The rise of online banking is a natural progression of the global trend toward digitization. The days of physically visiting a bank branch are numbered, and it’s easy to see why. A customer’s time and energy may be significantly taxed when dealing with a conventional bank. They now expect to manage their finances with a few taps on their smartphones. There has been a rapid ascent of neobanks in today’s increasingly digital financial landscape. Neobanks are online-only financial institutions.
With its immersive, digital overlay on top of conventional banking, neobanks offer a frictionless digital encounter. Customers may easily sign up for accounts and start using the services on their own because of the streamlined design of the company’s technological infrastructure. But what does the future hold for Neobanks for startups? What are the benefits of neobanks? We will cover everything from how neobanking services work and explain how the future of banking is going to be with some practical neobanking examples, in this article.
What is Neobanks?
The only way to use neobanking is over the internet. It has no brick-and-mortar locations and does all of its business via phone, online chat, and email. Neobank compiles its offerings into a single, convenient mobile app. Clients are increasingly turning to neobanks because they provide a wide range of services that are tailored to the requirements of modern consumers. Now, there are about 400 neobanks operating worldwide, with close to 1 billion customer accounts being served despite the worldwide economic recession. Read on to learn more about the future of banking.
Definition and characteristics
Neobanks are the virtual banks of the 21st century, which exist only in the digital realm. Payments, wire transfers, loans, and more may all be handled digitally and conveniently using their smartphone app. Customers are able to make deposits as well as withdrawals of money using their services. They provide a wide range of services including investment options and debit cards. They also serve as a source for loans and credit. Neobanks for startups have the following characteristics in common.
- Reduced Prices – As neobanks don’t have physical locations, they don’t have to pay the overhead costs that conventional banks do, such as rent, utilities, and building maintenance. Customers benefit from cheaper fees and greater interest rates as a result of these cost reductions.
- Accessibility – Neobanks operate independently of traditional banking hours. This means they are accessible anytime, any day of the year. There still exist conventional banks in the present day, and they too maintain a state of technological readiness. Quite a few of them have flexible mobile possibilities. Yet, you may not find them at every store. However, there is no geographical restriction on doing business with a neobank. From any location in the globe, it’s simple to handle your financial affairs.
- Easy loans and lending services – Neobanks provide a range of services, including personal and corporate loans, with the intention of reaching members of the underbanked population. By filling this need, neobanks are closing the gap between big banks, consumers, and small companies.
Example of neobanks
Neobanks are able to improve client experience and speed up complex banking operations since they have no legacy baggage and infinite technology alternatives at their control. It is possible that neobanks, together with other fintech startups, may eventually replace conventional financial institutions as the dominant financial system. In light of the current trend of Stripe acquisitions, it is clearer that even the largest financial institutions are keen on the significance of banking’s evolution in the form of neobanks and are exploring prospects to invest in them.
Similarly, Cheqly is a full-stack neobank for startups. We allow you to establish a bank account online, from the comfort of your own place. Users enjoy hassle-free banking with no hidden costs, outstanding customer service, and personal interaction. For Startups and SMEs looking for streamlined account management and transparent pricing, Cheqly would be the finest choice.
How do neobanks differ from traditional banks?
The many benefits offered by neobanking services explain their widespread use. As a result, they are able to provide enhanced service that consistently satisfies customer requirements. Customers value user-friendliness and convenience in financial apps. They can change and adjust to new situations easier. But, it is difficult to compete with the many banking options available at a traditional bank.
- Access – Unlike conventional banks, which also provide services by phone and in-person visits to offices, neobanks are entirely online.
- Licences – Just a tiny fraction of neobanks have been granted banking licences, in contrast to the vast majority of traditional banks. Neobanks often work with more conventional financial institutions to provide insurance on their goods.
- Fees – Although traditional banks might be intimidating to clients with their plethora of confusing fees, neobanks provide competitively inexpensive rates for their services.
