Difference Between Neobanks and Traditional Banks

Neo banks in digital Banks and to be honest there's a number of terms which are being used interchangeably across the world some people are using the word Neo Banks some people are using the word digital Banks some people are using the word virtual Banks some people are using the word  Challenger Banks some people are using using the word alternative banking these are all the terms and everybody uses these terms differently so there's no codified  terminology right you have to see the context within which the term and the word is being used so the question for for our purpose and for our webinar is near bank or near Banking and digital banking the same or on your Banks and digital Banks the same thing now Banks we we described as this new kind of platform Model whereby A person can experience banking services but not necessarily from a a fully fledged Bank it just it might be a platform it might just be a an intermediary right a digital intermediary which is a white labeling the traditional banking right so keep that in mind digital banks on the other hand often when  in the industry when the word digital banking is used generally it refers to traditional Banks who have full-fledged licenses to operate a bank and of course to operate a bank you need a number of licenses because you know you're keeping deposits giving deposits lending  this anti-money laundering compliance required a number of other other regulations which are required the capital requirements so a digital bank would generally refer to a traditional bank which is a full-fledged license to bank and to offer banking services but through a digital medium so a digital Bank can be considered to be a digital version of your Traditional Bank in every sense so it's your same Traditional Bank with all the licenses then it is the primary provider there's no intermediary between you and the underlying bank that digital bank that you're experiencing is a traditional bank and so in the in the fintech industry and in the banking industry usually when the term banking is used it really refers to these regulated licensed  providers which just have a digital  provider so it can be your you know your traditional Barclays Bank you can be a HSBC Bank and these you know big traditional banks that we have in the world but they have a digital interface and you're using their digital platform to access your banking services that would be for a formal  digital banking right  and therefore that's really what digital banking refers to generally in our conditions but as I said the word digital bank is the word digital Bank can also refer to near banks in certain cases it just depends on the use of the term you know we have we have different types of Neo Banks and as I said Neo banking is such a a large or such a broad umbrella term where where you can include Banks digital Banks which have a license or online banks which have a license an online banks which don't have a license so if there's a spectrum right of banks those Neo Banks which are fully functional and which have their own license meaning they can offer complete banking services such as  you know debit cards credit cards  current accounts deposits lending savings accounts all these types of services which a a Traditional Bank can offer if neurobank can offer as well because it has a license therefore there will be more or less the same as your Traditional Bank but purely digital and remember one thing about newer Banks I think one of the key differences is Neo Banks generally don't have any physical branch that's like a key sign of a neo-bank a challenger Bank whereby there are no physical branches whatsoever it's purely a smart bank and what we mean by that it only exists on your smartphone it only exists online there is no physical Branch you can go to as opposed to a digital Bank  which is a digital you could say manifestation of a traditional bank and of course being a digital manifestation of a Traditional Bank would mean that you can go to a physical branch and access banking services right so keep that in your back of your mind Neo Banks generally are only digital and so asking about examples if there's a spectrum right on one side of the spectrum there's those new Banks which have the license to offer banking services such as you have stalling Bank you have revolute n26 monzo these are the common kind of digital your Neo Banks which now have a license to offer banking services right so they are licensed to offer a range of banking services and then on your other side you have those which have no a license to offer banking services such as I mean you know yolt is potentially one which offers some kind of integration rate  your banking services but more it's more of like your wealth management kind of a platform but it's those  Neo Banks which have no Bank license whatsoever I mean in the UK you have risk digital Bank  which don't have their own license as yet right so they're on this side of the spectrum  to offer banking services and there's there's a number of like  Kestrel risk insha in Germany Germania you have  so these are like the key you could say Islamic challenge which their license might not be the same as a challenger bank which has a license and can offer complete banking services so these would not be offering complete banking services  at present until they get there for license.  

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