Open banking vs traditional banking: the gap has mostly closed
Five years ago, neo-banks were a convenience novelty — great for travel, questionable for a mortgage. In 2025, that gap has substantially narrowed. Here is what is left of it.
In 2020, calling a neo-bank your "primary account" was still a slight statement. Legacy banks had the credit lines, the mortgage products, the Deposit Guarantee Scheme reassurance. Fintechs had better apps and lower fees. By 2025, most of that product gap has closed. Here is what is actually different now.
Where neo-banks caught up
Full IBAN acceptance across EU employers and utility companies (see the virtual IBAN article). Instant transfer settlement that legacy banks still do not match on weekends. Multi-currency holding without manual conversion. Transparent FX pricing. Mobile-first UX that works for both power users and account novices.
Where legacy still wins
Mortgages, business loans, and complex credit products still require underwriting infrastructure that most neo-banks have not built. Treasury management for mid-sized companies — multi-signature controls, cash-forecasting, reconciliation with major ERPs — remains legacy-bank territory. Branch-visit services (safety deposit boxes, in-person loan consultations) are inherently physical.
Where neo-banks still win
Cost — monthly fees are usually 50–90% lower. International operations — a European freelancer invoicing US clients is almost always better served by a neo-bank. Developer tooling — neo-banks publish stable APIs; legacy banks are still catching up to the PSD2 technical minimums. Speed of change — a product update that takes a legacy bank 18 months ships in 6 weeks at a neo-bank.
Hybrid strategy for 2025
The emerging consensus among finance-savvy EU residents is one neo-bank for primary spending, SEPA, multi-currency, and transparent FX; one legacy bank for mortgage, insurance, and large deposit storage. This is more work than one account for everything, but the cost and feature arbitrage makes it worth it for anyone with cross-border income or international transactions.