We’re less than two months into the year and neobanks are already making headlines left right and centre, so we think it’s safe to say that 2020 is quickly becoming the year of the neobank!

Our recent Neobank Report 2020: Digital banking in a new decade revealed that a whopping one in four Aussies have either switched or are considering switching to a neobank.

But, in case you’ve been living under a rock and still don’t know the difference between a ‘neobank’ and a ‘neopet’, then we’re here to fill you in and answer some of your budding neobank questions!

What’s a neobank?

To put it simply, a neobank is a 100% digital bank that operates entirely online. Unlike traditional banks, neobanks generally don’t offer a physical branch and instead provide customer access digitally via mobile banking apps.

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But, why would I choose a neobank?

We went from hailing down taxis on the side of the road to ordering Ubers right from our phones. We stopped catching movies at the cinemas to Netflix and chill in the comfort of our homes. So it was really only a matter of time before we found a way to digitalise our banking too.

Today around 75% of Aussies do their banking mostly via smartphone or computer - so, to answer your question, you might opt for neobank for the same reason that you’ve taken the digital route in other areas of your life: convenience.

...not to mention, Neobanks have really changed the game in terms of their feature offerings and killer rates! In fact, our Neobank Report 2020: Digital banking in a new decade shows that the top four ongoing savings account interest rates in the Mozo database are offered by neobanks.

Standout neobank features:

Online everything:

Being that they operate totally online, neobanks are great for their ease of access. This typically also makes opening an account with one a pretty quick process. Not to mention, skipping the overhead costs of having a physical branch generally equates to better rates and better value products overall.

Security comes first:

Neobanks are regulated just like any other bank and either have their own Australian Financial Services (AFS) licence issued by ASIC or are partnered with a bank that has one and therefore come under that bank’s AFS licence.

Any neobank that wants to offer deposit products in Australia must also have a full ADI (Authorised Deposit-taking Institution) licence or come under a partnered bank’s ADI licence.

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Having an ADI licence means that the Australian Government guarantees funds deposited with that bank up to $250,000 per person, per ADI. So if the bank you keep your savings with goes bust, the government will protect up to $250,000 of your funds.

King of the banking apps:

Nowadays with everything shifting online, a good banking app experience could be the tipping point for many when choosing a bank account.

And seeing as mobile apps are essentially like a virtual shopfront for neobanks, they tend to come with unique features which might appeal to app-lovers, like money insights to help you track your spending and other cool features.

Funky bank cards:

Neobanks are known for having sleek, unique and just downright funky bank card designs. In fact,  one could even say that they’re actually winning people over with these colourfully eye-catching bank cards. At the very least they’ve got that millennial tick of approval.

Xinja vs. Up: A side-by-side neobank comparison

With the current rise of neobanks, it feels like there’s a new one popping up each day. So, now that you know what all the fuss is about, let’s take a look at two big-name neobanks Xinja and Up to see what they have to offer:

Xinja and Up bank are two of the hottest neobanks around at the moment, but if you want to see what else is out there, then be sure to run a quick neobank comparison so you can find the right option for you! Or, hit up our neobank news section to find out what’s going on in the world of neobanks.