The rise of neobanks

The word neobank has been cropping up all over the world, but a lot of people aren’t sure what it means or what they are. Well, I’m here to enlighten you and tell you what it’s all about, including why Douugh is a little different from your typical neobank!

Globally the neobank scene has been heating up for the past three + years, with new digital banks racing to get up and running with a viable alternative to the big banks. Within that time, there has been an emergence of neobanks originating out of Europe (Monzo, N26, Revolut), the U.S (Chime, Simple, Varo) and now Australia (Xinja, Up, 86 400).

So what is a neobank?

Simply, a neobank is 100% a digital and mobile platform but more than that, its systems are 100% new (not legacy) so it’s not simply a digital front end to a traditional bank.

While the word ‘bank’ brings up mental images of pens chained to desks, long lunchtime queues, and odd muskie smells, neobanks are anything but. Not only do they not have long ques, but they don’t even have branches – outrageous. Instead, they promise to provide customers with all the services you need but in the way you want: at the touch of a button, 24 hours a day, with no restricting opening hours - perfect as money has no bounders!

Neobanks are ‘shifting the mindset’ by offering a customer-centric approach to services. The vision is to transform the way banking is viewed by the public, in which traditional banks have created fear and distrust within the financial system.

Why Douugh isn’t just another neobank!

Douugh is setting out to disrupt the status quo of financial institutions. We don’t entirely identify as a neobank, rather, we’re moving away from the traditional banking model altogether.

Unlike ‘traditional’ neobanks, who are taking a mobile-first approach and applying for their own banking license to sell traditional bank products. Douugh is a technology company taking an AI-first approach to building a software platform, partnering with a bank to provide us with deposit-taking capabilities, and a balance sheet. Douugh is pioneering a new business model focused on delivering financial wellness to you.

This will see Douugh launching its own integrated wealth management offering, allowing you to invest and reach your financial goals faster. This technology is referred to as robo-advise, giving you access to balanced portfolios that are risk-weighted towards your specific requirements and financial plans. We are infusing robo-advisory to help you build a comprehensive plan that proactively sweeps funds towards your specific goals while assisting in spending wisely each day.

What advantages do neobanks have over traditional banks?

Now you may be thinking, well my bank has had an app for years, so what are neobanks actual offering?

Well, all good neobanks are far more cost-efficient. Without needing to maintain national offices, hundreds of physical branches, and workforces running into the thousands, our expenses are minimal.

Why is this important for you to know? Well, the smaller the spending, the less money we need to make off our customers. Neobanks are then able to pay higher interest rates, charge minimal or no fees. However, the big banks, effectively have to tax you to keep the lights on!

Neobanks don’t have outdated systems holding them back. Neobanks can build all their systems from scratch, allowing them to have the best tech to give the best service. Why spend precious time filling out countless pages to sign up for a new account, when you can submit a form in minutes via an app, there is no doubt which I would choose!

Top three things to know about neobanks:

  • Neobanks most useful feature is to use data made available through Open Banking to give their customers a single view of their entire finances.

  • Most neobanks are focused on building their own digital community. They are focused on involving their community in the development of their business to ensure that it meets real needs.

  • While most neobanks are launched through VC funding, it’s likely that most will need to list on the stock exchanges to access institutional investment capital to accelerate their growth.

As always, we love to hear from you - got some ideas and suggestions, general feedback or questions? Please email us at help@douugh.com.