For many decades, the world of finance has been dominated by traditional banks and big financial institutions. However, over the recent years, a new trend has emerged in developed markets such as the US and Europe, characterized by the rise of “neobanks,” “challenger banks,” or “open banks.”
These innovative financial entities have changed the way we bank, offering an innovative service based on a digital approach. Not only is this approach more convenient, but it also helps people from all over the world gain access to a top-notch banking experience.
Indeed, over the past few decades, we’ve been stuck with the same classic banks, as well as traditional financial institutions. But at the end of the day, we now live in a digital world, so the past years have revolutionized the industry.
Ready to disrupt the banking world as most of us know it, neobanks are independent and ready to provide the same high-quality banking services from the comfort of your home. Some of them are international and accept customers from all over the world as well.
But before delving into the top 10 neobanks, let’s first explore what exactly neobanks are and how they are reshaping the financial landscape.
Table of Contents
What are Neobanks?
Neobanks, also known as digital banks or challenger banks, are a new breed of financial institutions that operate exclusively online, eschewing the traditional brick-and-mortar model. Unlike traditional banks, neobanks do not have physical branches and rely on technology to deliver banking services directly to customers through mobile apps and websites.
While some neobanks are standalone entities, others collaborate with traditional banks to provide a range of banking services, including savings accounts, payment processing, lending, and more. This collaborative approach enables neobanks to combine their innovative digital offerings with the stability and security associated with established financial institutions.
Benefits of Neobanks
Lower Fees and Competitive Interest Rates
Neobanks are known for providing reduced fees and competitive interest rates, making them an attractive option for individuals looking to maximize their savings. In fact, the average interest rates for neobank saving accounts often surpass those offered by traditional banks, demonstrating the tangible financial benefits of embracing a digital banking approach.
Streamlined Customer Experience
Furthermore, neobanks prioritize a streamlined customer experience through intuitive mobile apps and user interfaces. This focus on user-friendly technology enhances the overall customer journey, appealing to tech-savvy individuals who seek modern and efficient financial services. With seamless access to account information, transaction histories, and personalized financial insights, neobanks are reshaping the way customers interact with their finances.
Accessibility and Convenience
The accessibility and convenience offered by neobanks also stand out as compelling advantages. By delivering services entirely online, neobanks enable easy and fast access to banking functions from any location with internet connectivity. This level of accessibility provides unmatched convenience to customers who prioritize efficiency and flexibility in their financial management, aligning with the demands of the digital age.
Agile Technological Advantages
Moreover, neobanks leverage agile technological advantages to offer rapid loan approvals, advanced security features, and a broad array of technical options that make online banking easy, fast, and convenient. These technological advancements cater to the needs of digitally engaged customers, further enhancing the appeal of neobanks as forward-thinking financial partners.
No or Low Fees, and No Minimum Balance Accounts
Another notable benefit of neobanks is the provision of no or low fees, as well as no minimum balance accounts. Due to their digital nature and lack of physical branches, neobanks can often provide financial flexibility that adds value to the customer experience, especially for those seeking cost-effective banking solutions.
After knowing various benefits of Neobanks, it’s time to understand the differences between Neobanks and Traditional banks. This exploration will provide a comprehensive understanding of the unique features and operational contrasts that define these two banking models.
Differences Between Neobanks and Traditional Banks
Operational Structure
Neobanks are a breed apart, functioning primarily as digital entities and don’t have physical branches, providing their services exclusively through online platforms and mobile applications. On the other hand, traditional banks maintain a substantial network of physical branches and have traditionally relied on face-to-face customer interactions as a key part of their operational model.
Customer Experience
The popularity of neobanks lies in their commitment to delivering a seamless and user-friendly experience through user-friendly mobile apps, streamlined interfaces, and personalized financial insights. This approach caters to the needs of digitally savvy customers who prioritize efficient and modern financial services. In contrast, traditional banks may offer in-person services, phone support, and have been slower in adapting fully digital customer experiences.
Fees and Interest Rates
When it comes to fees and interest rates, neobanks often stand out by offering lower fees and competitive interest rates, appealing to individuals seeking to optimize their savings. Conversely, traditional banks may carry higher fees and less competitive interest rates, showing that their fee and interest structures are more old-fashioned.
Accessibility and Convenience
Neobanks shine in terms of accessibility and convenience, providing easy and swift access to banking functions from any location with internet connectivity. This level of accessibility presents an attractive proposition for customers who value efficiency and flexibility. On the flip side, traditional banks may have limitations related to physical branch hours and the necessity for in-person transactions, potentially hindering accessibility and convenience.
