The best neobank products
You might have heard of neobanks and wondered what they are, wondered whether they’re right for you or, if they’re as safe as “regular” banks.
The good news is that they are as safe as regular banks and they probably are right for you. You might be a fintech fan, or you might just be looking for something new, more flexible and (usually) cheaper.
All that you need to know now is what a neobank is
A neobank is, quite simply, one of the new generation of banks. These new banks are built on new technology and don’t use the older tech used by most of the more traditional institutions. Because of this new tech, as well as a newer outlook, they can offer customers innovative products that are often easier, cheaper and, well, more modern.
Neobanks still offer all the usual products like transaction accounts, savers and even mortgages; they also still have to have all the licences and obey all the same regulations as traditional banks. It’s just that everything runs on a digital platform – one step further than the online versions of the older banks. There’s no physical infrastructure.
So much for the background. What can a neobank do for me?
A neobank can offer you lots of new techy features, such as single–use virtual cards for extra security, budget setting facilities, money management, currency and commodities exchanges and lots more. All of these features are delivered to you fairly cheaply because there’s no physical overheads.
You’ll also get a mobile experience, as neobanks are accessed through a smartphone app. This makes them ideal for using on the train, in a waiting room, walking the dog… You get the picture.
Then there’s the money apps
The neobanks have gone through all the regulatory scrutiny and licensing processes that you’d expect from a traditional bank, but the money apps defy categorisation as they all serve different purposes and needs.
Lots of the money apps offer prepaid debit cards, instant and (almost) fee–free currency exchanges, bill–splitting and cheap overseas money transfers.
Other apps are more concerned with budgeting and money management, across their customers’ accounts with traditional banks, lenders and providers. This helps people to streamline and monitor their finances quickly and more accurately. They can also make sending, receiving and managing money from a smartphone much easier.
A quick word about safety
Neobanks are all regulated by APRA and ASIC, so your money is quite safe. Up Bank, for example, issues its transaction and savings accounts through its partner Bendigo and Adelaide Bank. Bendigo is an authorised deposit–taking situation (ADI) and so your deposits, up to $250,000 per person, are covered by the Financial Claims Scheme (FCS).
Other banks, like Xinja, Volt Bank and 86 400, don’t have a traditional bank as partner so they’ve decided to get their own ADI licences. Without these licences, neobanks can’t offer the full range of banking services in Australia. If you see that a neobank offers a particular account, it’s licensed to. You might notice that some services aren’t offered by that particular institution; this doesn’t mean it’s dodgy, it’s just still earning the right licence.
What is so special about neobanks and money apps?
The structural difference between neobanks, money apps and traditional banks is the platforms they run on. This doesn’t really matter to end users, though, as it’s all about the features.
Neobanks and money apps can offer users pinpoint–detailed data on their spending, their habits and also encouraging saving tools and widgets. These banks are helping to usher in personalised banking, as well as more tools to micromanage spending and improve financial wellbeing.
There’s detailed transaction history, as in who paid you, complete with company name and logo, as well as who you paid, when and even where.
You’ll also get your own spending updates every week and month, so you can compare it to the previous several months.
Many apps have budgeting and savings trackers and “pots” so you can manage individual saving campaigns and make sure that you’re balancing your money.
Round–up facilities can automatically transfer “loose change” into a particular pot without you having to do anything.
Your phone security
Neobanks are aimed at millennials primarily, so most of their apps have biometric security measures like fingerprint and facial scans instead of passcodes.
It’s also possible to do voice banking using Siri, Google or Bixby.
The new payment options
Using a mobile wallet like Apple, Google Samsung Pay means you can leave your wads of cash and cards at home.
Most of the neobanks offer integration with New Payments Platform tech, like PayID, as well as making almost instant transfers to other banks by using Osko.
The disposable virtual cards offered by Revolut are really useful if you’re worried about card fraud as you generate a one–time card within the app, use it and then discard it after the transaction is completed.
One thing neobanks are offering is lots of travel–friendly products and options.
Lots of the prepaid neobank debit cards have zero per cent international transaction fees, as well as fee–free overseas ATM withdrawals.
Then there’s the really handy bill -splitting widget from Pelikin which lets you split expenses and bills with friends even if you’re all using different currencies.
Revolut lets its premium cardholders make international transfers at the interbank rate, which is significantly cheaper than the bank–to–end user rate.