The internet is changing a lot of thing around us, with innovations being churned out severally. Even the banking institution is not left out of this innovation with the advent of digitally-located financial institutions called neobanks. While many are of the opinion that neobanks are the emerging challengers to traditional banks, there is a need to spell out clearly the edges each one has over the other.
Advantages of Neobank
Ease of operations
Unlike traditional banks, neobanks offer great ease and convenience of opening accounts and conducting banking transactions. You don’t need to go through all the hassles of documentation and proof to open accounts with neobanks.
Since neobanks do not operate on high overhead costs, it allows them to pay higher interest rates on savings as well as annual percentage yields. This means you are likely to earn more by putting your savings in neobanks than putting it in traditional banks.
The fact that neobanks are designed to operate with little overheads also allow them to charge lesser fees than traditional banks. With the neobanks, you are free from various hidden charges that are common with traditional banks
One good thing about neobanks is that they can be accessed anywhere around the world since they operate strictly online. For travellers and globe trotters, neobanks offers a dynamic banking experience.
Better online banking experience
Although traditional banks too have online banking platforms, neobanks are built exclusively for mobile banking; hence they have an edge over traditional banks in this area.
Disadvantages of Neobank
No physical presence
As good as mobile banking looks, there are times when you might need to enter a branch to perform some transactions. The overdependence on apps is a great drawback because of any slight issue with the app and internet available renders the account inaccessible and inoperable.
Some banking transactions make it invaluable to visit a physical branch. For transactions that involve deposit checks, lodging such checks into neobanks accounts is cumbersome. This invariably means there is a limit to the level of international transactions that can be carried on with neobanks accounts.
Limited Product offerings
The number of financial products that neobanks offer to their customers is very limited. You should understand that banking is not limited to savings and withdrawals alone. Some traditional banks are known to grant specialized services to customers such as safekeeping of valuables. This is not possible for neobanks since they do not operate physically.
No customized ATM offering
In this era of ATM transactions, neobanks are yet to deliver anything better than traditional banks. Since neobanks do not have their own banking machines, their customers have to make do with the machines of other banks. This can lead to issues of card compatibility and a rack up of fees for ATM use.