In August 2025, Google Trends reached its highest level of global interest to date — 100 out of 100 points. While there were previous spikes in attention, why has interest peaked now?
CP Media explores the reasons behind this surge and examines the unique nature, evolution, and key insights shaping this fast-growing segment.
Understanding the Neobank Model
In terms of core services, there’s no fundamental difference between a traditional bank and a neobank. Any licensed neobank is, from a legal standpoint, a full-fledged bank. The prefix “neo” is mainly a marketing term that differentiates these institutions from the image of a “traditional bank” and highlights a new way of delivering financial services.
A neobank operates exclusively online without any physical branches. All banking functions, including opening accounts, making transfers, investing, taking out loans, and other operations, are available through a mobile app or web platform.
Key features of neobanks include:
- A fully digital service model. The absence of physical offices reduces operating costs and allows neobanks to offer more competitive rates.
- Simple and fast onboarding. Account registration happens entirely online, often within minutes. Identity verification is usually completed through identity document photos and a short video selfie.
- User-focused apps. The mobile app is the core of the neobank experience, with great emphasis placed on intuitive and streamlined design.
- Innovation-driven approach. Neobanks present themselves as innovators and, in practice, often lead the integration of banking with FinTech tools for financial management and digital assets.
A neobank isn’t a legal or academic term. It’s a marketing concept that defines a new generation of banking institutions built around innovation, a digital-first environment, and user convenience.
The Emergence and Evolution of Neobanks
A key historical event shaping the concept of neobanking was the global financial crisis of 2008, which sharply eroded public trust in traditional banks. The early 2000s saw rapid digital transformation across the economy and the rise of the FinTech industry. FinTech companies began offering innovative tools for money transfers, online payments, and financial management.
According to Google Trends, the first recorded searches for the term “neobank” appeared in 2008. Back then, the same institutions were often described as “digital-only banks,” “virtual banks,” or “challenger banks.” By the mid-2010s, however, the term “neobank” had become firmly established as the standard label for digital banks.
The definition “digital-only banks” has since faded from use, while “challenger banks” now refers to new traditional banks that compete with established players. Meanwhile, the term “virtual banks” has recently regained popularity as a synonym for neobanks or online banking in general.
Around the same period, the neobanking sector started attracting attention from major analytical firms. For example, BBVA Research’s January 2016 report on the digital economy dedicated a full section to analyzing the rapidly developing neobank segment.
Following that, industry media began giving the topic more attention. As a result, the definition of a neobank as a distinct category of banking institutions became firmly established — first within the professional community, then among the broader public. Around the same time, the distinction between neobanks and FinTech companies also became clearer, as the two had often been conflated before. The growing popularity of digital banking formats drew more investor interest, which, in turn, fueled additional media coverage and public attention.
According to Google Trends, the first major surge in global interest in neobanks occurred in the second half of 2021. A McKinsey report published in November 2022 estimated that by that time, roughly 400 neobanks were operating worldwide, and total venture capital investments in the sector between 2017 and 2021 reached about $32 billion. By the early 2020s, the segment had fully matured as an independent segment of the financial industry.
How Neobanks Work Under the Hood
The “online-only” format, meaning the absence of physical branches, is the main feature of neobanks but not the only one. Other differences relate to their technical foundation, including architecture, infrastructure, and development approach. Several key principles distinguish neobanks from traditional banks.
Modular Architecture
Traditional banks operate on monolithic IT systems whose core components were developed decades ago. Neobanks, by contrast, use a modular architecture where each element functions as an independent service. This approach is also known as a microservices model.
Advantages of modular architecture include:
- Faster development and deployment through continuous integration and continuous delivery (CI/CD)
- Fewer dependencies between components, which reduces failure points and vulnerabilities
- Improved scalability and flexibility
In practice, modules responsible for payments, settlements, KYC verification, analytics, and other operations function as a cohesive system, despite being composed of multiple interconnected subsystems.
API-First Approach
Neobanks are designed from the ground up so that all internal and external services can interact through APIs. This approach makes it easier to integrate with FinTech platforms, payment providers, marketplaces, and other potential partners, and to connect third-party services such as Apple Pay or Google Pay.
Many neobanks also rely on open APIs, a concept formalized in Europe under the PSD2 directive and commonly known as Open Banking.
