Ever heard of a bank that operates digitally via an online platform without a physical branch? Well, that is exactly what a Neobank means. They are based on websites, smartphone applications, or even both, sometimes.
The banking sector in Singapore has come a very long way and has evolved in the last three years. If you are thinking of trying out alternative banking methods, then you may have already come across the term, Digital banks.
Relin Consultant’s guide below covers the Singapore Neobanks and why you should consider having an alternative bank.
HOW ARE NEOBANKS AND TRADITIONAL BANKS DIFFERENT?
Traditional banks are those well-known for having a well-regulated and secure financial system. Because of their reliability, banks are the first location that springs to mind when people think of financial services.
Traditional banks may struggle to cope with their rigid processes and fast-developing client demands as customer experience and satisfaction are pushed to the forefront of the financial environment. The same operating systems in place today give very little potential for innovation.
A Neobank’s slimmed-down business strategy allows it to better target its intended clients, lowering fees and increased bonuses.
Neobanks provide swift answers to the financial demands of up-and-coming enterprises and consumers against the backdrop of an increasingly digitized future.
Neobanks are progressively penetrating the financial sector, for tracking business finances or transferring money to a family member overseas.
In simpler terms, traditional banks are physical institutions that have been here for a long time compared to Neobanks that has only been here for 5 years. Traditional banks have long-term contracts with their customers, in-person support, and more robust fees. On the other hand, neobanks have flexible contracts, website support, and transparent or lower-cost fees compared to traditional banks.
ADVANTAGES TO CHOOSING NEOBANKS IN SINGAPORE
Friendliness to users
Neobanks have easy-to-use and understandable user interfaces to provide a good experience to the users. While traditional banks provide a wide range of financial goods to a broad audience, such as credit cards, insurance, and loans, Neobanks cater to a more niche target group. Creating tools that operate with payrolls, expenditure management, and automated accounting services for freelancers are instances of this.
Easy to use
It is convenient for users to do anything they want, from creating an account to making transfers, where it can be done 100% online, and everything is just at the tip of the user’s fingertips. Users can manage their finance from wherever they are as well.
Within the app, you can easily make international transfers. Most Neobanks collaborate with a third party to provide a reasonable, transparent international transfer cost based on the mid-market exchange rate. You won’t have to carry around an extra business card because the account comes with a free virtual VISA corporate card built within the app.
Fees are low and straightforward
Neobanks have a huge cost advantage in operations because they do not have physical branches. These savings are passed on to their clients through cheaper applications, accounts, and program costs.
DISADVANTAGES OF NEOBANKS
Digital accounts may not be ideal for all users.
Neobank was designed with the current business owner and entrepreneur in mind and took a forward-thinking approach. It does not, for example, enable cheque payments but instead provides connectors that make payment flows easier and sync directly with accounting software like Xero for a seamless flow. Hence if you are liaising with some institutions or government departments which only issue cheques, there might be some complications.
A majority of banking clients still prefer to be served on an omnichannel basis through both online apps and face-to-face contacts at physical branches.
Lack of customer service representative
Compared to a traditional bank with a bank branch where you can walk in and speak to a person, some Neobanks might only liaise with you via email. Hence it might not suit everyone.
If you require assistance to open a corporate bank account in Singapore, feel free to reach out to us at email@example.com
Why are Neobanks rare in Singapore?
Despite the hype around Neobanks, they are still relatively new in Singapore, which has numerous financial laws. As a result, many fintech businesses seeking to incorporate or secure a license in Singapore may encounter certain challenges. However, you can note that the Neobank is increasing steadily in the region.
Can Neobanks be the future of banking?
Whether you choose a Neobank or a regular bank to support your financial needs, both types of banks will provide you with different benefits. As Neobanks’s charges are relatively cheap, your business should get both bank accounts from a traditional bank and Neobank.
Is Neobanking a viable option for your business?
Neobanks provide business owners with the comfort and convenience of conducting business banking from the tip of their hand with their app-only interfaces.
Neobanking is worth exploring if you are a company conducting international business.