Technological Advancements
Neobanks use quick and modern technology, such as rapid loan approvals, advanced security features, and a wide array of digital options, catering to the needs of digitally engaged customers. In contrast, traditional banks may be slower to adopt innovative technologies, leading to a less dynamic technological landscape.
Personalization and Flexibility
Neobanks often provide personalized financial insights and flexible account options, including no or low fees and no minimum balance accounts, demonstrating a clear focus on enhancing the customer experience. In contrast, traditional banks may offer less flexible account options and services, marking a clear distinction in their approach to personalization and flexibility.
List of Top 10 Neobanks
With so many options on the market, choosing the best neobank can be tricky, but here are some of the front runners.
First on our list of top 10 neobanks is Starling bank. Established by fintech entrepreneur Anne Boden, Starling Bank has initially become famous for being the first ever female established bank in the UK. The bank has never had any branches, so it offers services in an entirely digital manner.
Countries
Being established in the UK and having to respect the strict local regulations in terms of banking, Starling Bank can only offer local services at the moment. Its services are only available to British and foreign customers with an address in the UK.
Services
Like most other banks, Starling Bank offers access to both current and business accounts. Furthermore, it also provides overdrafts and loans, not to mention money transfer services. The bank is known for its relatively low monthly fees.
Fees
Different business accounts have different fees and costs. Personal accounts or joint accounts, for instance, have no maintenance fees. If you get a card too, you’ll pay £2 a month. Business accounts don’t have maintenance fees either, but additional services will come with premium subscriptions.
Rates
Personal accounts can get an interest rate of just over 3%, but only if the balance is under £5,000. Accounts with more than £5,000 won’t get anything. The same goes for business accounts. While fees are low, rates follow the exact same standards.
How to apply
To get an account with Sterling Bank, you’ll have to apply online. Strong KYC rules apply, too. Simply put, you’ll have to provide identification in a digital manner and proof of address. There’s no need to mail anything, but use the app or website to confirm your identity.
Pros
- Overdrafts available
- Supports cash deposits
- Low fees
- International transfers
Con
- Overdrafts are charged at a high rate
Ratings:-
- Credibility and trust – 9/10
- Quality of services 9/10
- Fees 10/10
- Customer service 9/10
The Wise account is a full banking service offering a classic account that is controllable through a convenient app, a card, transfers, and access to more currencies in more countries. Fees are generally low, too.
Countries
The bank offers services in about 160 different countries. It mainly supports European countries, but it’s also available in the USA, Malaysia, Singapore, Australia, New Zealand and Japan, just to name a few.
Services
Wise offers both personal and business banking services. Personal accounts can be opened in about 40 different currencies. Conversions are made through the app. Since international business is fairly simple, the business account is just as popular, especially for international or online businesses.
Fees
You’ll know exactly what you’ll pay when you make a transfer, so fees are clearly displayed. Having a personal account is free, as well as withdrawing cash to a certain limit. There are, however, fees for sending money or converting money. Getting a card will cost you for both personal and business uses.
Rates
There are no online rates for shopping in the currency of your account. When transferring money or shopping internationally, small rates apply. The interest rate is negative for account holding more than €15,000.
How to apply
The application is entirely online. Registering an account is a matter of minutes, yet you’ll also have to send scanned copies of identification documents, depending on where you’re from.
Pros
- Money in more currencies
- Low money transfer fees
- Transparent pricing calculator
- No monthly charges
Con
- No loans or overdrafts
Ratings:-
- Credibility and trust 9/10
- Quality of services 9/10
- Fees 8/10
- Customer service 10/10
Established in Switzerland and following local rules and regulations, Yuh is also backed by some major players in the banking industry, hence its credibility and quickly growing reputation all over the world.
Countries
Yuh is available in quite a few countries, including Switzerland, France, Austria and Italy. It’s also available in a few different languages. Despite being international, there are quite a few areas it can’t support, at least not now.
Services
You can pay, save or invest with Yuh. You’ll get a Swiss IBAN and can hold over ten currencies, but you can’t set direct debits or standing orders, so it’s a bit limited. You can get a debit card as well, but there’s no such thing as classic current or business accounts.
Fees
Fees are relatively low for everyday use. There are no registration or monthly fees. You can use the debit card with no fees either, but you can only do one free ATM withdrawal a week in Switzerland before fees kick in. There are no free international withdrawals.
Only bank transfers in Europe in other currencies, except EUR, will be charged.
