Neobanks – The new banking model

The incorporation of digital technology and artificial intelligence in the world of finance has led to the emergence of neobanks, online banks that offer more transparent, cheaper and more personalised services

GDS Modellica has developed flexible solutions that allow financial companies to create, manage and improve their strategies in a faster, more convenient way that best suits their needs.

The incorporation of digital technology and artificial intelligence in the world of finance has driven a genuine banking revolution, leading to the emergence of a new direct form of banking, known as virtual banking, online banking, digital banking or, more commonly, neobanks. Neobanks are financial service providers that operate 100% online and customers can only access them using mobile apps or online platforms. Their completely digital services and applications are simple, intuitive and agile. All you have is a simple mobile app, an online account and a debit or pre-payment card, although some also offer third-party services like loans.

According to Antonio García Rouco, managing director at GDS Modellica, neobanks offer simple, modern, transparent products with greatly reduced commissions, something which is very attractive for users who are tired of traditional banks. They also offer very useful services like multi-currency accounts, cheaper international transfers and travel benefits. By combining finance and technology, these new fintech organisations are seeing a lot of success in the banking sector, affirms García Rouco.bancario”.

The success of neobanks and fintech banks, with their millions of customers, lies in their personalised customer service, more transparent services, reduced costs, the absence of mandatory linking and the option of combining currencies to make cheaper international transfers. They also allow customers to withdraw cash in any country in the world with no extra charges whilst providing them with information and security measures based on advanced biometric recognition techniques and maximum privacy in real time.

The origins of these neobanks can be highly varied. Some have emerged under the protection of existing financial or banking organisations, being able to rely on their economic support and expertise from day one. Others have been created from scratch, facing greater challenges due to the complexity of the task at hand and the need to amass a large amount of money or even find an online commercial organisation to support them.

Many neobanks don’t have a banking licence. Instead, they operate as e-money institutions (EMI) or as private companies offering their services through an external EMI that safeguards the customers’ money and guarantees its security. This licence allows companies to issue or manage electronic money, offering accounts, cards, transfers or debts to their customers. One of the main differences between companies that use an EMI licence and those that don’t is that companies with an EMI licence can issue their own cards. Current regulations state that EMIs must safeguard their customers’ money either using safeguarding accounts or insurance policies. They also need to have the right equipment and a minimum amount of capital.

Being fully aware of the new needs of the sector, GDS Modellica has developed flexible solutions that allow financial companies to create, manage and improve their strategies in a faster, more convenient way that best suits their needs. But furthermore, they’re able to do this whilst providing maximum security, helping companies to ensure compliance within a very strict regulatory environment and accelerate the commercial cycle by adapting it to both the supply of credit and loan proposals.