Although neobanks are relatively new, they are still heavily regulated and must meet a number of security and quality standards before they can begin delivering their products and services in the United Kingdom or Europe. They also use a variety of security methods to ensure that your money is safe and secure, as well as your personal information.
However, many people are concerned about the Neobank's youth. First, are deposits safe if the bank only exists in digital form? Second, if I join a Neobank startup that fails, will my money still be available?
And, as with any internet endeavour, data security is an issue. Neobanks are vulnerable to the same pressures that affect other banks and companies that store data online.
Because their survival depends on their security procedures, digital-only banks may be even more secure. Neobanks spend more time and resources securing your money and personal information because they don't have the support of traditional financial institutions. And digital security is one area where being young might help—traditional banks' security mechanisms may be outdated.
The "new players," on the other hand, must enter the market with up-to-date and inventive security measures.
However, there are two crucial questions to ask about Neobanking's security before you choose it.
How to Pick a Safe Neobank. You should always ask your potential Neobank these two research questions:
Is there a banking or e-money licence on their books?
Is there a security profile or reviews that aren't favourable?
Even if your bank goes out of business, the Financial Services Compensation Scheme (FSCS) insurance protects your money. These are known as Deposit Guarantee Schemes in Europe (DGS).
For the most part, this implies that your deposits are protected up to £75000 or €100000 with most banks.
Go to the FSCS or DGS to see if any bank, neo- or otherwise, is insured.
By just completing an online search on the Neobank you're contemplating, you can uncover unfavourable security circumstances or evaluations.
Most Neobanks are safe; nonetheless, don't let the convenience of signing up fool you into skipping your due diligence.