neobank
A digital-only bank that operates exclusively online without physical branches, offering checking, savings, and other financial services through mobile apps.
Example
“Chime and Revolut are neobanks — no branches, no fees, fully app-based banking.”
Memory Tip
NEOBANK = a NEW bank with no physical branches. App only, lower fees.
Why It Matters
Neobanks matter because they typically offer lower fees, higher interest rates on savings, and more convenient access to banking services through your phone compared to traditional banks. Understanding neobanks helps you evaluate whether a digital-only banking option might save you money and fit your financial lifestyle better.
Common Misconception
Many people assume neobanks are less safe or less regulated than traditional banks, but most legitimate neobanks are fully licensed and their deposits are protected by the same FDIC insurance that covers conventional banks. The lack of physical branches does not mean less security or protection for your money.
In Practice
A person might open a neobank account and receive a 4.5 percent annual percentage yield on savings while their traditional bank offers only 0.01 percent, earning them $450 on a $10,000 balance annually instead of just $1. Additionally, they could avoid monthly maintenance fees of $15 that their old bank charged, saving an extra $180 per year while banking entirely through their smartphone.
Etymology
NEO- (new, modern) + BANK. A NEW type of BANK that exists only digitally.
Common Misspellings
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See Also
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