The concept of digital banking is not new anymore. But certainly, the trend of it has been growing quite a lot these days. The banks that are on digital platforms are now organically fitting the world’s known digitalization.
Even smartphone, in that case, has become the important part of the routine living. We store almost everything on the cloud and order goods through retail online stores and apps and even date through online sites.
There is no denial of the fact that even many people are now happy and relaxed with their fewer trips to the bank as they can now operate everything digitally. The clients are now more into mobile usage for controlling the money using the screen tap.
In a world where the digital environment is growing, the Neo Banks are also increasing at a faster rate. Let us explore more of it and understand how such non-bank payment services differs from that of the regular banking.
What exactly do neo and traditional banking mean
The approach of traditional banking is the customer service for some banks that has its roots be it political, financial, and everything else in the real world. Of course, it is not always important to visit the brand. But with modern techniques that offer a good bank service remotely, things have been easy.
Even the operations that are quite complex are carried out from any location using the mobile phone and laptop. Sometimes, it doesn’t even matter whether you are in the same country or abroad. In short, the real banking system irrespective of the location is what you can get from traditional banking.
On contrary, Neo banking is one efficient online nonbank-based model. It does not just have the physical office but it can also have an interaction with the clients using remote tools like chat, phone, and email. It gathers all the products in one handy mobile application
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The user shall then get access to the money 24*7 to form their office, home, or any other place. The only thumb rule about this is that it does not offer a complete range of banking services. They also come up with different niche products. Similarly, their services are quite convenient and even better as compared to other traditional banks.
How does a Neo bank work?
Considering Neo bank working to that of the traditional bank, well it works completely in a different manner in all the ways. Besides their business model is also an expectation. Neo bank is more customer orients and offers customized services to the users.
It is completely digital and hence technology plays a crucial role in its smooth functioning. Such a bank works on the model of decision-making that depends on the data-based decision. Neo bank is capable to collect and analyse the data and know the patterns. They can calculate the behavior of the customer and then come up with the results accordingly.
Neobank vs. Traditional bank
At a fundamental level, Neo banks and traditional banks are quite different. Though both are convenient Neobank is more accessible for those deterred due to the banks and ensure mobile banking models are offered with ease. That is why Neobank is also popular by the name of challenger bank.
Completely digital
Neobank is one kind of the direct bank which is completely digital through the internet and the mobile application. In contrast to this, traditional banks like Fintech solution providers have physical banking branches in different countries where they are located.
Customer support
The personal customer support that you can experience is only with the traditional bank. But again, you must expect it to be a little slow. Suppose, there is a mortgage application that requires your presence in the branch of your local bank and some documents need to be submitted along with an account check. In the case of the Neobank, everything is designed to bypass the application using the quick signup and even the automatic checks of the credit history, identity, and many more.
It does not need any kind of personal contact with anyone for loan approval, account creation, and even overdraft. No banks offer chatbots and even AI that offers flexible customer support online. In the case of traditional banks, it is either telephone or in-person custom support that a person can expect.
Cheaper
Traditional banks usually charge fees for different services but in the case of Neobank, they are quite cheap. There is no monthly cost involved at all. The prices are displayed and even simplified in a better manner so that you don’t have to worry about the hidden fees as well. In case of the traditional banking, well may get surprised to see those monthly fees that get added to your bank statement.
Branches
Traditional banks offer a wide range of services, you can expect better branches at a different location. In the case of neo banks, since everything is digitalized you can only expect all on application and without any branches.
That is why Neobank doesn’t charge any overhead cost but traditional banks would charge the overhead cost which they gather from the customers in form of services such as bank alerts and statements which is why such Digital banking solutions are preferred.
Transparency
In terms of transparency Neobank are quite transparent and has less cost involved. They have either partial, no, or complete banking licenses. That is why even the tedious task becomes quick and automatic when it is with Neobank. In a traditional bank, this is not the case and customers should ready for some hidden charges.
Licensing
In the case of a traditional bank, all the branches come with a bank license. But in the case of the Neobank, it is a mixed bag of licensing. The license type decides which services can such a bank offer or through other banks along with the savings protection level. There are also some Neobank that don’t even have deposit insurance or consumer protection if there is any dispute of payment.
Final verdict
There is no doubt that business deals could be quite a tedious task which includes a regular payment to be done. In the case of the Neobank well, all the manual efforts get saved to a great extent and time also can be managed while giving much better insights and anaclasis along with financial statements.
In short, they are best for businesses that don’t want to spend a long time in complex software. With the efficient services and benefits which such Branchless banking solutions are providing, there is no doubt that it is now said to be the banking future.
