In Australia there are a swath of 'neo-banks', banks that have no physical presence - typically are a 'mobile-first' experience. Some examples are Up, Xinja, 86400.

These banks are typically pretty competitive - offering no transactions fees, and higher-than-the-rest interest on savings accounts. They also tend to offer a better user experience in terms of offering budgeting or money tracking tools.

The question is - if I'm to use one of these neo-banks as my primary bank for holding all of my savings etc - how much risk am I at compared to a more traditional bank? ie. What risk is there that the bank completely fails and I lose all my savings?

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    "higher-than-the-rest interest on savings accounts" I'm curious, approximately what's their interest rate? Commented Jan 28, 2020 at 5:04
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    @FranckDernoncourt - Well for example most of the big four offer a temporary saving rate of around 1.6%, and then revert to around 0.15% after a few months. UBank offers 2.1% so long as you are depositing money and making transactions.
    – dwjohnston
    Commented Jan 28, 2020 at 5:35
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    If these neo-banks are Authorised Deposit-taking Institutions, then the deposits are guaranteed by government insurance, and thus they should be fine.
    – RonJohn
    Commented Jan 28, 2020 at 8:40
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    moneysmart.gov.au/managing-your-money/banking According to this AUD 250000 is guaranteed for ADIs
    – DumbCoder
    Commented Jan 28, 2020 at 10:07

2 Answers 2


I can answer this question for the EU, where the situation is similar. Most, but not all so beware, of these new, online only, mobile first banks are legitimate in the sense that they are registered as banks and they are guaranteed up to 100k€. A few are working more as transaction facilitators, therefore they are not real banks and although you can use them as banks, you don't have the governmental guarantee. In my opinion, it would be a huge mistake to use such a transaction facilitator as a bank. You wouldn't keep all your wealth on your paypal, wouldn't you?

The real neo-banks can be trusted up to 100k€ as much as you trust your government that it won't default, so quite a lot. For anything above 100k€ you need to trust the bank itself, and trust is built over time. Since the whole point is that the neo-banks are new, I am personally not trusting any of them with large sums, above the governmental guarantee.

There is indeed an explosion of neo-banks and tech-fin in general, that is likely due to a combination of better internet (4G, 5G), the novel blockchain technology, and new client behavior caused by other technologies. There isn't enough space on the market for all of them to succeed though, so some will fail. Some of the traditional banks will also slowly adopt new features that are currently available only in neo-banks. I don't know which neo bank will fail, but I'd rather find it from a newssite than from an "access denied" when I want to check my account.

TL;DR; Trust them, but check they're real banks, and beware with large sums.


One point I have since discovered, is that a 'mobile only' experience sucks if you lose your phone/stop using a smart phone.

It means you can't easily see your balance, can't transfer money out/between accounts.

It's actually quite a pain to do an account recovery.

So strongly recommend not using a 'mobile only' bank as your primary bank account that your salary is paid into.

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