Rates
Saving projects through Yuh are free. Save in EUR, and you’ll get 0.75% interest rates. They go up to 1% for CHF savings. Rates aren’t great, but the low fees compensate for this minus.
How to apply
You can apply by downloading the app and signing up. You’ll have to provide scanned IDs, too, depending on your location. Start using it as soon as you’re verified, simple as that.
Pros
- Easy to use
- Backed by Swiss banking giants
- Good investment features
- Small fees
Con
- Can only top up accounts through bank transfers
Ratings:-
- Credibility and trust 9/10
- Quality of services 8/10
- Fees 9/10
- Customer service 9/10
Fourth on our list of top 10 neobanks, Conotoxia offers a financial platform established in Poland that provides access to services in a few different countries.
Countries
Poland is the primary market for Conotoxia, but it also accepts clients from dozens of other countries, mainly European. Out of Europe, Conotoxia is available to clients in the USA, too.
Services
Conotoxia offers access to multi-currency cards. You can make and take payments in over 160 currencies. Money transfers, currency exchange in 27 currencies, multi-currency loans and investment options are also available.
Fees
Fees vary based on the country you’re in. For Polish users, there are no fees for money transfers to other users. Transfer and transaction fees are relatively low, though, most of them ranging around 0.2% to 0.8%.
Rates
Conotoxia is most commonly used for transfers, personal and business. Interest rates for saving with this platform are extremely low.
How to apply
To apply, you’ll need to download the mobile app or just do it online. Opening an account is free of charge. Identification documents will also be required, as well as a verification process. Like everything else with this platform, the verification is quite fast.
Pros
- Multi-currency accounts
- Fast card delivery times
- Excellent for spending abroad
- International transfers
Con
- No support for overdrafts and cash deposits
Ratings:-
- Credibility and trust 9/10
- Quality of services 9/10
- Fees 7/10
- Customer service 10/10
Compared to other neobanks from the list of top 10 neo banks, Vivid is relatively new, but it’s managed to gain a high notoriety with its exquisite customer service and the possibility to pay at home or abroad without spending a fortune on conversion fees.
Countries
Vivid is established in Germany. It’s accessible to anyone with a stable address in the EU, regardless of their nationality. However, the only minus is the fact that a physical card will take longer to reach customers out of Germany.
Services
Vivid Money is easy to access through its unique mobile app. It also offers a digital investing platform. It makes no difference if you’re after transfer, multi-currency accounts, payments, bills or savings, these things are all offered. Investments are allowed in stocks, precious metals and ETFs, among others.
Fees
There are two plans accessible over Vivid. The free one is aimed at active users. If they go inactive, fees go to €3.90 per month. Premium users will pay €9.90 a month, but they’ll get more features, such as cashback. Issuing a card will cost you €19.90. Transfers and payments are free.
Rates
Start an interest rate pocket with Vivid and you can get just over 5% a year if you keep your money in EUR or USD.
How to apply
To open an account, whether personal or business, enter your email address and you’ll get a link to download the app and register through it. You’ll need to provide full details and also upload some identification documents.
Pros
- Good cashback scheme
- Free payments, also abroad
- Up to €200 free withdrawals per month
- Up to 15 free sub-accounts in various currencies
Con
- No cash deposits
Ratings:-
- Credibility and trust 8/10
- Quality of services 8/10
- Fees 8/10
- Customer service 10/10
Monzo is one of the earliest neobanks in Europe and especially in the UK. Originally introduced as a prepaid card company in 2015, it started offering more traditional banking services in 2017, once its license was full.
Countries
Like Starling Bank, Monzo is established in the UK. And since local regulations are quite harsh, it’s difficult to provide an international service, so originally, it was only available to people in the UK, regardless of their nationality. These days, clients from the USA can also use it.
Services
There are current and business accounts, as well as a few custom options in between, such as premium or joint accounts. Monzo also offers access to saving accounts, investments and even the possibility to borrow money through loans or overdrafts.
Fees
There are no fees for using the card to pay anywhere. Cash withdrawals may also be free if you’re in the UK and Monzo is your main bank. Otherwise, there are some limitations before fees kick in. The bank passes Mastercard’s exchange rates to customers without adding anything else.
Rates
Saving with Monzo will give you just over 4%, but within a limit of £100,000. Exchange rates and personal payments feature Mastercard’s rates. Monzo offers a calculator on its app and website, so you’ll know exactly what you’ll pay.
