We live in a digitally advanced world where everything is within your reach. Gone are those days when you had to wait outside the bank or the ATM to get some cash.
Everything has gone digital! While there is an option of doing online banking, there are some new players on the field: neobanks.
Neobanks are digital-only fiscal services platforms, and they’re fairly new. And it’s not only US neobanks, but different nations have also embraced the new digital financial platform.
Wait a minute! You may be wondering how neo-banks make money. But let’s start with what neobank is.
Understanding the Concept of Neobank
A neo bank is a new variant of financial services. It’s an online-only bank for customers, so all the operations are carried forward digitally.
In traditional banking, you have physical branches, but neobanks are different. There is no physical branch, and all the focus is on improving user experience.
Neobanks operate online, but you must know they are mostly fintech companies and not actual banks.
How Does a Neobank Make Money?
A traditional bank has many ways to make money. They offer services like lending which gives them a chance to earn interest. The question is – how would neobankss make money? Although lending is not a form of revenue source, they can count on interchange fees, which specifically come from debit cards.
Let’s say a customer uses a debit card at a grocery store or swipes it at a hotel, there will be an interchange fee. This fee is the transaction cost that a merchant prays every time the customer uses the debit card.
Neobanks need to improve their transactional relationship with customers to increase their overall revenue. That’s the catch!
Why are Neobanks Garnering Attention?
Neobanks is garnering attention because they are offering online banking convenience. But these neobanks have a limited audience which may change shortly considering the concept is getting popular.
The modern and digital-only approach of neo-banks is gaining momentum and more people are getting interested in understanding the perks of neo-banks.
Four Compelling Reasons to Opt For Neobank
Since the concept is new to you, and you are interested to know whether or not neo-banks can help with gaining financial benefits, let us unravel the four reasons you must opt for the new-age banking.
#1 The UI is straightforward and quite friendly
It’s all about creating a convenient experience for the users. Opening the applications and websites aren’t a hassle.
#2 Opening an Account is Easy
Even though account opening in any traditional bank is simple. You just have to fill the application form and submit all the documents in the branch near you. Now, the thing about neobanks is that you can use your smartphone to open an account. It just takes a few simple steps to set up a US Neobanks account.
#3 Affordability is the Key
Since there are no physical bank branches, neobanks save all the overhead costs. There is no annual maintenance charge or any withdrawal fee. You save a lot of money and can utilize it elsewhere.
#4 It’s Ideal for MSMEs
The whole process of approval, disbursal procedure, and application seems a bit too overwhelming with a traditional bank. Fortunately, neobanks can be advantageous for micro, small, and medium enterprises.