What is a Neobank?
Neobanks are digital-only banking companies that rely on technology to provide various online financial services ranging from opening a checking account to transferring funds. As their operations are entirely online and digitised, a need for a physical branch is lessened. Instead of a brick-and-mortar branch, they have a dedicated mobile app and website that can be accessed 24/7 with customer support via email or live chat. In fact, the worldwide market share of neobanks rose 6% in just two years (2018-2020).
With the COVID-19 pandemic accelerating the need for more digitisation in all industries, many different businesses have followed suit to catch up with the times and the needs of their clients. For this reason, even traditional banks have pivoted their services from brick-and-mortar services to the online space by adopting mobile or internet banking technology.
Advantages of a Neobank
Convenient and Accessible
Singapore is a digitally-savvy country, with approximately 90% of the population using smartphones daily. As neobanks are only accessible via a mobile application or desktop, Singapore is an ideal seeding ground for the neobank industry. Moreover, it gives a sense of convenience to users that can fulfil their banking needs with just a few clicks. Users can get instant push notifications when their bank transfers are sent or received.
As neobanks are entirely online and have no physical branches, this translates to more affordable operations and lower overhead than traditional banks. Doing so enables them to offer lower fees and better interest rates. The UK neobank, Wise, even offers free monthly fees and requires no minimum balance to maintain an account.
Better exchange rate
The COVID-19 pandemic has proven that the work from anywhere policy is here to stay. The talent pool is not limited to one’s home country but extends almost anywhere. Neobanks have made it possible for businesses to get better exchange and transfer rates than a traditional bank.
Neobanks in Singapore
YouBiz is a new business product by multi-currency fintech startup Youtrip. YouBiz enables businesses to empower employee spending with unlimited physical/virtual corporate cards with unlimited 1% cashback and real 0% FX fees on card spend across 150+ currencies. From unlimited corporate card issuance, free accounts in 9 major currencies, best-in-market savings on remittance to over 140 countries, YouBiz is a fee-less business account designed to help global-minded businesses scale faster.
Founded in Melbourne, Australia, in 2015, Airwallex is a neobank that allows businesses to set up accounts with no monthly fees. They’re able to send money to over 130 countries globally in more than 30 currencies at no cost. Additionally, the service can be integrated with Xero, making it easier to keep track of your business expenses and consolidate it for financial purposes.
Established in 2011, Wise is one of the leading neobanks worldwide. It gives users and businesses a competitive exchange and transfer rate that makes it ideal for those looking to transfer funds internationally. With over 40 currencies, it allows businesses to pay invoices and handle payroll with ease, ensuring that they get the best value anywhere in the world without going over budget.
Similar to Airwallex, Revolut is a neobank that enables you to transfer internationally with multiple currencies at no transaction cost and ultra-low exchange rates. What makes it different is that it comes with a built-in expense tracker. This allows you to categorise spending and budgets and keep track of your expenses and cash flow.
Like their name suggests, neobanks are relatively new to the financial service space, and they offer a leaner service when compared to their traditional counterparts. For SMEs looking for the best business account in Singapore, they may just fit the bill. Neobanks can help save money and get the primary job of banking, such as transfers done with ease. However, as time goes on and tech becomes more sophisticated, neobanks may offer a more comprehensive and personalised service down the line.
Regardless of your neobanking choice, Lanturn is here to help you manage your money and investments effectively with our qualified experts.