Cloud Infrastructure
Unlike traditional banks that rely on their own data centers, neobanks are typically built on cloud platforms such as AWS, Google Cloud, or Microsoft Azure.
The benefits of using cloud infrastructure include:
- Flexible resource allocation based on workload
- Automatic data backup
- Uptime rates of up to 99.99%
Modern Security, KYC, and AML Frameworks
Robust identification and compliance technologies are essential for operating without physical branches.
Neobanks rely on:
- Electronic identification solutions (eKYC)
- AML monitoring powered by machine learning
- On-chain analytics tools for tracking digital assets
- Zero Trust security model to protect data and internal systems
Intelligent Automation
Neobanks employ advanced tools to optimize and streamline operational processes, including:
- AI- and ML-driven modules for transaction analysis, credit scoring, and personalized recommendations
- RPA solutions that automate repetitive tasks such as document verification and application processing
- Chatbots and voice assistants that provide 24/7 customer support
Mobile Core and UX Design
In neobanking, the mobile app isn’t just an interface. It serves as the core of the entire system. The app’s functionality is built on principles of minimalism, transparency, and personalization.
The user interface is designed for convenience and typically includes:
- Instant notifications
- Expense tracking and analytics
- Customizable spending limits
- Card and currency management, and other features
Both the client and server sides of the app are usually developed in sync. Neobanks also use proprietary software development kits (SDKs) to quickly integrate new features.
This approach results in a superior level of UX design, offering a user experience far beyond that of traditional banking platforms. To be fair, many conventional banks in recent years have updated their mobile apps, drawing inspiration from neobank practices.
Current Landscape and Future Outlook
At present, the total number of neobanks worldwide ranges between 300 and 400 institutions, depending on the scope and methodology used. A joint report by WeBank and Oliver Wyman, published at the end of 2023, found that there were 235 licensed digital banks and more than 300 organizations offering a broad range of digital banking services. A separate study by Simon-Kucher, published in October 2023, estimated that the industry was approaching approximately 1.1 billion customer accounts, with the number of neobanks approaching 400.
The difference in figures stems from how the term “neobank” is defined. Simon-Kucher analysts included payment service providers, electronic money issuers (EMIs), and partially licensed banking service providers, along with other companies that belong to the broader FinTech industry but market themselves as neobanks and share many of their characteristics. In contrast, WeBank and Oliver Wyman counted only institutions operating under specific types of banking licenses.
Analysts also relied on publicly available data, which not all jurisdictions disclose, and focused primarily on the largest markets. Therefore, the actual number of active neobanks globally could be significantly higher.
The ongoing development of regulatory frameworks for neobank licensing remains one of the key factors driving the sector’s growth. This trend is particularly evident in the United Kingdom, Brazil, Singapore, Hong Kong, the UAE, Lithuania, and several other countries, especially those with active FinTech sandboxes.
The largest neobank in the world is China’s WeBank, which had more than 400 million users by the end of 2023. The second-largest neobank by customer base is Brazil’s Nubank. By the end of 2024, it had 114.2 million, and by the second quarter of 2025, it reached 123 million. In third place is Revolut, UK- and Lithuania-based neobank, whose retail user base exceeded 52.5 million by the end of 2024.
Notably, demand for alternative payment methods continues to grow, and the neobanking sector is expanding along with it as a viable alternative to traditional banks. One of the main drivers of this process is a generational shift, as younger users make up an increasing share of the customer base. This shift is reshaping how the market perceives and demands banking services. It has also become one of the key factors behind the surge of interest in neobanks in 2025. Another important factor is the growing distrust toward traditional banking amid global economic instability and the gradual acceptance of digital assets. These assets provide an alternative to the conventional financial system while increasingly integrating into it through neobanks.
Analysts identify AI adoption as one of the key trends shaping the future of neobanks. AI allows neobanks to adapt quickly, personalize customer experiences, and scale effectively. The adoption of AI agents in FinTech products is already a reality rather than a prospect for the future.
Neobanks have permanently transformed the traditional banking paradigm by offering customers:
- Transparent pricing with fewer hidden fees
- Modern, user-friendly digital interfaces
- Seamless integration of innovative FinTech solutions
- A frictionless financial experience
As a result, neobanks have lowered entry barriers in a sector that traditionally required significant investment and strong brand trust. They have also helped rebuild confidence in the banking system and attracted millions of new users, especially among younger and more tech-oriented generations.
