Most neobanks don't start with a banking license.

So they're the equivalent of Paypal (Money transmitting license?)

They can hold/transfer money but they're not protected by regular banking deposit garantees.

So yes, they can have reduced costs/regulatory overhead when starting up.

Also they avoid legacy infra (physical and digital)

- No 1000s of branches/employees across the country

- No legacy digital systems (Mainframes/COBOL)

- No M&A spaguetti from acquiring 10x banks over time