Neobanks like Revolut, N26, Monzo, and Chime have transformed everyday banking. But as they handle billions in deposits, the question remains: is your money safe?
What Makes Neobanks Different
Neobanks operate primarily through mobile apps without traditional branch networks. This lower overhead allows them to offer better rates, lower fees, and innovative features like instant spending notifications and budgeting tools.
Are They Regulated?
It depends on the neobank. Some hold full banking licenses and your deposits are protected by government guarantee schemes:
- Monzo, Starling (UK) - Full UK banking license, FSCS protection up to £85,000
- N26 (EU) - German banking license, deposit protection up to €100,000
- Revolut - Recently obtained full UK banking license; EU deposits protected
- Chime (US) - Not a bank itself; deposits held at partner banks with FDIC insurance up to $250,000
Risks to Consider
- Some neobanks operate under e-money licenses, not banking licenses - your money may not be deposit-protected
- Customer service can be harder to reach compared to traditional banks
- Account freezes for compliance checks can be frustrating
- Not all offer the full range of products (mortgages, business banking)
Our Recommendation
Neobanks are safe for everyday banking and spending, provided they hold proper banking licenses and your deposits are covered by deposit protection schemes. However, for large sums, consider spreading your money across multiple institutions.