NEOBANKS IN THE DIGITAL ECONOMY: CHALLENGES AND PROSPECTS

Abstract

Neobanks are gradually becoming a visible and influential segment of the financial market, changing the way banking services are delivered, lowering barriers to entry for new and underserved customers, and reshaping competition in the sector. This article looks at neobanks as a business model built around mobile platforms, remote interaction with customers, fast onboarding, and automated financial operations. In this format, the value of a bank is increasingly measured not by the size of its branch network, but by the speed of service, simplicity of the interface, cost efficiency, and the ability to integrate everyday financial functions into a single digital environment. This shift is altering customer expectations and putting pressure on traditional banks to accelerate their own digital transformation. The paper focuses on the practical issues that accompany the rise of digital-only banking. Special attention is paid to remote customer identification, transaction control, financial monitoring, AML procedures, and cybersecurity risks. Unlike traditional banks, neobanks operate without physical infrastructure, which shifts the entire burden of compliance and risk management onto digital tools and automated systems. These issues are becoming more important as neobanks scale up and handle larger transaction volumes in real time. The article argues that the expansion of neobanking creates not only new market opportunities but also new supervisory challenges, since many traditional regulatory approaches were designed for banks with physical branches and direct customer contact. It is emphasized that the future of neobanks will depend on more than technology alone. Sustainable growth in this segment requires a regulatory framework that responds to high-speed digital operations, stronger financial monitoring tools, reliable cyber protection, and clearer legal rules for digital banking services. It is concluded that neobanks should be viewed not simply as a convenient banking format, but as an important indicator of broader structural change in the contemporary financial system.