Today fintech software and apps are slowly taking over the financial space. While we used to have to visit a bank in person to conduct most financial transactions, today we can do just about everything online.
But neobanks take this a step further. Neobanks aren’t like traditional banks, which are larger brick-and-mortar banks like Bank of America and Wells Fargo. Neobanks are completely digital and they don’t have the large parent bank that everyone knows.
Everything you do with a neobank is online – but is it all that bad?
Neobanks Offer Lower Costs
Because of the lack of overhead, neobanks offer much lower costs. You’ll find bank accounts with NO FEES. When’s the last time you saw that at a brick-and-mortar bank? It wasn’t anytime recently.
The lack of overhead allows neobanks to offer free checking and savings accounts, and various other bank accounts without minimum balance requirements or monthly maintenance fees. That means more money in your pocket.
Neobanks Offer Higher Interest Rates
Going back to the lack of overhead costs, neobanks bank higher interest rates too. Again, because they have fewer bills, they can pass the savings onto their customers – the people putting their money in the checking and savings accounts. On average, neobanks offer from 0.9 to 1% for savings accounts compared to 0.1 – 0.5% from traditional banks.
Neobanks Offer a More Personalised Experience
It seems crazy to say that a computer programme (AI) can provide a more personalised experience than a human, but it’s true. Here’s why.
AI can track data. They know your habits and needs, and they then offer services that meet those needs. You don’t have to ask for it – before you know it, the offerings will be in front of you and you’ll have what you need in the blink of an eye.
Types of Neobanks
Unlike traditional banks, neobanks operate in a few different dynamics. Understanding what you need and what they offer is important:
- Neobanks with a license: These are the equivalent (but sometimes better) than traditional banks. They usually offer all the bank products you could need and some you didn’t even know you wanted. They use AI to determine your needs and offer them to you.
- Neobanks without a license: These neobanks are an offshoot of an existing bank, but they aren’t related. Instead, they offer AI services the traditional bank doesn’t offer, such as push notifications, budgeting analysis, or other financial tools the bank doesn’t offer.
Should you Try a Neobank?
If you’re looking for new and improved ways to handle your money, give neobanks a try. You may find they have the products/services you want and all from the comfort of your own home. Even if you have the products or services you need, neobanks may save you money.
Look at the fees you pay and determine if it’s worth it or if there could be another banking programme out there that offers the same service for free.