Banks and financial institutions have been around for centuries. In the early days, banks were typically institutions that held money for citizens to use it. Today, however, banking has evolved into something much more complex than just storing money in an account. Thanks to technology and innovation, consumers have more options than ever before when it comes to where they store their money and how they access it.

What is a traditional bank?

A traditional bank is a financial institution that offers services such as current accounts, savings accounts and loans. Traditional banks are regulated by the government and have physical locations where you can deposit cash or take out money from an ATM machine.

Traditional banks can have different names depending on their country of origin, but they all offer similar services:

  • Current account (a bank account where you can pay bills and make withdrawals)
  • Savings account (an account from which you cannot withdraw money)
  • Loans

What is a neobank?

A neobank is a ‘new’ bank. Neobanks offer financial products and services through mobile apps. Neobanks focus on mobile-first offerings (think Knab or bunq). They typically don’t have physical locations or branches, but they do offer online banking capabilities as well as debit cards, credit cards and other forms of payment processing.

Neobanks typically have more sophisticated technology behind their platforms—think real-time data analytics tools used by machine learning algorithms that help analyze customer behavior patterns, so you can predict future purchases based on past spending habits (like how Amazon uses your history of purchasing books before recommending new ones based on what they know about your preferences).

The business model of neobanks differs from traditional banks as well. While both offer savings accounts and checking accounts, neobanks tend to focus on areas where they can deliver a higher value proposition than the competition: credit cards, loans and insurance products.

So, what is the difference between neobanks and traditional banking

Neobanks are digital banks that use technology to make things better for their customers. They have changed the game by using technology to improve customer experience, lower costs and make access easier. There is a focus on technology as its main differentiator from traditional banks. A neobank might offer a mobile app or website that allows you to conduct transactions using your smartphone or other mobile device. They excel in automation.

The difference between a neobank and a traditional bank is that the former focuses on technology while the latter uses it in addition to other methods such as face-to-face interactions with customers at branches or phone calls with customer service representatives. Traditional banks are still using mostly traditional methods to serve their customers.


The world is changing. Digitalization and the new generation are making our lives better in ways we never thought possible. But when it comes to banking, things can be confusing. If you’re trying to figure out what kind of bank you should go with, we hope this article helped shed some light on what makes each type unique and how they differ from one another.