From neobanks to deobanks: the future of transparent and universal digital banking

Five years ago, as the world retreated indoors during a global pandemic, neobanks emerged as digital alternatives to traditional banks. They offered easy-to-use apps and lower fees, impressing many with their modern interface and fast onboarding. Yet, they rely on the same legacy systems as traditional banks and still follow strict rules that exclude many and depend on outdated frameworks. These limitations leave more than 1.4 billion adults outside the banking system. Today, another transformation is taking place in the form of decentralized on-chain banks, or deobanks. A prime example of this model is WeFi . WeFi introduced the term “deobank” and has positioned itself to fill the gap left by neobanks. The goal is to show how digital finance can work for everyone. In practice, deobanks simplify compliance by gradually integrating AI-driven KYC and employ blockchain tech to offer non-custodial accounts that let users own their funds and spend them directly from their personal wallets. The global market for decentralized finance is projected to reach $351.75 billion by 2031 , and ‘payment and transactions’ are set to be the second biggest consumer segment in this industry. Deobanks have significant scope to become a catalyst for this growth and transform fintech services at a global scale. A new decentralized model of digital finance Traditional banks and neobanks face the same challenges that keep them tied to old methods. They often rely on physical infrastructure and centralized control. In contrast, deobanks operate entirely on blockchain networks. This setup eliminates the need for intermediaries and provides real-time transparency. Every transaction is recorded on-chain, and users can track how their funds are managed. This feature builds trust and reduces the risk of unexpected account freezes. If any regulatory issues arise, only suspicious transactions are flagged, leaving funds under the full control of the user. Deobanks also take a strong stand on environmental concerns. Neobanks tend to rely on physical cards, which contribute to a significant amount of plastic waste. Research shows that payment cards alone use over 130,000 tons of plastic . This waste takes centuries to decompose and leaves a lasting impact on climate change. Deobanks like WeFi promote a truly digital-first future in which payments happen via mobile devices using QR codes, Apple Pay, or Google Pay. These modern methods support sustainability and match today’s consumer habits. Serving the unbanked Macroeconomic challenges of the past decades show how fragile the traditional banking system is. The 2008 crisis, which led to the collapse of many financial institutions, exposed the fragility of legacy banks. More recently, Silicon Valley Bank’s sudden downfall left many customers unable to access their funds. This is even more prominent in developing and underdeveloped regions. In regions like South America and Africa, rapidly increasing inflation has caused many traditional banks to limit financial services to the wider population. Strict regulations and outdated processes leave these banks ill-equipped to meet modern demands. Neobanks have trimmed fees and sped up services, yet they still rely on custodial accounts that deny users true control of their money. Deobanks are built to serve the unbanked and underbanked. They are designed for people who fail to meet strict account opening criteria or who have lost trust in conventional banks. The decentralized nature of deobanks means that there is no central authority to dictate how funds are managed. Instead, users maintain control and benefit from a transparent system. This model directly addresses the needs of millions who remain on the outskirts of the financial system. Most importantly, Deobanks leverage a non-custodial approach that truly establishes universal accessibility. For instance, WeFi allows users to transact using stablecoins and access services via a Telegram bot. This way, users can conduct near-instant transactions at a fractional cost, regardless of their location or demographics. Deobanks are the next chapter of global financial evolution After the concerning failures of traditional banks, the lack of impact from neobanks, and the increasing growth of blockchain integration, the need for on-chain banking in global finance is growing. Deobanks offer a practical, scalable solution that meets the demands of a modern, interconnected world. Looking ahead, investors and users should prepare for a significant shift in global finance. Deobanks have the power to disrupt established players and create new opportunities in cross-border transactions, wealth management, and everyday payments. Developers also have much to gain. The decentralized on-chain banking framework offers a creative, unrestricted ground for developing innovative financial applications. On-chain data and smart contract integration open new avenues for automated yield strategies, lending protocols, and specialized payment systems. The transparent nature of Deobanks will encourage further innovation and drive efficiency in the digital finance space. This new model is expected to accelerate financial inclusion, especially in emerging markets where traditional banking fails to meet demand. The post From neobanks to deobanks: the future of transparent and universal digital banking appeared first on Invezz

Source: Invezz