Difference between digital banking and neobanks

Difference between digital banking and neobanks

Download Now: FREE GST 2023 GuidebookDownload Now: FREE Employment Pass ChecklistDownload Now: Free Incorporation Checklist

Difference between digital banking and neobanks

When the term 'digital banking' arrived on the scene, it simply meant that a bank had an online presence. It was a place where customers could check their account balances and transactions, and maybe even pay bills. Today, digital banking has taken on a much broader definition.

Digital banking now encompasses all the ways customers can interact with their banks using digital channels. This includes mobile apps, websites, chatbots, and even social media. And it i’s not just about checking account balances or transferring money. It also includes features such as applying for loans, opening new accounts, and getting personalised financial advice.

Then, neobanks emerged. 

In this article, we take a closer look at what neobanks are and how they differ from digital banking.

Is digital banking and neobanking the same thing?

Not quite. Neobanks are digital-only banks that do not have any physical branches. They also offer the following:

· Online banking that is personalised   

· AI-powered technology

· They operate 24/7

· They are cost-effective

Neobanks also offer a more streamlined and customer-centric experience than digital banks. They also tend to be very innovative. They offer features such as in-app budgeting tools and real-time spending insights that traditional banks simply do not offer.  

They are also not associated with any traditional financial institutions. This means they are not subjected to the same regulations. This can be both a good and a bad thing. On one hand, it allows neobanks to be more agile and updates quickly with newer features. On the other hand, it also means that they are not as well protected in terms of  deposit insurance.

Digital banking encompasses all the ways customers can interact with their banks using digital channels, while neobanks are digital-only and do not have any physical branches, as we already mentioned.

What features do digital and neobanks offer but not traditional banks?

There are disruptions to traditional banking systems with neobanks leveraging Artificial Intelligence (AI) and other technology to refine the banking experience. 

Digital banking on the other hand makes banking far more accessible for consumers and businesses, while traditional banks are still set in the past. 

The increased adoption of technology is driving the use of neobanks and digital banks far more so than that of traditional banks.

Why do you need neo banking?

The main advantage of neobanks is that they are customer-centric, which means they are designed to offer a better experience than traditional banks. 

The lower fees are a major draw card. They can offer such low fees because they do not have the same overhead costs as traditional banks. For example, they do not need to maintain physical branches and they can use technology to automate many of their processes.

Neobanks are attractive to a lot of consumers as they are designed to be digital-first, which means they can a wide variety of features that traditional banking cannot.

Are digital and neobanks secure and reliable? 

The reality is that technology has advanced so much that there are multiple layers of security for both digital and neobanks, while traditional banks are still reliant on a lock and key. 

Such technology has also made both neobanking and digital banking incredibly reliable, with limited downtime.

How are neobanks using artificial intelligence?

Neobanks are using artificial intelligence (AI) in several ways. For example, they are using it to personalise the user experience, offer financial advice, and detect fraud. AI is also being used to develop new features such as chatbots that can provide customer support.

In conclusion

As you can see, there is a clear difference between digital banking and neobanks. The lower fees that neobanking is offering is certainly going to attract a lot of consumers.

With demand for neobanks set to rise in the near future, this will be an interesting space to watch.

Sprout With Us!

Interested in Neobanks? When you incorporate a business with Sprout Asia or appoint us as your secretary, we can connect you with our Neobank partners so that your business may get started quickly and smoothly. Be it setting up a company or handling documents, we can assist you in any way possible!

If you have any questions about Sprout Asia's incorporation or corporate secretary procedure, get in touch with us right now for a free consultation!