Last summer, a local neobank launched an ad campaign that struck a chord with many millennials.
Called “ditch dad banking”, the idea was that if you don’t dance like your dad, greet friends like your dad or exercise like your dad, then why do you bank like him?
In less than a year, whether or not it was due to the provocative ad or not, the neobank signed up more than 45,000 accounts, mainly from its intended younger customer base. The best way to understand the benefits of a neobank is to open an account. It’s free, it can take less than five minutes provided you have proof of identity at hand, and if you change your mind halfway through the process you can close it.
I opened a neobank account to go through the process and, much to my surprise, the experience was as good as they said on the label. With all the money management tools bundled into the account, it does have the potential to radically change the way you save, spend and borrow money.
Sure, there are many savings and budget apps available, but to have it inside your bank account makes the activity less of a chore and, in many ways, more like an enjoyable game for grown-ups. So, given it’s early days, why should you consider opening a neobank account?
1. Budget and savings tools are bundled into your account. While there are many money management apps available, neobanks offer the same, if not better, tools to track your spending and saving. And because they are connected to your savings or transaction account, you get a real-time picture of where your money goes. Over time, the underlying program gives you more personalised recommendations for when and where to save.
2. You can easily open accounts for your children. While linking accounts is not unique to neobanks, they have certainly made it easier. For example, one neobank allows banking customers to create up to five junior accounts (age seven to 17), set up a weekly allowance on each account and create tasks for them within the bank’s app to get extra pocket money. Parents (or grandparents) can also nominate savings goals under these accounts.
3. In a few years, mortgage or small business loans will be available too. Local neobanks have launched savings accounts and are gearing up to offer term deposits, home loans and other products. Once these become regular offerings, there should be shorter approval times and lower costs. Under the open banking regime that kicked off last july, it will be much easier to switch banks or move home loans, ensuring both big banks and neobanks stay competitive.
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