Digital-Only Banking at a Crossroads: Challenges and Future Directions of Neo-Banks

Neo-banks, digital only banking institutions operating without physical branches, have gained traction in recent years as part of the broader fintech revolution. They offer convenience, speed, and often lower costs compared to traditional banks. However, they also face significant challenges including regulatory uncertainty, cybersecurity risks, profitability concerns, and customer trust issues. This paper presents a comprehensive review of existing literature on neo-banks, analyses their key challenges, and explores future prospects. Drawing on empirical and theoretical work, this study situates neo-banks within the evolving landscape of digital finance and outlines research gaps and future directions