Best Neobanks in 2021: Working Terms and Services, Key Functions, and Differences from Traditional Banks

A neobank is a fairly new term. The first organizations of this type appeared in Europe in 2015. For a long time, these financial institutions remained largely experimental. The reason for this was simple – potential customers simply did not perceive neobanks as full-fledged financial institutions. The traditional paradigm was too strong, and customers wanted to see an offline office, cash desks for consumer transactions, managers, sheets of signed contracts, and receipts issued after each transaction.

The list of neobanks began to expand significantly after the start of the COVID-19 pandemic, when all the advantages of fully remote banking became especially clear. Traditional financial institutions began to lose ground in the informal competition for customers and have been gradually losing it, although in 2021 they still hold the leading position. But it is becoming more and more difficult for them to “adapt” to the new realities and challenges.

A typical example is a neobank (let’s think of an abstract one, without any references to a specific company) with a completely remote customer service system and significantly shorter delays. Opening an account takes 15 minutes, any other transaction – 3-5 minutes. And all you need is a smartphone with an installed application. There is automatic cashback, currency exchange in just a few touches. Individual entrepreneurs get current accounts without any need for filling out massive paperwork. Almost all reviews of neobanks speak of a high degree of customer satisfaction. And this has been the same over the past few years.

We will not publish a complete list of neobanks: it would take several pages, and would not be of particular practical benefit to our readers. Also, we will not confidently assert that the neobanks that were named the best ones in 2021 by the experts of the Q Wealth portal are ultimately unsurpassable. Perhaps other list options would be more correct for specific areas of use.

Another important point to mention is reviews of neobanks. It is clearly not worth focusing only on reviews when choosing financial institution for yourself. The subjective opinion of an individual client is based on their personal experience and by definition cannot be applied to everyone. Reviews of neobanks will help you make your own shortlist, but your final choice should be balanced, thoughtful, and as impartial as possible.

So, how can one choose the best neobank? The most preferable option is getting an individual consultation with our experts. We will discuss your wishes and requirements, evaluate to what extend the list of various banks’ services comply with them, and only then give you specific recommendations. Otherwise, it would be impossible to say that you have found the best neobank (and please note – the best for yourself!). E-mail us at in**@***********rt.com indicating the format of our further communication that would suit you best of all.

Neobanks – a New Approach to Banking

As we said above, no one has really “cancelled” traditional financial institutions yet. But almost all financial analysts are sure that the future already belongs to them – at least if they do not transform into something new. Reviews of neobanks are full of negative assessments, comments about slow service, conservatism, and a limited list of tools and services compared to traditional financial institutions. However, many potential customers do not fully understand how neobanks differ from traditional banks; as a result, they find themselves in a kind of information vacuum, unable to make informed decisions. Which is exactly why we offer this article for your attention.

Neobanks are financial organizations that work exclusively online, and as such they do not have an office for clients. They may be one of the following:

• Licensed institutions, operating completely independently; or
• Intermediaries cooperating with traditional banks or operating under their licenses.

There are various options for making profit from neobanks. For example:

• Charging interest on services;
• Charging interest on transactions and transfers;
• Interest on loans.

Neobanks have a number of key functions. Here are some ways they can be implemented:

• A branch of a traditional bank operating under its own brand. Most often, usual “old-fashioned” banks choose this option if they do not want to compromise their own reputation with conservative clients;
• A branch of a traditional bank that works with clients online (but under the original brand name);
• A neobank operating under the guise of a traditional financial institution, but with no obvious ties to it. Organizations of this type have their own development strategy, marketing policy, target audience, and methods of service promotion; and
• A neobank created “from scratch” and designed to work exclusively in the digital format.

Here are the main differences of neobanks as compared to traditional financial institutions:

• The absence of a physical offline office;
• A relatively small list of services (possibly, temporarily);
• Control over the work is carried out by the Central Bank and the Ministry of Finance (for a traditional bank it is usually only the Central Bank);
• May work with a limited license.

Modern neobanks are a good example of how vague the notion of a traditional financial institution has become these days. The latter are gradually entering the online space, transferring more and more of their work with clients onto the Web. Therefore, we can assume that in a few years we will have a new format of the banking structure, or NextGen neobanks, which will have the features of organizations of both types.

Best Neobanks in 2021– Short List

For our top list we have selected the brands that seemed optimal. We took into account all the most important factors, and the reviews were of no least importance. However, we should say once again, the best neobank for your specific needs may be totally different – everything depends on your actual requirements for a financial institution.

Generally, the best neobanks (see the table for examples) offer their customers approximately the same terms of service. We would say that the conditionally “standard” set includes no minimum balance requirements, zero monthly fee, and a low (zero) annual rate of return.

If we talk about the combination of a neobank and a list of services, then various options are possible here, sometimes with significant differences. This issue is a good example of how some specific (and sometimes by far not the best) neobanks may interpret the needs of their target audience. We will talk about that in the next part of this article.

