What Is a Neobank? A Plain-English Guide

NeoBanks Reviews editorial team · Updated August 2026

A neobank is a financial services provider that operates entirely digitally — no branches, no paper forms, no queueing. You open an account online in minutes, manage everything from an app or web dashboard, and typically pay far lower fees than at a traditional bank.

How neobanks work

Under the hood, most neobanks are either fully licensed banks (like Revolut in the EU) or regulated e-money institutions (EMIs). EMIs can't lend out your money — they must safeguard 100% of client funds in segregated accounts at credit institutions or central banks. That's a different protection model from deposit insurance, but a robust one: your money is ring-fenced from the company's own finances.

How do neobanks make money?

• Interchange — a small slice of every card payment, paid by the merchant.
• Subscriptions — premium plans with higher limits and extra features.
• FX margins — small mark-ups on currency exchange.
• B2B services — APIs, card issuing, white-label programmes (this is Wallester's core business, which is why its end-user plan can be free).

What business neobanks typically offer

A dedicated IBAN or local account details, physical and virtual debit cards, instant payment notifications, team access with roles and limits, receipt capture, accounting integrations and transparent pricing. The best ones — see our 2026 ranking — bundle full expense management for free.

Are neobanks safe?

Regulated neobanks are safe for business use. Check three things: the licence (bank or EMI, and in which country), the safeguarding arrangement, and security features like 3-D Secure, 2FA and instant card freezing. All five providers we recommend pass on all three.

Continue reading: Top 5 business neobanks · Full comparison · Wallester review