In America a neobank rents a bank. In Asia it is one.
"Neobank" sounds like one kind of company. Look at what the 397 we track are actually licensed to do, region by region, and it turns out to mean very different things depending on where the app was built.
| Home market | Neobanks | Hold a banking licence | Most common model |
|---|---|---|---|
| United States | 55 | 9 (16%) | Partner bank: 37 (67%) |
| Asia | 70 | 41 (59%) | Licensed bank |
| MENA | 26 | 15 (58%) | Licensed bank |
| United Kingdom | 18 | 9 (50%) | Bank 9, e-money 8 |
| Latin America | 50 | 22 (44%) | Licensed bank |
| Europe (ex-UK) | 66 | 27 (41%) | Bank 27, e-money 18 |
| Africa | 31 | 10 (32%) | Licensed bank |
The region is the market each neobank is filed under in the dataset. The 65 apps built for everywhere at once, mostly self-custodial wallets, are filed as global and left out of this table.
America: the app on top of someone else's bank
In the US, the typical neobank is not a bank. Thirty-seven of the 55 we track, including Chime, Current, Dave, Mercury and Ramp, run on a sponsor bank that holds the deposits and the charter. The nine that do hold a licence are either the rare fintech that got its own charter (Varo, the first, in 2020; SoFi, by buying a bank in 2022), digital brands of existing banks (Ally, Marcus, FACILE), or small chartered banks built for a niche.
The reason is structural. The US has no dedicated digital-bank licence. A fintech that wants to be a bank needs a full charter, with years of capital, examination and political risk, or it buys an existing bank. Renting a sponsor bank was the fast path, and for a decade almost everyone took it. We have written about what that costs customers when the sponsor changes, and about who actually holds the money when something breaks.
Asia: regulators built a door
Asia is the mirror image. Forty-one of its 70 neobanks hold a banking licence, because regulators across the region created licences specifically for them:
- South Korea licensed internet-only banks: KakaoBank and K bank opened in 2017, Toss Bank in 2021.
- Hong Kong granted eight virtual bank licences in 2019, which produced ZA Bank, Mox and WeLab Bank.
- Singapore awarded digital bank licences in 2020: GXS, MariBank, ANEXT.
- The Philippines approved six digital banks in 2021, including Tonik, GoTyme, UnionDigital, UNO and Maya.
- Malaysia issued five digital bank licences in 2022, now live as GXBank, AEON Bank, Boost Bank and Ryt Bank.
Where that door doesn't exist, Asia looks like America. India has not issued digital-bank licences, and eight of Asia's eleven partner-bank neobanks, among them Jupiter, Niyo and Open, are Indian.
Britain and Europe: two ladders
The UK splits almost exactly in half: nine licensed banks (Monzo, Starling, Atom, Zopa, Kroo and others) and eight e-money institutions (Tide, Curve, ANNA). Britain's regulators set up a dedicated path for new banks in the mid-2010s, and the challengers that took it are now the licensed half. In continental Europe the e-money licence does more work: one licence passports across the single market, which is why 18 of the 66 European neobanks, Wise among them, are e-money firms rather than banks.
The US is changing
The American number is the one most likely to move. Since January, Nubank and Revolut have won conditional approval for national bank charters, and in September Chime agreed to buy its own sponsor bank. The partner-bank model that defined American neobanking for a decade is starting to give way. That's next week's post.