How to apply
To open an account, download the app and start the registration process. You’ll have to introduce some details about yourself, then confirm with scanned copies of documents and a selfie video that proves your identity. Verification is fairly quick. Once you card arrives, you’ll have to activate it.
Pros
- Bill splitting features
- Easy to use
- Ideal for joint accounts
- Smart features
Con
- No credit or debit card top ups
Ratings:-
- Credibility and trust 8/10
- Quality of services 8/10
- Fees 10/10
- Customer service 9/10
7. Chime
Known for providing a plethora of free services, Chime has been featured and listed in various charts, including Fortune, Forbes and Inc.’s. The neobank is headquartered in San Francisco, CA and has extra offices in Chicago, IL and Vancouver, Canada.
Countries
While Chime’s users can use their accounts and cards anywhere in the world, the neobank is only suitable for those living in the USA. It’s only available to users with a valid SSN. Despite having an office in Canada, Canadians aren’t accepted, at least not for now.
Services
Chime offers access to limited services. While not as versatile as other neobanks, it does do a good job at tackling the services in its portfolio. Users can opt for checking accounts, credit builder accounts and savings accounts. Unfortunately, Chime doesn’t support business accounts.
Fees
Chime has the mission to keep most services free. There are no fees to use these services. There are no monthly fees, overdraft fees, fees for debit cards or cash withdrawal, yet some ATMs may charge you. Forget about balance requirements and activation fees too.
Rates
A high yield savings account will give you a 2%annual percentage yield. Compared to the national average, that’s nearly five times more. Since there are no monthly fees, the deal is quite competitive and outweighs most of the competition.
How to apply
Register by entering your full name and email address. Provide a few more details about you, then confirm by email and upload the required documents for identification. The verification is pretty fast, yet it will take longer to get your card by mail.
Pros
- Little to no fees
- Good rates
- Convenient and user friendly app
- Ideal for everyday banking
Con
- Issues with international money transfers and ATMs
Ratings:-
- Credibility and trust 10/10
- Quality of services 9/10
- Fees 10/10
- Customer service 10/10
Revolut is currently one of the most popular neobanks on the market, widely used to transfer money abroad, but also for parents to help kids understand budgeting and the usefulness of a card.
Countries
Revolut is available in the EEA area, covering all the countries, as well as Australia, Switzerland, Canada, Singapore, Japan, the UK and the USA.
Services
Revolut offers personal accounts, joint accounts and business accounts, as well as virtual and physical cards, multi-currency accounts and transfers. There’s a Revolut section for those under 18 as well, manageable by parents.
Fees
Revolut fees are based on the type of account you have. Standard accounts have no monthly fees, but Metal, Premium, Plus and Ultra account come with maintenance fees. You can also withdraw cash to a certain level before fees kick in.
Rates
Currencies are converted in real-time, so you know precisely what you’re about to spend for conversion or transfer. You can exchange 36 different currencies. Savings accounts can offer up to 4.75% in interest rates, but they’re only available in GBP, USD and EUR.
How to apply
You can apply for Revolut over the official website or after downloading the app. Just like for every other neobank, you’ll have to supply scanned copies of identification documents. Verification is relatively fast.
Pros
- Multiple personal finance options
- Ideal for international spending or holidays
- Excellent mobile app
- Standard account is super low in fees
Con
- Currency conversion prices are higher on weekends
Ratings:-
- Credibility and trust 9/10
- Quality of services 8/10
- Fees 8/10
- Customer service 9/10
Comdirect is a German neobank specialized in financial services and offering access to a wide variety of brokerage services. It’s only available in Germany, regardless of the user’s nationality.
Countries
Regulated in Germany, Comdirect is mainly aimed at the German market. That’s why the website and app are difficult to navigate as well, since they’re mainly in German. However, German residents will find it quite comprehensive and detailed in services.
Services
Signing up with Comdirect will give you access to a classic EUR IBAN, ideal for everyday banking needs. The main service is a full bank account, yet Comdirect is mainly appreciated for its trading services, including stocks, ETFs, options, bonds and crypto, among others.
Fees
There are no withdrawal fees. There’s also a low inactivity fee, yet trading fees are relatively high compared to other brokers.
Rates
Current accounts don’t have interest rates, but some savings accounts can bring in as much as 11%.
How to apply
Comdirect is a neobank with no branches, so applying for an account is done exclusively online. Registration is also available through the app, and identification documents are required for verification.
