Growth of Digital Neobanks and AML

Neobanks have grown to become a part of our daily lives. The concept of Neobanks, which has a key place in Fintech trends, continues to gain more recognition and adoption by an increasing number of customers globally. In this post, we look at Neobanks, their advantages, and their AML and CTF compliance.

What are Neobanks?

Neobanks are basically digital or online banks without physical assets. Neobanks, unlike traditional brick-and-mortar banks, reach their customers through the digital web and mobile channels.

The banks’ ability to operate without physical branches helps to cut down operation costs and therefore provide services at significantly lower and affordable costs.

Another reason for the fast growth of Neobanks is that they also provide quick solutions to customers. Most of them provide timely customer service through live chat, email, telephone, and other digital channels. The digital banks also provide easy-to-use services using the integrations that they offer.

Here are some major advantages of digital banks over traditional banks:

1. Low and More Affordable Fees

Digital banks have lower operational costs than traditional banks. It costs less to run an online bank than its bricks-and-mortar counterpart.

The savings digital banks make are passed on to the customers, enabling the banks to offer lower fees than traditional banks.

2. Higher Interest Savings

Digital banks are cheaper to run which also allows them to provide customers with higher interest on savings.

Your money works better for you in a Neobank than in a traditional bank.

3. Quick Paperless Setup

A virtual bank is easier to set up and you will have everything ready in no time, doing away with a lot of paperwork.

Traditional banks offer the same online account setup services but are not as fast and easy-to-use as those of digital banks.

4. Fewer Charges

Due to the easier online mode of operation, digital banks have fewer charges than traditional banks.

5. Lower Minimum Balance Options

Most Neobanks allow for lower minimum balances than traditional banks. However, many brick-and-mortar banks have started offering low minimum balances as well.

Digital Banks AML and CTF Compliance

Neobanks use a digital customer onboarding process for all new account opening procedures. The customer’s physical presence is not required because everything is done online.

Customers can open accounts quickly and get through the KYC process by uploading the required documents.

However, this simple and quick account opening process does not mean that digital banks are immune to financial crime threats. Neobanks are also required to take measures to prevent terrorist financing, money laundering, fraud, corruption, and bribery. They should have effective risk and compliance capabilities that scale with operations as they gain traction and scrutiny from regulators.

Screena provides advanced solutions to enable digital banks’ customer onboarding processes to be done in compliance with AML regulations. We provide Fintech Risk Scoring solutions and technology to ensure that your digital bank does not lose customers due to slow and inefficient risk screening procedures.

Contact us today to learn how we can help your digital bank to verify identities and comply with AML regulations using AI-powered accuracy.