Chime

• Basic service terms (monthly commission, annual return, minimum balance): no / the average of 0.5% / no;
• Interesting services and features include: savings summary, more than 60 thousand ATMs without commission, blocking / unblocking the card from the mobile application, receiving direct deposits 2 days ahead of time, etc.;
• Customer reviews. Chime neobank reviews are almost all positive. The users note relatively high yield of 0.5% (APY 1-8×2), savings / checking accounts, and a highly functional application. It should be noted that the list of this neobank’s services is constantly expanding.

Please note, dear readers, that Chime is in the first place a business, a financial and technological company. It was deservedly entered on the list of neobanks, but cards there are issued through the Bancorp Bank / Stride Bank. The organization is a member of the FDIC (Federal Deposit Insurance Corporation, Federal Deposit Insurance Corporation), so users are guaranteed a fairly high level of security.

Aspiration

• Basic service terms (monthly commission, annual return, minimum balance): at the client’s choice (“in fairness”), or 5.99 USD per month / up to 1% (with Aspiration+ Package) / no. Opening an account costs 10 USD (the list of neobanks that charge money for this service is limited, on our shortlist there are just two, Aspiration and Unifimoney);
• Interesting services and features include: “green” orientation (savings accounts or deposits do not finance fossil fuels), cashback up to 10% (reviews about this neobank confirm this), compensation of monthly fee when withdrawing cash from a “foreign” ATM;
• Customer reviews about Aspiration neobank: given the orientation of the financial institution, they are extremely positive. Its target audience – socially conscious people with a fairly high income – is quite demanding, so the example of a neobank that could find common ground with such people should definitely be analyzed and followed by other banks.

The emphasis on the voluntary monthly fee is an excellent marketing move, which, by the way, which, by the way, provides a good financial return. For an extended package of services, which is surely not necessary for all the customers, those who choose to have it must pay 5.99 USD per month (71.88 USD per year), but this amount is perceived by the target audience of this offer with understanding.

The number of free ATMs is slightly smaller than that of Chime (55 thousand), but this is unlikely to pose a problem. The main clients of this neobank (the list of whom includes freelancers, accomplished youth, IT specialists, and other professionals with a high level of income) almost never deal with cash.

Revolut

• Basic service terms (monthly commission, annual return, minimum balance):  up to 16.99 USD per month / up to 0.14% / no;
• Interesting services and features include: exchange between 28+ fiat money and cryptocurrency (in any direction), enhanced card security, interesting opportunities for travelers;
• Customer reviews about Revolut neobank: The list of neobanks that officially deal with cryptocurrencies with a sufficient number of regular services is really small and Revolut is among the select few. This fact mainly attracts customers, although it is true to say that the basic services are at quite a decent level.

The pattern chosen by Revolut is somewhat reminiscent of VISA/Mastercard support programs. The emphasis on crypto-currency services and special tools for actively traveling clients have allowed this neobank to carve out its own niche in the market, but in connection with this preference, their “regular” services are at a good, but basic level.

Reviews about neobank only confirm this conclusion: customers note the existence of several insurance programs covering medical emergencies and baggage delays, as well as offering the right of free access to the waiting room if the flight is delayed. Other perks are also attractive, like the chance to receive payments with a 2-day advanced bonus. In addition, the Revolut neobank has some advanced tools for working with plastic cards, for example, beside the regular opportunity to block a card, the client can also create disposable cards for online purchases upon request.

Robinhood

• Basic service terms (monthly commission, annual return, minimum balance): no / 0.3% / no;
• Interesting services and features include: investments using a connected brokerage account without commission, FDIC insurance (with reservations), and 90 thousand free ATMs;
• Customer reviews show that Robinhood neobank is a NextGen financial institution well-liked by its clients. The options offered by the bank are quite specific, but for the target audience they are more in demand than standard services. Reviews only confirm that Robinhood is a good example of a neobank that has taken its niche and clearly understands the goals of its presence in the market.

Robinhood is often referred to as an investment application, but this is not entirely true. Rather, in this case we are dealing with a neobank that is competently building its marketing policy and does not seek to sit on all chairs at once. Of the interesting extras we must mentions free stock / options trading, a combined account (current and savings), advanced fund management options, and a functional client for a smartphone.

Wealthfront Cash

• Basic service terms (monthly commission, annual return, minimum balance): no / up to 0.1% / no;
• Interesting services and features include: insurance in FDIC (up to 1 million USD), super-quick transfers to a specified investment portfolio, advanced automation options;
• Customer reviews of Wealthfront Cash neobank are mostly positive. Not all users were satisfied with the use of a robot consultant (getting help from a living support person is quite problematic). Most importantly, Wealthfront Cash is a typical example of a neobank that focuses on the needs of the target audience, and not a generalized impersonal client with average, typical requirements.

