Neobanks and money apps are the newest places to stash and manage your cash - but how do you choose between all the features and technology they have on offer?
Our handy comparison table lets you compare everything from the latest payment options and money management tools to rates and fees on neobank bank accounts, savings accounts and home loans - all in one place!
You’ve heard of online banks, major banks and perhaps even customer-owned banks, but now it’s time to meet the new generation of neobanks and money apps. And no, neobank is not just another buzzword, because neobanks and money apps are real banking and money management alternatives that have flourished overseas and are already doing the same in Australia.
So whether you’re an innovation lover or you’re just on the hunt for a banking alternative, keep reading as we answer some of the most common questions about neobanks and money apps, including the Australian players you’ll want to know about, the features they offer and just how they’re different from their traditional bank counterparts.
Smartphones, what would we do without them?
If you’re anything like me you’d be lost without this little box of magic. Mine helps me to check the weather, chat with my mates, and it tells me if my bus is going to be on time. Although, chances are it isn’t. I’m even using it to record right now!
It’s also my financial manager and the main outlet for my everyday banking and if you’re watching this video then chances are that you use your phone as your main banking outlet too.
But there’s a new breed of financial service providers battling for real estate amongst your phones’ apps. That’s right, I’m talking about neobanks!
But what are they? Who are they? And should you even be interested? Let’s find out.
You may have heard of some already, but Australia has a bunch of new banking players including Up, Volt Bank, 86 400 and Xinja. These are the neobanks.
But what is a neobank?
Well, here are some of the things neobanks are. They’re online, they’re almost all app-based and they don’t have any bank branches.
I know what you’re thinking though. You’ve already heard of online bank that don’t have any branches and they’ve been around for years right?
That’s true, there are a handful of banks already in Australia like ING, UBank and ME that are already totally online.
But neobanks have set themselves apart from traditional banks, and even the online players, in a couple of different ways.
That means that their processes are fully digital, so unlike traditional banks which have been ‘digitised’ over the years, they’re not beholden to legacy systems and technology - systems which many traditional banks rely on.
The way some traditional banks have digitised their systems is kind of what a book or magazine is to an ebook or an online article.
Sure, these are kind of new because it’s on a digital platform, but it’s essentially just a digitized version of an existing system.
Being fully digital gives neobanks the advantage of being small in scale which means they need fewer employees and other overheads, which in turn means they can potentially offer their customers better rates, plus they can be faster and more flexible.
It’s not just a difference in technology though, because neobanks are also bringing with them a new outlook on banking.
They’re focusing on what their customers - or what they think their customers - really want, which is a more holistic approach to their finances.
They want to be there to help their customers actually improve their financial positions.
Yes, by offering simple products with competitive rates, but also by providing more data, greater insights, better tools and a bit of support along the way.
That means that they’re almost like a bank and a smart budgeting app all rolled into one.
So to recap, fully digital, app-based, no branches and a fresh outlook equals neobanks.
So there you have it, your super quick guide to neobanks in Australia
Neo bank. It’s as simple as breaking down the word: ‘neo’ (meaning new) and ‘bank’… well, we can let you guess that one. So when we talk about neo banks, or more commonly neobanks, we’re really just talking about the newest types of banks!
What really sets neobanks apart from traditional banks though? The technology their banking platforms are built upon and the new and exciting innovations they offer their customers.
After all, neobanks still offer products like bank accounts, saving accounts and even home loans, and they still have the same levels of security and licencing restrictions of traditional banks - meaning your money and your details are just as secure.
Unlike many existing banks though, neobanks have developed their own fully-digital platforms to run on - platforms that aren’t just digital versions of existing banking systems. That means that neobanks are operated 100% digitally without the need for physical infrastructure like branches.
But the most exciting part about neobanks are the in-built technology features! From the ability to pay or withdraw money with virtual cards to setting budgets and managing money all in one app, neobanks are really trying to make banking smarter and more personal. Plus with reduced overheads, neobanks are also promising to offer more competitive rates and lower fees.
Did we mention that they’re mobile-focused? Customers will only be able to access neobanks online, and generally through a smartphone app, which will no doubt make them a seriously attractive alternative for millennials and tech-loving Aussies wanting to do their banking from the palm of their hand.
While neobanks are fully licenced and regulated banks that offer the kinds of deposit and loan products you might expect from any bank, credit union or mutual, money apps are a little bit different. That’s because there’s no neat bracket which money apps fit into because they’re all built to serve different needs!
