February 2nd, 2023 • Neo banks by Marketing Skaleet

Digital banks vs. neo banks: what are the differences? ⚡

The banking industry is facing many challenges. Among them is the digitalization of the financial sector. This evolution is necessary and has led to the emergence of new banking players, such as digital banks or neo-banks. More and more prominent in recent years, they’ve managed to take their place in the financial landscape. But what are the differences between digital banks and neo-banks? Answers.

Digital bank vs. neo bank: definitions

What is a digital bank?

Digital banking or online banking can be defined as the digitalization of traditional banking services. It refers to the banking services and functionalities developed by universal banks. Thus, a digital bank is systematically backed by a conventional bank. It proposes a dematerialized offer of equivalent quality to "classic" banks but has no physical branches. This particularity allows the digital bank to respond to new digital uses while offering its customers the stability of a universal bank with the attractive prices that digitalization allows.

Digital banking: examples

  • Boursorama Banque (part of Société Générale);
  • My French bank (part of La banque postale);
  • Hello, Bank (part of BNP);
  • BforBank (which depends on Crédit Agricole) ...

What is a neo-bank?

A neo bank is a financial technology company. It provides digital and mobile solutions for managing payments, money transfers, and financial analysis... It is a digital-only financial institution, often offering 100% mobile access.

Neo banking: examples

  • N26 ;
  • Revolut;
  • Qonto;
  • Lydia

Digital bank vs. neo bank: 5 differences

1.      Digital bank and neo bank: different statuses

As a digital bank is linked to a universal bank, it has a banking license, also called a credit institution license. This license is issued by the ACPR, the Prudential Control and Resolution Authority (backed by the Bank of France, the ACPR is responsible for the approval and supervision of banking and insurance institutions and their intermediaries). This banking license allows online customers to have the same services and guarantees as traditional banks. For example:

  • The customer can request a loan from a digital bank;
  • if the digital bank fails, the customers' funds are guaranteed up to 100 000€.

On the other hand, most neo-banks do not have a credit institution license. Therefore, they are payment institutions, not banks, in the strict sense of the term. The ACPR reminded us in April 2021 that the word "bank" - and by extension, "neo bank" - could only be used to designate financial agents with a Credit Institution license (such as the neo banks N26 and Revolut). Despite this clarification, the term "neo bank" continues to refer to digital financial institutions that do not hold a banking license. This is the case, for example, of the Manager. one, Green-Got or Pixpay

Read also: Which license to become a neo-bank?

2.      Digital banking and neo banking: different types of organization

Digital banks and neo-banks correspond to different types of organizations. The former was created by large banking institutions (Banque Postale, Crédit Agricole, BNP...), while the latter are fintechs. Each one has its own culture and its processes.

3.      Digital banking: comprehensive banking services

The second significant difference between a digital bank and a neo-bank (in the legal sense of the term as recalled by the ACPR and the broad sense) lies in the scope of services.

As online banks are real banks, they master and offer a range of products identical to traditional banking institutions: bank accounts, bank cards, checkbooks, credit, savings, life insurance, and stock market...

Neo-banks are usually limited to bank accounts and cards. In general, the services of neo-banks are more limited:

  • No checkbook;
  • No authorized overdraft;
  • No credit or savings offers;
  • Only bank cards with systematic authorization;
  • Only sometimes cash or check deposits.

4.      Digital bank versus neo bank: account opening deadlines and conditions

Although digital banks offer fast account opening times, they generally require guarantees from their future customers. The latter must fill in forms, provide information about their income, and undergo identity verification procedures. Neo-banks, on the other hand, usually offer instant account openings with no income requirements.

5.      Digital banking and neo banking: different media usage

Universal banks have created digital banks to facilitate account opening and financial management. Their initial support is, therefore, the computer. They then adapted to the new digital uses to widen their support of use: mobile and tablet.

More recently, neo-banks have been focusing their efforts on mobile applications. Some of them are not available on computers, like Revolut.

The target clientele is thus different: digital banks target a large public, while neo banks target the generations equipped with smartphones rather than the under-thirties.

Read also: Neo-banks and Gen Z: Preparing for a new banking era!

Digital banking and neo banking: an increasingly blurred line

Initially, online banking and neo-banking met different needs. However, the line between these two financial actors seems to be becoming increasingly blurred (at least when "neo bank" is understood in the legal sense defined by the ACPR).

N26 is, for example, a neo bank, but it is similar to a bank. It has a credit institution license: its customers are protected by the same guarantees as a universal bank. Although it does not yet offer authorized overdrafts or checkbooks, it could choose to develop its services in this direction.

Moreover, while digital banks are working to develop more and more advanced mobile applications, more and more neo-banks are obtaining banking licenses and expanding their service offerings.

Read also: Neo-banks and traditional players: towards a marriage of reason to face the appetite of Big Tech?


In short, digital banks and neo-banks must be agile and scalable to meet the market's needs and compete. The Core Banking Platform offers digital banks and neo-banks the possibility to reinvent themselves continuously.

To address new practices, Skaleet has developed a Core Banking Platform that enables financial and non-financial institutions to quickly launch new banking products and experiences at a competitive price. Want to learn more? Download our presentation!

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