Changing to Succeed

The term neobank has been used at least since the mid-2010s to describe fintechs that are challenging traditional banks by providing an increasingly comprehensive suite of banking services (as opposed to just payments, personal financial management, etc.) through innovative and low-cost digital channels. Depending on geography, these institutions have also been called challenger banks, virtual banks, digital banks, online banks, and internet-only banks. Over the years, the definition of neobank has expanded and blurred. Many traditional banks have launched their own exclusively digital plays, and fintechs have partnered with traditional banks to provide banking services. Today, licensed neobanks—entities that have a regulatory license in their respective geography to provide digital banking services—may exist as stand-alone fintechs, digital units launched by traditional banks, or as digital financial services plays by other institutions.