The Difference Between Neobanks, Digital Banks, and Traditional Banks
The one sure shot rite of passage we’ve all had growing up is opening a bank account. As an eighteen-year-old just opening her first account, I didn’t have the slightest idea of what a neobank is, or what digital banking is. Hell, I didn’t even know what a normal bank is.
I was taught to set a PIN and use a debit card for withdrawing money from an ATM when I really, really needed it. A few years later, everyone around me is talking about neobanks and some apparent “fun” ways of banking and all I can ask myself is — Do I know more than just setting a PIN and withdrawing money?
And as ridiculous as this sounds — I don’t
The truth is that I’ve procrastinated learning about banking for years. It’s always scared me, so I’ve put it off by calling it boring, drab, or unimportant. When we all know that it’s a crucial life skill. Now, I may not know much, but the one thing I know (and can confirm every day) is that when it comes to being clueless about money, I’m really not the only one. No offence to the ones who have their stuff sorted, but most of us are only good at money in Monopoly, and when we have to calculate how much we save on Happy Hours. Banking options are spread out like never before. If, like me, you have no clue of what these are and which fit you, here’s a quick way to know which bank is really your vibe.
That cool kid on the block — Neobanks
If you’ve seen Grease, neobanks are the John Travolta of the finance industry. They’re savvy, cool, and super smooth. They offer all their services online, through apps. All you need to do is register yourself with them and you get instant services, features, and offers, just a click away. To add to this, they know exactly who their customer is, and what they need. Apart from customised services, they also want to ensure that your banking experience isn’t the same old one your parents had. This can sound very similar to digital banking, but the biggest difference the two have is this — Neobanks don’t have a physical bank you can walk into. They’re purely online. In addition, Indian neobanks aren’t registered banks. Rather, they use the services of registered banks and give you a super easy banking experience with that bank.
If you’re always on the edge of your seat for something refreshing, neobanks could definitely be your scene. Also, if you never want to step into a physical bank and want things done from your phone, this is something you should check out, right now.
The reliable fun, bestie- Digital Banking
Again, if the finance industry was Grease, this is Sandy post-makeover. Digital banks are usually your existing banks after a great glam up. For millennials and Gen Zs who need convenience (and are also sometimes riddled with social anxiety), digital banking is a gift they didn’t ask for. All the services of a usual bank, like withdrawals, savings, transactions, and more can easily be accessed through an app or a website. Personally, so far digital banks have completely matched my vibe. The trust of a traditional bank with increased convenience, it’s all I need. For those of you looking to explore online options without feeling a bit too adventurous, this might be a good pit stop before you decide to jump to neobanks.
The mom of the group — Traditional Banks
You’re probably sick of the Grease references by now, but do you remember Sandy before her makeover? And if for some unexplainable reason you haven’t seen the movie yet, have you noticed the mom in your friend group? The mom always has extra water bottles when you head out and gives surprisingly good advice. Traditional banks are the moms of the banking industry. They’ve been around for a while and seen it all. In order to access a traditional bank, you actually have to step into a branch and speak with the people around.
Benefits? On a good day, you get your work done and learn something new quite soon. The only thing that annoys me? Traditional banks can get quite crowded and it can take forever for your turn to come. If you’re an old soul millennial/Gen Z, traditional banks could be your thing. What I truly enjoy is having a personal touch and speaking to experts and getting the help you need from them. If you haven’t already been to one, check one out to see what an actual bank works like, and well, looks like
Pro tip — Don’t get surprised when you see pens tied to tables ;)
Found your match? Want to start?
First off, all of us banking newbies are proud of you for finding a match and wanting to start. It’s simple — If it’s neobanks you’re interested in, check out the available Indian neobanks and see which one fits you. Do you like something catered to your age group, or to your lifestyle, or city? The options are plenty. Also look out for plans, offers, and have an idea of how they work in general.
Once you’re done with this, simply download the app, register, and start! For digital banking and traditional banks, all you need is to check out the banks available near you. Have a look into the kind of bank you want, whether it’s private or public, and what security are you looking for from your bank. Once you’ve chosen a bank, all you need to do is either visit the closest branch, or their website, and create an account. The bank will soon contact and activate this account, and voila, you’re good to start banking.
In all honesty, this is just the tip of the iceberg. There are multiple banking things you’ll learn as you go ahead and your choice of banks will most likely change multiple times. Consider this a point to start your banking journey and not the end of exploring!
Originally published at https://fi.money.