Some money apps provide alternative travel money solutions for Aussie travellers with prepaid debit cards and apps which allow them to make purchases and split bills in multiple currencies, or to send money overseas for less.
Other apps are all about equipping Australians with the budgeting and tracking tools to give them a broader picture of their finances across multiple accounts, and even different banks and financial providers, to better help them budget and save.
But just like neobanks, money apps are designed to make paying, sending and managing money from a smartphone a more convenient reality.
When it comes to your money, especially your hard-earned savings, it’s completely normal to consider the reliability and credibility of a bank or any financial institution. But just like traditional Australian banks, neobanks are regulated by the same authorities - APRA and ASIC.
For example, neobank Up Bank’s bank accounts and savings accounts are issued through their partner Bendigo and Adelaide Bank (which is an Authorised Deposit-Taking Institution). This means that deposits up to $250,000 per person with Up Bank are protected by the Financial Claims Scheme (FCS) - exactly the same as any other bank in Australia.
The same is the case for deposits with neobanks like Volt Bank and 86 400 (when they launch). But instead of finding an existing bank to partner with like Up has done with Bendigo and Adelaide Bank, these neobanks have decided to obtain ADI licences of their own.
Money apps and fintechs are regulated slightly differently, but they are still required to have an Australian financial services licence (ASFL) or to partner with someone who does have one in order to offer products like prepaid debit cards.
As we mentioned above, the main difference between neobanks and money apps and their more traditional counterparts is the design of the platforms they run on, but more excitingly, the innovative features and tools they are actually offering (and will offer in the future).
One of the major selling points neobanks and money apps are spruiking is their ability to provide users with more detailed data, spending insights and comprehensive saving tools. This is all part of a push towards more personalised banking and providing users with the tools and information to improve their financial health. They include:
Neobanks are really targeting millennial and tech-savvy Australians, so it just makes sense that they’re offering integration between their mobile apps and the latest smartphone technology including:
In addition to accommodating the latest smartphone technology, neobanks are also giving customers access to the latest payment options.
Another feature neobanks and money apps are really pushing is making their cards and accounts as travel-friendly as possible, because (surprise, surprise) Aussies love to travel. Some of these features include:
There are certainly similarities between Australian digital banks or online only banks like ING, ME, or UBank and neobanks - namely that both are based entirely online and both tend to put more emphasis on creating innovative tools and providing greater insights for their users.
But many online banks are just digital versions of their traditional bank counterparts. That’s meant that internet banking platforms and mobile apps developed by some online banks have been designed as digital versions of existing physical platforms, rather than made for a new generation of mobile and online-savvy consumers.
Just like traditional banks, neobanks and money apps use the latest technology to keep their apps (and your money) secure, including with fraud monitoring systems. But there are always steps you can take to make your own smartphone secure, such as setting up strong passwords or biometric security options on your device and on the apps themselves.
Yes! While neobanks and some money apps are giving their customers the chance to use the latest digital payment options like Apple, Google and Samsung Pay, most (if not all) are also offering physical debit or prepaid debit cards. That means that you’ll still be able to make over the counter purchases with a physical card or withdraw cash with one from an ATM.
Speaking of cards, money app and neobank customers will also be able to use their debit cards, prepaid debit cards and, down the track, credit cards overseas. In fact, many Australian neobanks have made travel-friendly card features a major selling point by offering perks like 0% international transaction fees and even free overseas ATM withdrawals to Aussie travellers.
Given that users will only be able to access many neobanks through their respective apps, losing or breaking a smartphone could mean losing access to your bank account and means of payment. Of course, you could always use the physical neobank or money app debit or prepaid card which can be used to withdraw cash and pay for things online and over the counter, but that might not be much use if you choose to block your account after losing your smartphone.
If you do happen to lose your phone and you’re worried about your account security, most neobanks have a dedicated phone number which you can call for lost or stolen cards and phones.
Neobanks may be operated 100% online or through an app, but you’ll still be able to withdraw cash using your respective neobank debit or prepaid debit card. Just remember to watch out for ATM withdrawal fees, as many neobanks don’t have dedicated ATM networks.
Found a neobank or money app that ticks all the boxes? Because neobanks and money apps are 100% digital, on of the most convenient benefits is being able to apply in-app! All you’ll need to do is download the respective neobank app from the Apple App Store or Google Play store, and sign up with a few simple bits of information like your date of birth, home address, phone number and some form of ID (such as a drivers licence, passport, or medicare card).