How to Open a Neobank Account: Step-by-Step Guide
Neobanks are app-first financial services that run on your phone, often partnering with licensed banks for the back end. They focus on smooth sign up, low fees, and useful tools like spending insights and early pay.
What is a neobank
A neobank is a digital account you open and manage in an app or on the web. Many neobanks are not themselves chartered banks. In the US they commonly hold your deposits at a partner bank that is insured by the Federal Deposit Insurance Corporation. Always check who the actual bank is.
Key concept - deposit insurance
- US: FDIC insurance covers up to $250,000 per depositor per insured bank. If a neobank places your funds at an FDIC bank and requirements are met, coverage can be passed through to you.
- UK: Only deposits at banks and building societies are protected by the Financial Services Compensation Scheme up to £85,000. E-money firms safeguard funds but you do not have FSCS protection.
- EU: Deposit Guarantee Schemes protect up to €100,000 per depositor per bank in the bank's home state.
How to choose the right neobank
- Confirm the licensed bank behind the app. Look for the named partner bank and its FDIC Certificate number in the US or whether the firm itself is a bank in the UK or EU.
- Check deposit protection status. In the US verify FDIC coverage and whether it is pass-through to you. In the UK confirm FSCS eligibility if it is a bank - if it is an e-money institution, you have safeguarding not FSCS.
- Review fees and limits. Look for ATM fees, foreign card fees, cash deposit options, and daily transfer limits in the disclosures or terms. Many neobanks monetize through card interchange so core accounts can be fee-light, but limits vary.
- Look at KYC experience and support. Good apps explain why they need identity checks and how to fix failed verifications. KYC and Customer Due Diligence are required by law to deter fraud and money laundering.
- Evaluate safety features. Two-factor authentication, instant card freeze, in-app dispute flow, and clear fraud refund policies matter. With any fintech, know who resolves complaints and how to escalate.
- For UK users: if the firm is not a bank, read its safeguarding statement and where client funds are held.
Steps to open a neobank account
1 - Install the app and start sign up
Download the official app from your device's app store. Use the link on the provider's site to avoid fake apps.
2 - Enter personal details
Expect to provide your legal name, date of birth, address, phone, and email. These basics are part of banking Customer Due Diligence rules.
3 - Verify your identity
Identity checks usually include scanning an ID and taking a selfie. Some apps also ask for a Social Security number in the US or a National Insurance number in the UK to meet KYC and anti-money laundering obligations.
4 - Add funding
Common options are linking an external bank via ACH, card top up, or employer direct deposit. If the neobank is US-based and funds go to a partner bank, FDIC coverage applies if pass-through requirements are met.
5 - Activate your card
Many neobanks issue a virtual card instantly and mail a physical card later. You can add the virtual card to your mobile wallet and set PINs in-app.
6 - Set controls and alerts
Turn on 2FA, spending alerts, and location-based security. Freeze and unfreeze cards in-app when needed.
What documents you may need
- Government ID - passport or driver license.
- Proof of address - utility bill or bank statement if asked.
- US only - Social Security number or ITIN for tax and sanctions screening.
- UK or EU - national ID details as required by local AML rules.
Deposit protection - what to check before you move money
| Region | Who protects eligible deposits | Coverage limit | What to confirm in a neobank app |
|---|---|---|---|
| United States | FDIC | $250,000 per depositor per insured bank - coverage can pass through if records and titling meet FDIC rules. | Name of the FDIC-insured bank, that your account is a deposit account at that bank, and how pass-through insurance works. |
| United Kingdom | FSCS | £85,000 per person per bank - only if the firm is a bank or building society. E-money firms use safeguarding, not FSCS. | Whether the firm is a bank with FSCS or an e-money institution with safeguarding only. |
| European Union | National Deposit Guarantee Scheme | €100,000 per depositor per bank, regardless of your residence. | Whether your provider is a licensed bank in an EU state and which DGS applies. |
Reminder - not all payment apps are banks. Funds at some wallets do not have deposit insurance. Understand the difference and keep larger balances only with insured deposit accounts.
Common neobank features to compare
- Direct deposit and early pay. Many apps post payroll when they receive the payment file from your employer's bank. Timing depends on the employer and the partner bank.
- Fee structure. Look for ATM network access, international use, cash deposit methods, and whether there are upgrade tiers.
- Budget tools. Categories, insights, round ups, and safe-to-spend views are typical.
- Support. Check hours, in-app chat, and complaint routes such as the bank partner or the ombudsman in your country.
If verification fails or your account is locked
Identity checks can fail for data mismatches, unclear photos, or fraud screening. Re-try with better lighting, submit secondary documents if offered, and contact support. These checks are part of required CDD.
Escalate to the partner bank if needed. In the US you can also contact the bank's regulator. In the UK you can use the firm's complaints process and then the Financial Ombudsman if eligible.
Security checklist
- Turn on two-factor authentication and biometric login.
- Use in-app card controls - freeze when you misplace the card and unfreeze when found.
- Set transaction and location alerts.
- Keep larger savings in insured deposit accounts - understand which balances are insured.
FAQ
Is a neobank account a real bank account?
Sometimes yes - if the neobank is itself a licensed bank. Often it is an account provided by a partner bank. Read the disclosures to see which bank holds your deposits and what insurance applies.
What is pass-through FDIC insurance?
When a nonbank places customer funds at an FDIC-insured bank and keeps proper records, deposit insurance can pass through to each customer up to $250,000. Check that your app explains the bank, titling, and limits.
Are UK e-money accounts protected like bank deposits?
No. E-money institutions must safeguard client funds, but FSCS compensation does not apply to e-money. Only deposits at banks and building societies get FSCS protection.
What does KYC involve?
Customer Due Diligence requires verifying identity and assessing risk using reliable documents or data checks. Expect ID scans and sometimes a selfie or live video.
Is it safe to use a payment app as my main bank?
Be careful. Some apps are not banks and balances may not be insured. If you want deposit protection, use a bank or a neobank account that holds funds at an insured bank.
Quick checklist before you hit "Open account"
- Provider name - bank or e-money - and the partner bank's name.
- Deposit protection - FDIC limit in the US, FSCS in the UK, or EU DGS details.
- Fees, limits, funding and withdrawal options, ATM network.
- Support and complaints path.
- Security controls and alerts.