A non-zero amount of that legacy is due to regulations and compliance.
Most of what a bank does is totally invisible to the end customer. A "neobank" is almost always just a shiny consumer-oriented facade in front of a grumpy old bank. Someone still has to follow all of those laws.
This website is operated by Monzo Inc. Monzo reserves the right to restrict or revoke any and all offers at any time. The Monzo mobile banking app facilitates access to banking services through *Sutton Bank*, Member FDIC. The Monzo Mastercard Debit Card is issued by Sutton Bank, pursuant to a license from Mastercard International Incorporated. Monzo accounts are FDIC insured up to $250,000. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
That's for the US branch. Monzo in the UK is a real bank.
> Starling Bank
That one is an actual bank. In the UK, it's easier to open a real bank, than in the US. Bank of England has a special division dedicated to guiding "small" companies in becoming a real bank.
Although there's a kernel of truth there, it's far from accurate. Most of the legacy is due to the assumption of regulations and compliance. The truth is that most of the systems are in fact out of compliance, but as long as you don't touch them the likelihood of a serious audit is small. The complexity is more about erecting an impenetrable wall to make the auditor assume it's probably compliant.
It's essentially about overwhelming auditors with details to fatigue them. Not to dissimilar to when lawyers flood each other with documents in tv shows.
Their FDIC charter was issued in 2006.
US banking being largely obsolete as a whole (checks? paid wire transfers that take days to arrive?) probably explains why there are no real neobanks in the US and they're all just a UI in front of a legacy bank. I doubt it has much to do with regulations, because I really doubt US banks are more heavily regulated than EU banks, who also have country differences to deal with if they operate in multiple countries (Revolut, N26), and they also have to check if the customers are American tax residents and handle that case too (or simply refuse them to become customers as some banks do).
Even Revolut that you cite was just a frontend until January 2021 where it became a bank, but just in the UK: https://en.wikipedia.org/wiki/Revolut#History
What are you talking about? Revolut is a real bank, same as Monzo, N26, Aumax (part of a larger banking group so it hardly counts), Kard. Specifically regarding Revolut, they are a real bank in multiple countries now - UK, Lithuania, US and a bunch of other European countries.
Revolut's links to Russia are, perhaps, not helping with that.
For me it was buying a house and realizing that you must be able to wire money.
When the stakes were high, Varo failed me (they promised they could do it, but on the day I needed it they refused) and I had to scramble at my traditional bank to make the payment in time to avoid $20k on penalties.
Other than the most important transaction of my life, though, they've been great!
I don't know Varo but would you imagine continuing using them for other transactions and using the traditional bank for traditional purchases (house, etc.) After all, people don't go through the most important transaction of their life frequently.
The neobanks are all very incremental improvements, and is largely just packaging. E.g., Lunar being app-only obviously has a somewhat more modern app than the average bank.
The truth of the matter is that banking is horribly entrenched. Actual business decisions are mostly driven by arbitrary considerations of which laws to follow that day. Although we provide a ton of functionality and business capability, we are still woefully behind on any sort of compliance measure, not because compliance is hard or impossible, but because nobody is actually critically examining the systems.
The problem for the "neobank" is not one of building technology to catch up. It's in cultivating an image where they are seen as systemically critical such that they will be afforded the same leniency in policing that the established sector already has.
It's in Turkish but translate will help you get the idea: https://ohvps.github.io/v1.0.2/contents/odeme-emri-baslatma-...
Here's the api documentation of 25 Danish banks, including the one I'm a part of: https://apiportal.prod.bec.dk/openbanking/sandbox/product/17...
https://www.openbanking.org.uk/api-performance/
These figures only include the “top 9” UK banks that are required to implement open banking, not smaller banks like Monzo.
I’d argue that open banking is already being used for lots of serious stuff. Credit checking, for example. And of course pretty much any accounting/financial software supports open banking now days.
By serious stuff I meant stuff that requires perfect accuracy and integrity - credit checking wouldn't care if you're missing one transaction here or there, or if the timestamps are a little off.
But for accountancy, perfect accuracy is required and OB with legacy banks is far from perfect in that regard - the data quality is bad, you get missing/duplicate transactions, timestamps are off (due to TZ issues). Modern banks are the only ones where the data is any good. For accountancy services, this ends up causing significant support overhead to companies where customers complain their numbers are off and the company can't do anything because the bank sends incorrect data, not to mention engineering overhead where you have to try and clean up the data in-house (the problems are different for each bank, so you have to essentially reverse-engineer how each bank mangles the data and implement bank-specific workarounds).
> Uptime and performance seems to be monitored pretty closely since 2020
Uptime, sure. I too can make a 100% uptime API that returns random data.
When it comes to data quality, there didn't seem to be any authority (in terms of real, practical outcomes - not theoretical powers that never end up being used like the GDPR for example) to complain to - which I find to be a fatal mistake in a situation where banks otherwise have zero incentive to provide a functional & usable OB API (in fact, OB is detrimental to their business as it would allow customers to use a third-party's - often better - service over the bank's own one). Even the OB "gateways" like Plaid, TrueLayer, etc have their hands tied when it comes to this - once the issue is confirmed to be with the bank, the lead time on getting any kind of resolution is often months, during which you have a disgruntled customer breathing down your neck and blaming you for the problem.
Like this Increase, "build your own bank", but themselves it isn't a bank. It's just an API to their partner banks.
As others have mentioned legacy banks here in Scandinavia are slowly catching up, the main reason being the slow trickle of custeos to neobanks.