How Safe Is Your Money in Digital Banks? A Comprehensive Safety Analysis
How Safe Is Your Money in Digital Banks? — Detailed Repor Digital banks (often called neobanks, challenger banks, or e-money providers) can be as safe as traditional banks if they operate under a regulated banking licence, hold deposits at an insured bank, and follow good safeguarding/cybersecurity practices. However, risks differ by business model: some fintechs are fully-licensed banks with deposit insurance, others are platforms that safeguard customer funds using partner banks (different protections), and still others depend on many third parties — which creates operational and systemic vulnerabilities. Notable failures (Wirecard, SVB) show that fraud, liquidity mismanagement and rapid interest-rate shocks can put customers and businesses at risk. 1) What we mean by “digital bank” Full-licence digital banks — banks that hold their own banking licence and take deposits directly (examples: Varo in the US after becoming a national bank). Deposits at licensed banks are typic...
