Best Neobanks 2026: The Three Licence Models, Compared

Last updated: 1 August 2026

"Neobank" is a marketing word, not a legal one. No regulator issues a neobank licence. The apps grouped under the label operate on at least three completely different legal foundations, and those foundations decide what happens to your money if the company fails. Two providers with near-identical apps can offer entirely different protection.

That distinction is the most useful thing to understand about this category, and it is the one most comparisons skip in favour of ranking app design. This guide is organised around it.

How this comparison was compiled

No accounts were opened for this article and nothing was tested first-hand. Licensing status, regulator and deposit protection details were read from each provider's own published legal pages and from the relevant regulator or deposit guarantee scheme on 1 August 2026, and are linked below so you can verify them.

Interest rates and plan prices are not ranked here because they change frequently and vary by country. What does not change month to month is the licence a provider holds, and that is what this page compares.

The three licence models

Model 1: a full banking licence in its own name

These providers are banks in the legal sense. They hold their own licence, they are supervised directly by a banking regulator, and customer deposits are covered by that country's statutory deposit guarantee scheme up to its limit.

• N26 holds a full German banking licence and is supervised by BaFin. Customer funds are covered by the German statutory scheme up to EUR 100,000, per N26.

• bunq holds a Dutch banking licence and is supervised by De Nederlandsche Bank, with deposits covered up to EUR 100,000 under the Dutch deposit guarantee scheme, per bunq.

• Monzo and Starling are UK banks authorised by the Prudential Regulation Authority and regulated by the PRA and the FCA. UK deposits are covered by the FSCS, where the limit rose to GBP 120,000 on 1 December 2025.

• Revolut joined this group in the UK on 11 March 2026, when, in its own words, "the PRA has lifted restrictions on Revolut's banking licence, and given approval to launch its UK bank, Revolut Bank UK Ltd", per Revolut. This followed the restricted licence granted in July 2024.

This is the strongest position for a depositor. It is also the slowest and most expensive licence to obtain, which is why relatively few app-based providers hold one.

Revolut also illustrates why the entity matters more than the brand. Its UK customers are being migrated from Revolut Ltd, an e-money institution, to Revolut Bank UK Ltd in phased batches, and it states that customers signing up from 11 March 2026 onwards may still be onboarded onto an e-money account. Until an individual account is migrated, it is safeguarded rather than FSCS-protected. Two people using the same app can therefore hold different protection on the same day, which is why checking your own account's entity is not a pedantic exercise.

Model 2: an electronic money institution

An EMI is authorised to issue electronic money and process payments. It is not authorised to take deposits or lend your money out, and it is not a bank. Instead of deposit insurance, an EMI must safeguard customer funds: hold them separately from the company's own money, typically at a third-party bank or in liquid assets.

Wise is the clearest example. Wise states plainly that it does not lend customer money, and that because it is not a bank it handles funds through safeguarding rather than deposit insurance. In its own words, safeguarding "means we look after your money by keeping it separate from our own money, and making it available to you whenever you need it", per Wise.

The practical difference matters. Safeguarding is a real protection and segregation genuinely helps in an insolvency, but it is not a government guarantee. There is no compensation scheme that pays you a fixed sum within a fixed period if the firm fails; instead the safeguarded pool is returned through an insolvency process, which can take time and carries cost. FSCS deposit protection does not apply to Wise balances.

This model is common across multi-currency and business payment providers, including Airwallex and Vivid Business. It is not a flaw — it is a different product — but it should be a conscious choice rather than an assumption.

Model 3: a fintech on a partner bank's charter

Here the app is not a bank and does not hold a licence to take deposits. It partners with one or more chartered banks that hold the money and provide the regulated banking services.

Chime is the best-known example. Chime is a financial technology company, not a bank; banking services and the deposit insurance are provided by its partner banks, The Bancorp Bank, N.A. and Stride Bank, N.A., both FDIC members, per Chime.

Deposits are insured, but through the partner bank rather than the app. Two consequences follow. First, the FDIC limit applies at the partner bank level, so holding balances in several apps that share a partner bank may not multiply your coverage. Second, insurance covers the failure of the partner bank, not the failure of the intermediary, and that distinction has caused real losses in the US when middleware providers between fintechs and banks collapsed.

