Neo Financial: a case study

The Canadian banking landscape has undergone significant change in recent years. Indeed, the hegemony of the country’s big five institutions (TD, BMO, RBC, Scotia and CIBC) appears to be over as several new financial institutions such as EQ Bank, Tangerine, Motusbank and Alterna gain prominence.

These modern virtual banks offer low-cost financial products. Transactions are also simplified as they are conducted online. A trip to the branch is therefore not necessary.

In addition, their checking and savings accounts have higher interest rates than traditional banks. This competitive return is made possible by savings on rental costs. Indeed, these institutions do not need physical premises to carry out their operations, as their activities are carried out electronically at a distance.

To this end, several other electronic financial platforms have been created. This is particularly true of Neo Financial. In this paper, we will discuss this new financial interface.

Neo Financial is a Canadian financial institution based in Winnipeg, specializing in savings and credit products. Special attention is also being given to the financial literacy of Canadians.

This innovative initiative is the brainchild of Andrew Chau and Jeff Adamson, who previously founded the “Skip the dishes” food delivery app.

Neo Financial offers its users a range of services:

• Neo Crédit
• Neo Money
• Neo Cash Credit card
• JA Money card—powered by Neo
• Neo Financial Secured Mastercard
• Neo Invest
• Neo Mortgage

Here, we analyze two of these Neo services.

The Neo Credit Card from Neo Financial is affiliated with the credit card provider Mastercard. It has no annual fee and is fairly easy to obtain, although a minimum credit score of $300 is required.

Failure to pay your bills can be costly, as the interest rate charged is between 19.99% and 24.99%.

The credit limit can vary depending on different criteria such as your payment history, the presence of debts and your annual salary.

The maximum credit limit is $10,000. This product is available in Quebec.

Neo’s high-interest savings account is a great discovery, standing out from the competition. Here is an account of the main advantages and disadvantages of this account.

• High interest rate: The interest rate on this account is 4%. This is one of the best rates in Canada. It is currently superior to some other similar financial institutions.
• Year-round promotion: The interest rate is valid for the whole year, which is an advantage over competitors such as Tangerine, who tend to offer promotions over a shorter window of time, generally between 3 and 6 months.
• Many free services: Wire transfers, Interac transfers and bill payments are all free. It is also important to mention that there are no fees for managing your account.

• Excellent virtual application that allows you to track your rewards accumulation and credit card transactions
• Easy-to-obtain credit card with an innovative rewards program offering generous cash returns
• Savings account with a high interest rate (4%) among the best in the country

Overall, we find Neo Financial’s financial products attractive to Canadians.

The Neo Credit card is attractive because it’s free and easy to use.

Secondly, we like the simplicity of Neo Financial’s mobile interface. The information contained is clear and concise, and easy to find.

Finally, we note some shortcomings concerning Neo Financial’s offering of certain financial products. We are thinking in particular of the absence of a debit card. It seems, however, that changes are gradually taking place, notably with the high-interest savings account now also available in Quebec.

We remain optimistic that Neo Financial will continue to build on its current momentum by developing additional financial products. We believe that developing a low-cost virtual investment platform would be a great initiative.