking industry is on the cusp of innovation.

We can't wait to see how disruptive neobanks can be in the financial industry, with the next ten years shaping up to be an extremely exciting time.