Neobank

What it means

A neobank is a bank or payment institution that operates only online through a mobile app, without branches. It offers fast account opening, low fees, favourable exchange rates for foreign currency payments and modern features such as instant notifications and virtual cards.

Not every neobank is a bank in the legal sense. Some hold a full banking licence, while others operate as a payment institution or an electronic money institution. This determines which services they may offer and whether clients' money is covered by deposit protection.

Most neobanks active in Slovakia are licensed in another EU member state and provide services under the European passport. They are supervised mainly by the authority of the licensing country, and clients with problems turn to the institutions there.

How it works in practice

For a business owner, a neobank can be a practical complement to the main business bank account, for example for foreign currency payments, company cards for employees or setting money aside for taxes. Before opening one, check whether it issues a Slovak or foreign IBAN and how payments are processed.

For accounting, it matters how the neobank provides statements. They should be complete, in a format the accounting software can import, and contain all details needed for posting. Many neobanks offer exports or a connection via open banking directly to accounting software.

When receiving payments from customers, consider how they will react to an unfamiliar bank. Some partners or authorities may have difficulties with a foreign IBAN, and for VAT refunds and other payments from the state it is safer to also have an account with a traditional bank.

What to watch out for

If a neobank is a payment institution rather than a bank, clients' money is not protected by the deposit guarantee fund but merely safeguarded separately from the institution's own assets. If it runs into trouble, getting money back may take longer. Larger reserves are therefore best held in a bank with deposit protection.

Neobanks must comply with AML rules and may suddenly freeze an account and request documents if transactions look suspicious. For a business this can mean temporary loss of access to funds. Keeping a backup account at another bank is therefore good practice.