It’s no secret that banking isn’t what it used to be. From mobile apps to banking cafes, the local savings and loan establishment is a thing of the past. And with the digital banking market accelerating faster than ever, and with recent events surrounding COVID-19, banking may never be the same again.
Through all this change new digital banking types have emerged, offering customers new ways to be serviced and banks new ways to build their clientele. As laws around banking continue to change, as customers’ trust in digital banking options continue to rise, and as we all continue to step into a new normal in how we live following the outbreak of COVID-19, there’s no doubt that the digital banking landscape will become more competitive.
This has also brought up the potential for more concerns around cybersecurity. Cyber Insurance has increasingly become a must-have for banks in the past decade, but with more digitally dependent services, customers, and transactions, cyber insurance is now more important than ever.
For a better look at the different types of digital banking options, read on.
New banks have full banking licenses and are direct competitors of the bigger banks, such as Bank of America and Wells Fargo. These banks offer the same types of services as traditional banks, but with more digitally sound options and user-friendly experiences.
Neo banks are banks that don’t have to operate with a banking license, but instead partner with financial institutions to offer bank-licensed services. Neo banks still require customers to have an account at a local existing bank that is licensed, and then they offer more user-friendly interfaces and services without fees. Neo banks are considered to be ahead of the curve in this new age of banking where contactless services are preferred.
Beta banks are joint ventures of existing banks that offer financial services through the parent company’s license. These banks are usually set up as a way to step into new financial markets, offering limited services, but to a bigger customer base.
Like the name implies, these banks have no connections to traditional banking licenses. Instead, nonbanks provide financial services through other means and allow the company to operate on its own, independently of banks.
About Financial Guaranty Insurance Brokers
Since 1983, Financial Guaranty Insurance Brokers has distinguished itself as a provider of Professional Liability, Cyber Liability, and Crime insurance products for entities of all types. To receive timely, personalized service from a knowledgeable and experienced staff, call us today at (877) 485-4413 to speak with one of our professionals.