Now that you’ve set up your business (congrats!), the next step is to open a business account, so you can really take your business off the ground. Today’s entrepreneur, however, doesn’t necessarily have to go to a bank to get that set up.
Neobanks are FinTech startups who offer digital solutions to traditional banking services, ranging from loans and credit, to current accounts and business accounts. At Neat, we’re a company headquartered in Hong Kong that offers digital multi-currency accounts for SMEs and startups in Europe and Asia. We’ve seen a lot of demand from budding entrepreneurs and established companies alike in the past few years.
That being said, we get this question a lot: what is the benefit of going with a neobank over your average high street bank? What type of business and what type of entrepreneur does a neobank suit?
From our experience, here are some pointers that can help you understand whether your business could stand to benefit by going with a neobank account:
You prefer an online or app-based interface
While you’ll be hard-pressed to find a bank today that doesn’t have an online banking option, online banking still can’t function as a full replacement to physical branches. There are simply still things you have to do in person.
When you can do everything from purchasing flights to filing taxes from your smartphone, it can seem a little backward when you have to step into a branch just to change your registered address, for example, especially if you travel frequently or are not a resident in the country your business is in.
The biggest advantage of going with a neobank is that everything can be done online, in a sleek and easy-to-use interface.
Because they don’t have branches, their apps or online portals are their primary product – and they spend their efforts focused on perfecting the digital user experience. So if you prefer the convenience and familiarity of getting stuff done online, that’s a huge plus for going with a neobank.
On the other hand, there are some people who really value the personal touch that in-person banking offers. If that’s the case for you, and you prefer to go into a branch, it may make more sense to stick with a brick and mortar bank.
You have an online business
If your business is primarily operated online, neobanks are built for customers like you. If you’re already making and receiving online wires, or using payment gateways like Shopify or PayPal, they will integrate seamlessly with your neobank partner.
On the other hand, if you run a cash-based business (such as a restaurant or local store), and usually do a lot of your banking at branches, a neobank account might not be able to cover all your needs.
While you can typically still withdraw cash from any ATM using your card, because neobanks don’t own their own machines, sometimes fees may be higher than you’re used to.
However, these digital challengers do often boast lower transfer fees and better FX rates. A lack of branches means eliminating the ongoing costs of staffing and maintaining physical branches – which in turn goes into lower fees for customers. In fact, according to the Financial Brand, nearly a third of neobanking customers went with a FinTech solution due to more attractive rates.
It isn’t convenient for you to go into a physical branch
One of the biggest reasons an entrepreneur may opt for a neobank is if they’re not based in the country they need the account for. For us at Neat, many of our customers operate worldwide, meaning they may have multiple accounts in different countries. So, if they’re based in the UK for example, they don’t have to worry about making trips to Hong Kong to open or manage their business account with us.
Similarly, Neat and other neobanks also offer GBP & EUR accounts for UK businesses, and the business owner doesn’t need to be a UK resident in order to open the account. While some high-street banks also offer accounts for non-residents, it typically takes a lot of time to get it set up, as their processes aren’t optimized for this customer base.
Or maybe you just generally want the flexibility of being able to manage your finances from wherever you are, without restrictions from a bank branch’s opening hours.
With neobanks 100% of what you need to do can be done online and you’ll never have to walk into (and wait in line at) a branch.
You’re keen to get started, and don’t have time to waste
Perhaps you have grant money or are expecting your first payments coming in, and you don’t want to deal with the uncertain wait times when it comes to opening a business bank account.
Because everything is done digitally, opening an account with a neobank usually takes a fraction of the time.
At any neobank, applications are completed online and typically take no more than 15 minutes. Approved accounts are generally opened within a week. Contrast that to banks, whose processes often take weeks, or in Hong Kong even several months – especially if you’re a startup or SME.
Why? Banks have been around for decades upon decades, and so have their processes. Unfortunately, most banks are simply because revamping their systems cost a lot of time, money, and effort in such large companies.
Bonus: Neobanks can have more relevant valued added services, depending on your business
Many neobanks and FinTech companies have niche audiences, and have created custom features that cater specifically to their customer base. For example, in Europe there are many neobanks that are specifically focused on making lives of freelancers easier by automating some of the VAT and admin that can be a challenge for one-person companies to manage. Think of Kontitst in Germany, or Coconut in the UK.
At Neat, we’re built for SMEs and startups – particularly those that trade between Europe and Asia. So, we specialise in making transfers between that channel seamless and accessible for businesses of every size and trading volume, and also help companies incorporate and set up in Asia.
So, is a neobank right for you?
For today’s digitally-savvy entrepreneur, a neobank can give you the business account you need to grow your business, with minimal wait times, better rates, and a smoother user experience.
If you’re looking for a business account to help you launch your Asian operations, Neat might be the solution you need. Learn more about Neat here!