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App Development

6 Things You Should Know About Neobanking

Neobanks has become the trend-setter in the FinTech industry. The Neobanking sector has been successful in attracting the attention of entrepreneurs as well as fintech investors. It is simultaneously redefining the banking sector by showing what the potential future of banking might look like.

Perhaps you are not fully aware of the term “Neobanking. Well, Neobank is a kind of fintech enterprise that offers digital financial services. However, Neobanks have no physical branches and no face-to-face interaction. It may be referred to as a digital bank with no branches. They operate exclusively through digital channels and offer their services via web-based and mobile applications.

When it comes to Neobanks VS traditional banks: Neobanks provide the best and uninterrupted customer experience that a traditional bank can never offer. They also save on banking costs by reducing fees. Neobanks are faster and cheaper than any conventional bank.

There’s a lot to be said about Neobank that challenges traditional banks. So let’s take a look at the six most interesting things about neobanks.


1. Rapid growth in Neobanks:

Although Neobanks is a relatively recent phenomenon, the growth of Neobank is very impressive. In August 2019, they have more than 30 million customers. And this figure excludes highly populated markets such as India & China. Compared to other Fintechs, Neobanks are the fastest-growing segment. This growth is largely driven by aggressive investment in the Neobanking sectors.

South America is showcasing a particularly interesting number of fast-growing neobanking start-ups with Mexico. And it is becoming a new “battleground” for challenger banks.

2. Ideal For The Corporate World:

Businesses often face lengthy, tedious processes involving payments and disbursals. Due to many faulty software and complex infrastructure systems, they often have to devote hours and hours to manual efforts each month. But when it comes to Neobank, they will simplify, speed up and supercharge every aspect of financial functions. They make the corporate process easier, managing cash flow from accepting payments to consolidating transactions and flexible payments.

Listed below are few benefits of Neobanks that business will acquire by adopting it:

Neobanks offer instant payouts that eventually reduce manual efforts and save time.

They assist businesses to make, control, track, and analyze all forms of money movement from their powerful dashboard

Neobanks’ in-depth financial CRM enables businesses to manage and track the cash flow of vendors, customers, employees, etc.

3. Transparency Of Cross-border Payments:

When it comes to making cross-border payments, users experience difficulties in traditional banking as they have to make a raise to switch their debit card into an international debit card. And such kinds of processes are actually distressing. However, the arrival of Neobank has made all these things quite easy. Now people will not have to face lengthy processes to make international payments.

People don’t have to worry about those things anymore if they have a Neobank account. With current exchange rates, they can utilize the same card to make purchases or transactions abroad.

4. Customers Are More Satisfied With Neobanks:

Neobanks are predominantly fueled by heavy investment rounds. Neobanks places great emphasis on the design of their platform.

The goal of NeoBanks is to develop a user-friendly and intuitive system that can become a better alternative to conventional banking systems. The Neobank software is easy to operate and well designed to address the complex requirements of the customers.

For Neobank, the client is everything. For this reason, many definitions refer to them as “customer-centric” banks. All the actions of Neobanks are based on customer needs, wants, and constant feedback.

This client-centric approach is an indefinite production outcome. According to recent polls in the United States, 90 percent of American consumers are satisfied with neobanks.

5. Competitive IT Infrastructure:

Whilst exploiting open-source front-end frameworks such as React Native and Ionic for developing modern web and mobile applications, NeoBank’s IT approach relies on micro-services and standardized APIs for post-back-end. Using these front-end frameworks and third-party JavaScript libraries and scripts for building modular apps, Neobank benefits from rapid product development with reduced costs. This enables them to launch new features and update existing ones based on customer feedback.

According to market research, Neobanking apps add 10 new features per year on average, compared to 6 for conventional banks, which includes 27 updates per year. Neobanks, as a result, are feature-rich and perform much better than traditional banks.

6. Advanced Security Features:

Neobank is not based on older legacy systems like the traditional banking system. They place more emphasis on their safety and security when designing their platforms. Below listed are some of the advanced security features adopted by neobank software:

Lock/Unlock the entire transaction card

ATM/login PIN resetting

Adjust transaction limits based on channel or transaction type.

Masking the account balance and card number from the app.

Online accurate transaction updates and itemized transaction history log

Moreover, neobanks are all required to comply with the same set of regulatory requirements such as data localization standards or 2-factor authentication (2FA) for card-based transactions. They implement biometric verification, Role-Based Access Control (RBAC), high-end encryption technology, and many other advanced security measures to make banking safe for users.

In addition, neo-banks were among the early adopters of more sophisticated transaction security models such as the MCC block, tokenized online transactions, and single-use virtual cards. Apart from this, Neobanks software also follows customer privacy laws, anti-money laundering laws, etc.

In A Nutshell:

Neobanks bring new strength to the banking sector. They challenge conventional banks by providing high-quality digital experience. Thus, they are rapidly attracting users worldwide. Users are appreciating this new, fast and convenient banking system.

Nikunj Gundaniya

Nikunj Gundaniya, Product manager Digipay.guru, one of the leading fintech solution providers USA, which provides mobile finance application development services. He is a visionary leader whose flamboyant management style has given profitable results for the company. He believes in the mantra of giving 100% to his work.

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