- Services – In most cases, neobanking services are limited to accounts for savings and checking, financial transactions, payment platforms, and limited resources for financial literacy like budgeting apps. By contrast, traditional banks provide access to a far wider variety of services, such as mortgages, personal loans, credit cards, investment opportunities, and more.
- Focus – Whereas traditional banks prioritise long-term client partnerships, neobanks are more likely to have deals that are flexible and short-lived.
Benefits of Neobanks for Startups and SMEs
An increasing number of company owners are starting up new firms and developing technologies to improve banking options for micro and small enterprises. Some benefits of Neobanks for startups and SMEs include:
- Lower fees and costs – Customers benefit from the reduced fees and increased interest rates offered by neobanks as a result of their decreased operating costs. It also means that neobanks have more capital and personnel to put into improving the retail experience for their clients.
- User-friendly technology – Opening an account, for example, that would normally require you to visit a bank, may now be made from a user’s mobile device or laptop computer while they are at home. With the majority of individuals choosing to spend their free time inside, conveniences like these are more highly valued than ever.
- Faster and more efficient service – The digital experience of its customers was the banking sector’s top strategic objective. The purpose of developing neobank applications is to enhance the efficiency and convenience of online banking. Simply said, neo-apps are easy to use, highly effective, and visually appealing. Neobanks have the resources to attract and retain top people, allowing them to create some of the most streamlined banking experiences in the fintech industry.
- Increased accessibility and convenience – Traditional banks in the present day are also technologically proficient. Several firms provide flexible mobile possibilities. But you shouldn’t count on finding them at every store. If you have a neo bank, it doesn’t matter where you are. Wherever you may be on the globe, it is just as simple to handle your financial affairs.
- Quick response to market needs – Online neobanking services are available around the clock. Simple, regular chores, like making payments, may be accomplished at any time and from any location. Their customer support is tailored to each individual, and they employ AI to address issues immediately.
- Tailored financial products and services – Often, neobanks specialize in serving a certain kind of customer. One benefit of this method is that it facilitates in-depth market analysis and consumer study. Bank costs at neobanks are minimal, and they also provide fascinating customised offers and incentives. Customers end up paying less for exactly what they wanted.
Future of Neobanks for Startups and SMEs
Alternative banking has the potential to meet the specialised demands of today’s businesses in ways that traditional banks cannot. By moving away from traditional banking and toward tech-driven alternatives in the mass market, a new industry is established and more company owners get the resources they need to launch and grow their ventures. And technological progress has only made banking more convenient for individuals. To gain their clients’ confidence, neobanks have been working hard to improve the quality of their online banking services. In addition to face-to-face interactions, a positive digital customer experience (CX) may go a long way toward establishing credibility with your clientele.
By eliminating redundant interruptions along the customer’s path, embedded financial services adopted by neobanks for startups provide increased productivity, consistent integration, and a natural flow. It is projected by grand view research that between 2021 and 2028, the neobanking industry would develop at a CAGR of 47.7 percent. Several more companies, both B2B and B2C, will soon provide a unified platform for their customers’ whole lifecycle of interactions with their brands. The neobanking industry is expected to grow to $722.60 billion by 2028. They’re going to keep developing and changing, creating new standards that will determine their future.
Experience the Future of Business Banking with Cheqly
Neobanks provide speedier access to instant payments and loans for small enterprises since they serve communities that traditional banks don’t. There will be a boom of cutting-edge neobanks catering to certain niches in the coming years. Big, established banks’ reluctance to work with startups limits the size of the market they can serve in a growing sector. More support for entrepreneurs is needed in the form of streamlined platforms and open access to capital.
This is why neo banking services are essential for your business. Cheqly is a global virtual bank that offers business checking accounts with VISA debit cards to startups and SMEs . At Cheqly, you’ll have a mobile banking solution that allows you to handle your finances from anywhere. Creating a checking account with us is free of charge. There are no minimum balance requirements, monthly maintenance fees, or account setup costs. You can now get access to a banking option with no hidden costs, along with helpful, personalised customer service. Sounds interesting? Apply for a business checking account now!