Skip to main content
FDIC-Insured - Backed by the full faith and credit of the U.S. Government
Jenius Bank vs a Neobank: How We’re Different

Jenius Bank vs a Neobank: How We’re Different

Jenius Bank Team2/10/2023 • Updated 4/4/2024
Venn diagram with neobanks on one side and Jenius Bank on the other

While neobanks and Jenius Bank share some traits, there are some significant differences between the two.

Your money is important to you, and where you choose to bank could impact your access to growth opportunities and even the security of your hard-earned savings. When trying to choose the right bank for you, there are dozens of options to choose from. Over the past few decades, new players, like digital banks and fintechs, have entered the marketplace.

Keeping up with all the different options, and lingo, isn’t easy. Neobanks and digital banks are newer terms you may have heard. But what is a neobank? Is it really a bank? How is it different from a digital bank?

Let’s explore different types of financial service providers to understand where digital banks and neobanks fit; then,with the help of Jenius Bank CEO John Rosenfeld, we’ll highlight how Jenius Bank is different from a neobank, and why that matters for you.

Traditional Banks, Digital Banks, Neobanks — What’s the Difference?

The best way to understand more about your bank, and its advantages and disadvantages, is to demystify the words used to describe it. It seems like the term bank should be straightforward, right? You may be interacting with organizations that offer bank-like services, but that doesn't mean those organizations are actual banks.

What do we mean when we say, “actual bank?” It all centers around the bank charter.

What is a Charter, and Why is it Important?

A banking charter is essentially a license from a state or federal government allowing the company to offer certain financial services. Charters are granted after an approval process where banks must show that they have enough money for bank operations, growth, and potential risks.

A charter gives banks multiple benefits, including a lower cost to do business because they’re able to use deposits to fund lending products, and FDIC protection on deposit accounts, like checking and savings accounts.

Unchartered financial companies don’t have direct access to FDIC insurance, meaning you may not be able to get your money back if they go under. Keeping your hard-earned money in an unprotected account seems pretty risky to us.

Traditional Bank vs Digital Bank

Traditional banks are your parents’ and grandparents’ banks—they have physical branches you visit to receive money and services in person. They may also have a website or mobile app for customers to manage their money. But these digital options are often secondary to their brick-and-mortar presence and may result in poor user experiences.

Digital banks (like Jenius Bank) offer their products and services entirely online or through apps and put the digital experience first, focusing on flexible and streamlined user experiences.

Digital banks also tend to offer better rates and lower fees on accounts, something usually attributed to the lower overhead they have versus brick-and-mortar institutions.

What is a Neobank?

Neobanks are the new kids on the block in the finance industry. Unlike traditional and digital banks, they're a type of financial technology (fintech) company that provides users with limited financial services and they lack a banking charter.

Neobanks rely on venture capital for funding, which may make them unstable. They focus on growth to raise funds from investors, but this may lead to failure and leave customers in a lurch since their funds aren’t FDIC insured.

To compete with traditional banks, neobanks seek ways to offer FDIC insurance. Some neobanks choose to purchase established banks to obtain a charter, while others partner with chartered banks. However, these partnerships may lead to a disjointed customer experience.

Other neobanks “grow up” and earn charters to become fully regulated banks, but this is a minority of cases. Jenius Bank is already sitting at the adults’ table as a division of SMBC MANUBANK, a California state-chartered bank.

5 Differences Between Jenius Bank and a Neobank

Venn diagram comparing Jenius Bank and neobanks

We’ll get into specifics below, but here are some quick hits on how Jenius Bank is different from a neobank.

Now that you’re up to speed on neobanks, let’s talk a little more about Jenius Bank and what makes us unique with some insights from our leader, John Rosenfeld. He’s been around banking and financial services for 20+ years, and Jenius Bank isn’t the first digital banking business he’s created.

Spoiler alert: Jenius Bank is not a neobank. And he thinks that’s good news for you. Let’s explore why. 

