Tier-1 / Challenger/ Neobank
Types of banks
- Tier-1
- A major, systemically important bank with a full range of services and strict compliance
- Challenger
- A new licensed bank with modern service and easier entry
- Neobank
- An app without its own banking licence — often an EMI
- How to choose
- By the task: holding capital, programme payments or everyday payments
- The main mistake
- Keeping everything in one place and finding out at the wrong moment
In plain words
Tier-1, challenger and neobank are informal names for three different types of banking service. A Tier-1 bank is a large, systemically important bank with a full range of services: deposits, loans, investments, international settlements. Such banks are reliable and accepted everywhere, but entry is stricter and compliance deeper.
A challenger is a relatively new bank with a genuine banking licence but a modern approach: remote opening, a convenient app, clear tariffs. A neobank is most often not a bank at all: behind an attractive app there is an EMI or payment institution licence, which means no deposits, no loans and no deposit guarantee.
For investment migration clients the difference emerges at a specific moment: when a programme contribution has to be paid, a settlement made with a notary or proof of funds provided. There the receiving party looks at the institution’s status, not the convenience of the app. That is why a sensible arrangement is a major bank for capital and programme payments plus a convenient service for everyday expenses.
When the type of bank matters
How the three types differ
- A full range of services
- High trust
- Strict entry and compliance
- A genuine banking licence
- Remote opening
- Modern service
- Often an EMI licence
- No deposits or loans
- No deposit guarantee
- Look at the licence
- Check whether payments are accepted
- Separate the channels
How to choose a bank for the task
- 01Define what the account is for
- 02Check the institution’s licence
- 03Confirm whether the programme payment will be accepted
- 04Open a main and a back-up account
- 05Separate the channels by purpose
What you need to know
- A neobank often operates under an EMI licence, not a bank’s
- A deposit guarantee applies only at banks
- State programmes usually expect payment from a bank
- Strict compliance is the flip side of reliability
- A single account is a single point of failure
Common mistakes
- Choosing a bank for the convenience of its app
- Keeping all your capital in one place
- Treating any service with an IBAN as a bank
- Opening an account at the last moment before a payment
- Not checking whether the programme accepts payment from this account
What this means for a BRIDGES client
We choose a bank for your programme in advance and check whether the receiving party will accept payment from your account. We put account opening into the schedule together with gathering documents, so that the banking question does not delay filing.
Frequently asked questions
01 /What is a Tier-1 bank?
An informal term for a large, systemically important bank with a full range of services and a high level of trust. Entry is usually stricter.
02 /Is a neobank a bank?
Often not. Many apps operate under an EMI or payment institution licence: there are no deposits, no loans and no deposit guarantee.
03 /How does a challenger differ from a neobank?
A challenger has a genuine banking licence with a modern service. A neobank often operates under a non-bank licence.
04 /Where should you open an account for the programme?
As a rule, at a bank: state programmes, notaries and developers usually expect payment from the applicant’s own bank account.
05 /How many accounts should you have?
At least two at different institutions. A single account is a single point of failure: a block or a check stops all your payments at once.
06 /Why is it harder to open an account at a large bank?
The larger the bank and the higher its reputational risks, the stricter the compliance. That is the flip side of reliability, and you prepare for it with documents.
See also
Read next
This material has undergone editorial review by BRIDGES.
Unsure where to open an account?
We will choose a bank for your programme and help you open it before the documents are filed.