Are neobanks like traditional banks?
24/10/2023
You’ve almost certainly heard of neobanks. You might also know someone who has decided to deposit their savings in one of these banks, attracted by their competitive offers. But do you really know what they are and how they differ from a “traditional” bank?
When we talk about neobanks, we’re referring to financial firms that conduct their business exclusively through digital channels – online banking and apps (fintech) – to offer everyday products and services, such as payment accounts, cards and loans. This generally allows them to have lower costs because they don’t have brick-and-mortar locations and don’t offer services in person.
Neobanks operate independently of traditional banks, although their online and mobile banking services resemble those of conventional banks.
Are they just like any other bank then?
It depends. Some are registered with the Banco de España as credit institutions, which means they are subject to its regulations, and the money we deposit is covered by a deposit guarantee schemeAbre en ventana nueva (DGS) (at national or EU level).
Others, however, may operate with a different business model. They may be registered as electronic money institutionsAbre en ventana nueva[, be associated with already established ones, operate as payment institutions Abre en ventana nuevaor only provide account aggregation and payment initiation servicesAbre en ventana nueva. While credit institutions offer a wider range of services (including deposit-taking, which is why they must be covered by a DGS), others are limited to payments and, as they don’t take deposits, don’t include the protection of a DGS
Before signing up for financial services with one of these neobanks, you should check how they operate and what services they can provide to determine if they’re right for you.
To do so, use the Official Register of InstitutionsAbre en ventana nueva of the Banco de España. If a bank is authorised in another EU country, you can also consult the national registers of other Member StatesAbre en ventana nueva or the European Banking Authority’s Payment Institutions Register.Abre en ventana nueva