Wealthfront Cash is a robotic neobank with maximum automation. As a customer, you will automatically receive a standard debit card at no additional cost. You will need some preparation to use all the functionality created by the developers, but customers who value their time will definitely like this approach.

LendingClub Banking

• Basic service terms (monthly commission, annual return, minimum balance): no / 0.15% / no. Opening an account – 100 USD;
• Interesting services and features include: cashback (when using a debit card), extended package of financial services, and discounts on ATM fees;
• Customer reviews of LendingClub Banking: customers confirm that the neobank’s management has chosen the right strategy for entering the market. Some people will not like the seeming absence of a certain “character”, but as a potential leader in the mass market, LendingClub Banking is probably the best neobank. Or, at least, a legitimate contender for a place on our TOP list.

LendingClub Banking made it to our list of neobanks for a reason, although in terms of structure and philosophy of working with clients it is closer to traditional financial institutions than to NextGen banks. Another interesting feature is the client privileges that are more typical for fintech companies. Thus, customers of LendingClub Banking have access to free current accounts, discounts on the commission charged by ATMs of other banks, and extended cashback.

Therefore, LendingClub Banking is a typical example of a neobank in 2021 that is targeting the mass consumer. At LendingClub Banking, the emphasis on cash, servicing rank and file customers (who usually do not have bonus credit cards), and consumer lending services surprisingly peacefully coexist with the options and tools required by the business audience.

Unifimoney

• Basic service terms (monthly commission, annual return, minimum balance): varied / up to 0.2% / no. Opening an account – 100 USD;
• Interesting services and features include: automatic investments, a wide range of loans, and credit card rewards;
• Customer reviews. Reviews about neobank Unifimoney mostly depend on how the customers intended to use their account. So, if your main goal is daily spending, Unifimoney may not be the best choice for you. But the users who have selected this company for other purposes are confident that they made a good choice. Unifimoney is an example of a neobank focused on the generation of users of the 21st century.

Unifimoney is not just a neobank. It is a full-fledged fintech company, building its work strategy with an eye on attracting its clients’ investments. The list of services includes a current account and a debit card, which is a standard for neobanks. Of the unusual features we would like to note the checkbook option;

Potential customers who are used to free service may not like the minimum initial deposit of 100 USD and the monthly service fee (there are a number of conditions that eliminate this requirement). On the positive side, there is a way to link an account to an investment service, and a simplified procedure for buying / selling cryptocurrency, precious metals, stocks or ETFs;

You can also sign up for the services of a robotic advisor that will take over portfolio management. The release of credit cards is expected soon, adding to the number of cashback options and expanding the list of credit services.

N26

• Basic service terms (monthly commission, annual return, minimum balance): no / no / no;
• Interesting services and features include: limited ATM fees, interesting savings tools, debit card cashback;
• Customer reviews. Customers who share the N26 business philosophy note the effectiveness of the available functions, stable work of the mobile application, and advanced planning tools.

The N26 project is being developed by a fintech company focused on the mobile use of all available functions. N26 is a good example of a neobank that does not strive to cover the maximum audience, and relies mainly on specific features and capabilities rather than generic services for everyone. Of the common options we may note the availability of debit cards, cashback, and a network of 55 thousand “free” ATMs.

Lili

• Basic service terms (monthly commission, annual return, minimum balance): no / no / no;
• Interesting services and features include: services for freelancers, providing them with a business checking account;
• Neobank Lili customer reviews describe it as a NextGen bank with a clear and unambiguous focus on freelancers, which in itself is quite unusual. The target audience perceives Lili’s services very favorably, so our list of neobanks only benefits from the fact that the neobank offers such unusual options.

Lili is not only and not so much a neobank as a modern fintech company. Targeting freelancers, whose requirements for financial institutions are different from those of “ordinary” clients, was a little risky. But it turned out fully justified. The main feature of Lili neobank is a full-fledged current account complemented by tools for monitoring and managing finances.

Another advantage of Lili is the tools and functions for preparing tax returns. The list of neobanks with such functions is extremely limited. In fact, freelance clients have no other alternatives, so Lili’s prospects are very good.

Summary and Recommendations

Reviews of about neobanks confirm that the undertaking turned out to be quite viable. Rejecting the idea of having conventional branches and transferring all operations (including opening an account) online has made it possible to offer customers extremely favorable service conditions and maximum comfort for customers. 

But you must clearly understand that even the best neobanks are not universal tools, even if the reviews of enthusiastic customers say otherwise. In many cases, choosing a traditional bank or payment system will be more preferable for your particular needs. But in any case, your choice should be conscious, not impulsive.

Experts of the Q Wealth portal (in**@***********rt.com) will be happy to consult you on the following topics:

• …opening a foreign or offshore personal bank account; 
• …using a foreign payment system;
• …opening a foreign or offshore corporate bank account.

We successfully implement business projects of any complexity and never take on obligations that we cannot fulfill. Contact us for an individual consultation. We are looking forward to your call!