A Neobank is a type of direct bank that is 100% digital. It interacts with its customers on mobile apps and personal computer platforms only. Hence sometimes these banks are also referred to as Mobile banks, App banks or simply digital banks. Neobanks function differently from regular banks as they do not operate traditional physical branch networks. SME neobank is a neobank offering banking products specifically for SMEs and businesses.
Neobanks are mostly technology-driven and may adopt machine learning , blockchain and other artificial intelligence technologies whilst not being constrained by legacy systems of traditional banking competitors.
Neobanks have led the charge in fintech innovations and have received more than $3.6 billion in venture capital funding for consumer fintech startups this year. And as this coronavirus-fueled acceleration of digital transformation continues, it seems that these digital banks or neobanks are here to stay, with some estimates forecasting neobanks reaching 60 million customers in North America and Europe by the end of 2020, and surpassing 145 million by 2024.
Globally, top neobanks have captured the attention of investors, which is reflected in their high valuations. Neobanks are able to attract funding due to their disruptive capabilities and innovative approach to the way financial services are offered.