Pros
- Full bank account services
- Quick card delivery times
- Great for everyday banking
- Low fees for banking
Con
- Fees for trading are higher than average
Ratings:-
- Credibility and trust 9/10
- Quality of services 8/10
- Fees 9/10
- Customer service 8/10
Based in Toronto, Canada, Koho is one of the first neobanks in the area. It’s been established in 2017 and offers access to a wide variety of banking services, pretty similar to everything you’ll find in a regular bank.
Countries
Koho is only available in Canada. The application and website are available in English and French. Residents of Canada can use it with no restrictions at all, regardless of the nationality.
Services
Koho’s best features include spending and saving accounts. There are quite a few plans, such as the easy one that brings in cash back, electronic transfers, interest and no monthly fees. There are also essential, extra and everything plans, offering more features, as well as more fees.
Fees
The easy plan is basic and has no monthly fees. All the other plans have monthly subscription fees ranging between $4 and $19 a month. Despite the fees, premium plans also come with extra features, such as trading capabilities.
Rates
Interest rates are quite attractive and they vary based on the plan you have. On a savings account, you can get up to 4.5% interest. Cash back rewards are also worth some consideration, ranging between 0.5% and 2%, depending on the plan. The more premium the plan, the more you’ll get.
How to apply
There are more than a million Canadians taking advantage of Koho’s services. To register, go on the official website and start with your email address and a chosen password. You’ll obviously be verified, so you’ll need to supply identification documents as well. You can do the same through the Koho app too.
Pros
- No monthly costs for the basic plan
- Cash back rewards on every type of account, including the free one
- Good interest rates for savings accounts
- Convenient virtual card
Con
- Credit building program comes with a $10 monthly fee
Ratings:-
- Credibility and trust 8/10
- Quality of services 8/10
- Fees 10/10
- Customer service 9/10
Whether the convenience associated with a branchless operation, the low fees, access to quick and easy international transfers or just a safe approach to international spending, neobanks represent an upgrade to today’s banking industry.
While these are only top 10 neobanks out there, the truth is there are many more options out there, each of them with its pros and cons. Other notable neobanks include:
- Commerzbank
- Global66
- Tomorrow
- Tangerine
- Majority
- Boursorama Banque
- Neon
- N26
- Monese
- Buddybank
Frequently Asked Questions- Top 10 Neobanks
Are Neobanks regulated like traditional banks?
Neobanks are not directly regulated as traditional banks. Instead, they typically partner with chartered banks that handle the regulatory compliance. However, neobanks must adhere to financial regulations to ensure the safety and security of customer funds.
How do Neobanks ensure the security of customer funds and data?
Neobanks employ advanced encryption protocols, multi-factor authentication, and real-time fraud monitoring to safeguard customer funds and data. Additionally, they adhere to strict industry standards and compliance regulations to maintain the integrity and security of their digital platforms.
Can I deposit cash or checks with a Neobank?
Most neobanks currently do not support cash deposits due to the lack of physical branches. However, some neobanks offer remote check deposit features through their mobile apps, allowing users to deposit checks electronically.
Are there any risks or downsides to consider when using a Neobank?
Potential risks of using neobanks include limited product offerings, less established customer service channels, and dependence on digital infrastructure. Additionally, some users may have concerns about the lack of physical branch access and potential cybersecurity vulnerabilities.
How do Neobanks make money without physical branches?
Neobanks generate revenue through various sources, including interchange fees, lending interest, subscription-based premium services, and partnerships with fintech companies. By operating digitally, neobanks significantly reduce overhead costs associated with physical branches, enabling them to focus on innovative financial products and services.
Can I link my Neobank account to external financial services?
Yes, many neobanks allow users to link their accounts to external financial services. This integration enables seamless transfers, payments, and access to a broader financial ecosystem. However, users should verify the security protocols and compatibility of the external service with their neobank to ensure a smooth and secure linkage.
Bottom Line
Deciding on the best neobank depends solely on your personal needs, but also on its availability in your location. There are a few international neobanks out there offering services in dozens of countries, as well as local neobanks specialized in certain locations only, such as where they’ve been regulated.
Some people are looking for quick and cheap international transfers. Some others are looking for a safe way to pay abroad while on holiday, hence the necessity of a prepaid account to keep their original banking details hidden.
There’s also the option to teach kids how to be responsible while budgeting, so some neobanks offer access to cards for teenagers, prepaid by parents on a regular basis. The idea teaches youngsters about cards and banking.
Based on what you’re after, what works for some people won’t work for everyone else, hence the necessity to assess your needs before making a final decision. Just like for any other banking service, you’ll have to do your homework upfront.