Making the Switch from Traditional to NeobankingDownload Now: FREE GST 2023 GuidebookDownload Now: FREE Employment Pass ChecklistDownload Now: Free Incorporation Checklist
Every business needs a reliable banking partner. You will need someone to keep your earnings safe, someone to help you invest, and someone to facilitate your financial transactions.
Luckily for you, there are limitless options when it comes to banking. And what is better is that banking has evolved. creating new world of digital banking that promises better services, safety and convenience to its customers. .
As Fintechs continue to grow, they are disrupting the traditional banking system. More than ever, consumers are getting what they have been asking for; faster, smoother and more valuable banking experiences.
Neobanking is now essential to the financial service industry, with a market value of 47.39 billion in 2020. It has revolutionised how businesses and individuals transact and manage their money. They offer convenient online services through neobanking apps, offer budget and money tracking, and lower transaction costs, among an array of other benefits. .
In this article, we explore neobanks vs traditional banks, why people are preferring neobanking, and what to check before switching to help you make a better decision.
Neobanks vs Traditional Banks
All banks exist to offer financial services to individuals, businesses, and companies. However, not all banks will provide you with the services in the same manner.
Traditional banks require you to visit a physical location to access banking services, whereas neobanks allow you to perform your transactions online from the convenience of your smart device.
The table below shows the differences between neobanks and traditional banks.
- No face-to-face interactions and communication
- Use of credit cards depend on the bank
- Use of banking applications
- Filling and submission of documents is online
- Licensing depends on the bank
- Faster approvals and services
- Medium maximum deposits
- Face-to-face communication
- Use of credit cards
- depends on the type of bank
- Filling and submission of documents is physical
- All banks are licensed
- Longer approval times and processes
- High maximum deposits
Why are More People Switching to Neobanks?
Traditional banks have served people for decades. They provide a safe and secure way to transact. However, individuals and businesses seem to prefer neobanking. What changed?
Consumer behaviour is increasingly shifting over time. For banking, the main concern was speed, ease of access, and high quality of service. Neobanks are here to satisfy that demand.
Here are some reasons why people are switching to neobanking.
- Ease of use and speed. Opening neobanks takes a few minutes through an internet-connected device (phone or computer).
- Easy accessibility. Neobanks provide their services online through websites and neobanking apps.
- Wider consumer base. Anyone can open a neobanking account as long as they have an ID. This includes unemployed people and immigrants.
- Lower costs. Neobanks have fewer administrative costs due to their online nature. The result is lower and zero charges for some services.
- International reach. Neobanks allow individuals from other countries to open accounts from their locations.
- Better experience. Neobanks provide more than just transactions. You'll benefit from things like budget tracking, and on-demand reports, among others.
- Focus on the gig economy. Most neobanks aim to get the individuals without access to traditional banks. Therefore, small business owners and gig workers can leverage this and open accounts.
- Customisation of services. Some neobanks focus on serving a particular group of people. It helps you get a bank that fits your values and beliefs.
Make a Responsible Move
While neobanking offers improved services, there are things you must consider before making a move. Here are some things to note.
- Neobanks are not regulated like traditional banks. Therefore, ensure that you research the nature of the bank you want to use.
- Neobanks may encounter service disruptions due to updates and other factors. However, disruptions also occur in traditional banking.
- Neobanks do not have a physical location where you could go and make a complaint. You need to test the customer service of your chosen bank before signing up.
Does the Future Belong to Neobanking?
While traditional banks work well, neobanks are getting much more attention. According to research, millennials are ready to or have already switched to a digital bank.
Additionally, the lockdown and restriction of movement during the COVID period accelerated the growth of neobanks. According to PwC, banking customers now make 73% of their transactions online.
Neobanks are filling in gaps left by traditional banks while improving the customer experience. Therefore, they are gaining the attention of small businesses worldwide. Try them out today and experience a new era of accessible banking.
Sprout With Us!
Decided to make the switch to Neobanking? Sprout Asia can connect you with our Neobank partners when you incorporate your company or appoint us as your corporate secretary. Let us assist your business set up so that you can have a smooth experience!
Contact us now for a complimentary consultation if you have any queries!