# Neobank

*Banking & Payments — Finicade finance glossary*

A neobank is a digital-only bank with no branches, usually built on modern software and often operating on someone else's banking licence. The cost base is a genuine advantage; the business model has been the hard part, since interchange revenue alone rarely covers acquisition costs. The critical question for a customer is whose licence holds the deposits, because that determines who insures them.

**Also known as:** challenger bank, digital bank, app-only bank

**Related terms:** [Banking as a Service](https://finicade.com/glossary/banking-as-a-service), [Open Banking](https://finicade.com/glossary/open-banking), [Commercial Bank](https://finicade.com/glossary/commercial-bank), [Deposit Insurance](https://finicade.com/glossary/deposit-insurance), [Digital Wallet](https://finicade.com/glossary/digital-wallet)

Source: https://finicade.com/glossary/neobank