How to check which model your provider uses

This takes about two minutes and is worth doing before a large balance goes anywhere:

• Find the provider's legal, imprint or terms page and identify the exact legal entity that holds your money. The trading name and the licensed entity are frequently different.

• Look for the phrase that names the protection. "Covered by the deposit guarantee scheme" means model 1. "Safeguarded" or "we are not a bank" means model 2. "Banking services provided by [bank name], Member FDIC" means model 3.

• Check that entity on the regulator's public register rather than taking the website's word for it. The FCA, BaFin, DNB and equivalent registers are free and searchable.

• If you hold money across several apps, check whether they share a licence or a partner bank, because protection limits apply per institution and not per app.

Our neobank safety guide goes through this process in more detail, and the country-by-country protection limits are set out in our savings accounts comparison.

A licence is not immunity: the N26 case

Holding a full banking licence means supervision, and supervision sometimes produces enforcement. On 15 December 2025, BaFin ordered measures against N26 after a special audit, prohibiting new mortgage lending in the Netherlands, banning securitisation of mortgage claims, imposing additional capital requirements and appointing a special monitor. BaFin found that the bank "lacked proper business organisation" and identified "serious deficiencies … in risk and complaint management and in the organisation of the lending business", citing breaches of the German Banking Act. It was the second time since 2021 that BaFin had installed an external monitor at N26, per Banking Dive.

The reporting does not indicate that customer deposits or the banking licence itself were affected, and the deposit guarantee continued to apply. The point is not that N26 is uniquely troubled. It is that a licence buys you supervision and a compensation scheme, not a guarantee of good management, and that a provider's regulatory history is a legitimate input when choosing where to keep money.

What neobanks are genuinely better at

The category earned its growth on things incumbents were slow to fix:

• Account opening that completes in an app, usually in minutes, without a branch visit.

• Instant transaction notifications and automatic categorisation, which make spending visible in a way monthly statements never did.

• Materially cheaper foreign exchange and card use abroad than traditional bank retail rates, which is the single largest cost saving for most users.

• Sub-accounts, pots and rules that automate saving without a separate product.

• Fee structures that are published, comparatively simple, and free at the entry tier.

Where the category still falls short

Honest limitations that apply across most providers:

• Lending is thin. Mortgages and substantial credit are still dominated by incumbents, and a neobank relationship rarely helps you obtain either.

• Cash handling ranges from awkward to impossible, which matters for cash-taking businesses.

• Support is usually chat-first with no branch escalation, and dispute resolution can be slow when an account is frozen.

• Automated compliance and fraud systems can restrict accounts abruptly and with limited explanation, which is a widely reported frustration across the category and a genuine risk if a single account holds all your money.

• Coverage is uneven. Many providers are excellent in a home market and thin elsewhere, and features advertised on a global site may not exist in your country.

The last point is the strongest argument against consolidating everything into one app, regardless of which model it uses.

Choosing between them

The useful question is not which neobank is best overall, because the category serves different jobs.

• For a primary account that receives your salary and pays your bills, a model 1 provider licensed in your own country gives the strongest protection and the fewest surprises. Our current accounts comparison covers this in depth.

• For holding and converting multiple currencies, model 2 providers are generally cheaper and better designed for the job, provided you understand that safeguarding is not deposit insurance and you are not using them to store long-term savings.

• For business use, the requirements differ again and are covered in our business bank accounts guide.

• For protected savings, the deposit guarantee limit is the binding constraint, not the app.

Norwegian-language coverage of online banks versus traditional banks is in our journal guide, and more of this category is collected under neobanks. If you are curious how these providers earn money when the accounts are free, see how neobanks make money.

Important Disclaimer

BankTopp is an independent comparison site. We may earn commission when you open an account through our links. This does not affect our rankings or the figures published above. This is general information, not financial advice, and it does not account for your circumstances. Licensing and protection details were read from the linked sources on 1 August 2026 and can change — verify a provider's current authorisation on the relevant regulator's public register before acting. Your capital is at risk.