Having a Charter Sets Us Apart

Most neobanks don’t have a charter – and once they do, they stop being neobanks. The chartering process is important for a bank because it requires the institution to lay out its strategic plan and prove viability. 

According to John, “A lot of startup digital banks struggle to figure out how they’re going to get a charter. For the most part, charters are not easy to come by, so the fact that we have one provides us an enormous head start.”  

As the new digital banking division of SMBC MANUBANK, Jenius Bank has been in regular contact with regulators to discuss our plans for innovative products and services, as well as our projections to become a sustainable and profitable bank. We’re bringing our customers the confidence and benefits that come with a charter alongside the fresh approach, and benefits, of a digital bank.

Your Money at Jenius Bank is FDIC Insured¹

Another privilege afforded to chartered banks is FDIC insurance. While some neobanks offer FDIC protections, this is due to partnerships with chartered institutions. Any money held in an account by a non-chartered company isn’t FDIC insured. 

“You don’t want to play games with your money and neither do we,” says John.

As the digital banking division of SMBC MANUBANK, deposits to Jenius Bank accounts are FDIC insured to the maximum allowed by law. Sleep soundly at night knowing that your money is safe at Jenius Bank. 

We’ll Have a Suite of Products

As mentioned, most neobanks only offer one or two products to reduce their risk level and costs. At Jenius Bank, we launched personal loans and savings accounts in 2023, and we're not stopping there. We have an exciting growth plan that includes checking accounts and other lending products.

“Most fintechs or neobanks want a quick win,” says John. “Their investors want to see them grow a million customers to prove the concept, regardless of long-term potential and customer value.” He adds, “At Jenius Bank, we have a very long-term view.” 

Our future products will be based on our customers’ needs, trends based on our research, and feedback we receive.

“We’re focused on building relationships with customers and using customer feedback to create the best possible banking experience,” says John. 

Additionally, as a digital-only bank, we’re saving money on physical locations. Our lower costs are passed on to our customers. Some of this is via higher rates on savings accounts, no minimum deposit requirement, and our no late fees on personal loans. 

We’re Drawing on SMBC’s 400-year History

Hey, sometimes being old is a good thing! Unlike neobanks, most of whom are less than 10 years old, we are the digital banking division of SMBC MANUBANK which is a member of SMBC Group. SMBC is one of the largest financial groups in the world, with over $2 trillion in assets. Our connections allow us to draw on over 400 years of history to create a unique digital bank. 

That said, our history doesn’t mean we plan to do things the old way. We have a digital-first mindset and are using the latest technology to create a world-class experience for our customers.

“We are building Jenius Bank on a core that’s only a few years old, whereas most of the banks in America are running on 30- to 40-year-old cores,” explains John. “They can’t possibly do many of the things that we will be able to do.” 

We’re Humanizing Digital Banking

Due to their digital-only platforms and lean, start-up like staffing, some neobanks lack the resources necessary to field customer service requests and make it difficult to find their phone numbers. 

“We’re here to help our customers, not hide from them,” says John. “If they want to speak with us, we will pick up the phone any day, any time. And our phone number will be boldly featured on our home page after we launch.” 

At Jenius Bank, we’re creating a network of customer service team members who are available 24/7 to assist our customers if they need it. We already have over 200 employees working to create a best-in-class product and our U.S.-based customer service team grows every week. 

And our parent companies are committed to our growth and success. Not only are they committed to Jenius Bank, but they’re also committed to our customers.

“We're doing things the right way, prioritizing your experience and needs,” says John. 

Final Thoughts

Neobanks have pressured traditional banks to offer new products and improve digital customer experiences, bringing banking into the digital era. But these companies are often reliant on external partners or investors to survive. 

Jenius Bank has the means and support to create a top-notch, digital-first customer experience while offering the same protections as a traditional bank.

Check out Jenius Bank savings accounts today and be sure to continue visiting our blog where we help you be a Jenius with your money and live a richer life!

Banking 101Financial Wellness