Your small business clients are opening accounts with digital platforms that promise instant setup, modern interfaces, and seamless payment processing. These neobanks deliver convenience and digital sophistication that appeals to businesses looking for streamlined financial operations. What most business owners don’t realize until something goes wrong is that the platform they’re banking with isn’t actually a bank at all.
When a business signs up with a neobank, they’re not opening an account with a bank. They’re signing up with a technology platform that partners with a chartered financial institution somewhere in the background. The slick interface belongs to the neobank, but the deposits sit at a partner bank the business owner probably never heard of before reading the fine print. This multi-party structure creates an accountability gap that becomes a crisis when fraud strikes, accounts freeze, or technical issues lock businesses out of their own funds.
The business owner, their customers making payments, the neobank platform, and the partner bank holding deposits—too many hands in the cookie jar. When something goes wrong, nobody knows who’s responsible for fixing it. The neobank blames the partner bank. The partner bank says it’s a platform issue. Meanwhile, the business can’t access their money, can’t make payroll, and can’t get straight answers about when the problem will be resolved.
For traditional financial institutions, this represents your strongest competitive advantage. You can offer the same digital capabilities that make neobanks attractive while maintaining something they fundamentally cannot: direct accountability where businesses know exactly who holds their deposits and who they can reach when problems arise.
(Source: PYMNTS – Neobanks Navigate SMB Market Potential and Regulatory Risks)
Why Small Businesses Choose Neobanks
Small business owners face legitimate operational challenges that neobanks address effectively through their onboarding experience and digital-first design. The five-minute account opening process removes traditional friction points. A contractor finishing a job site can open a business account during lunch, start accepting payments that afternoon, and deposit checks through their phone without ever visiting a branch.
Modern invoicing and payment tools come built into neobank platforms, addressing the reality that small businesses need more than just checking accounts. They need to send professional invoices, collect payments digitally, and track which customers have paid. A marketing consultant can invoice clients, accept credit card payments, and reconcile accounts all within one interface rather than juggling separate banking, invoicing, and payment processing systems.
The interfaces are intuitive and visually polished. Clean design, mobile-first functionality, and straightforward navigation make these platforms easy to use from day one. Business owners want the same simple, modern experience they get from their personal finance apps—and neobanks provide it.
The Hidden Accountability Problem
Behind the appealing features lies a fundamental structural problem: these platforms create multi-party relationships where accountability becomes unclear precisely when it matters most.
Neobanks operate as technology companies that partner with chartered banks to provide financial services. While the business interacts exclusively with the neobank’s branded interface for everything from invoicing to payment processing, their actual deposits sit at a partner institution—often one they’ve never heard of and have no direct relationship with. The neobank provides the technology and user experience, while the partner bank handles the regulated banking functions and deposit insurance.
This structure creates an accountability gap that leaves businesses without clear answers when problems arise. When fraud occurs or accounts get frozen, determining who can actually solve the problem becomes challenging. The neobank claims only the partner bank can access accounts and reverse transactions. The partner bank insists they can only respond to requests channeled through the neobank. The business owner finds themselves trapped between two entities, each deflecting responsibility while their funds remain inaccessible.
The result is too many parties involved in what should be a straightforward banking relationship. The business owner needs access to their funds. Their customers are making payments. The neobank controls the interface. The partner bank holds the deposits. At any given moment, money might be sitting in a neobank processing account, held by the partner bank under that institution’s policies, or frozen due to compliance checks that neither party adequately explains.
67% of small businesses using neobanks report confusion about who actually holds their deposits, and 43% couldn’t identify their partner bank when asked—a troubling gap in understanding where business funds actually reside.
(Source: CNBC – What Is a Neobank?)
When Things Go Wrong: The Real Cost of Unclear Accountability
The accountability problem remains theoretical until small businesses face actual crises. These scenarios reveal why the neobank structure creates risks that outweigh convenience advantages.
Fraud incidents become nightmares when multiple parties control different aspects of the account. A contractor discovers fraudulent ACH debits draining their account. The neobank’s customer service says they’ll investigate but can’t reverse transactions because the partner bank controls the actual account. The partner bank says they can only respond to requests from the neobank, not the account holder directly. Meanwhile, the business can’t make payroll and vendor payments bounce.
Technical outages at neobanks can lock businesses out of their funds entirely. When a platform experiences downtime—whether from cyberattacks, infrastructure failures, or software updates—businesses lose access to their money even though deposits sit safely at the partner bank. A property management company can’t process rent payments or pay maintenance vendors, not because the money disappeared but because the interface controlling access is temporarily offline.
Regulatory compliance holds create particularly difficult situations in multi-party structures. Partner banks conduct fraud monitoring and compliance checks on accounts, but businesses interact only with the neobank platform. When the partner bank flags suspicious activity and freezes an account, the business owner often learns about it through cryptic messages in the neobank app rather than direct communication from the entity that made the decision.
Platform shutdowns or partnership changes expose the ultimate risk. When neobanks change partner banks, face regulatory action, or cease operations entirely, business owners discover they have no direct banking relationship at all. Their account access depends on a platform that might disappear, leaving them scrambling to establish new banking relationships while deposits sit inaccessible at a partner bank they’ve never directly contacted.
(Source: NerdWallet – What Happens If a Neobank Fails?)
The Traditional Banking Advantage: Clear Accountability When It Matters
Financial institutions hold a fundamental advantage that technology alone cannot replicate: direct, accountable relationships where business owners know exactly who holds their money and who’s responsible when problems arise.
Single-entity accountability eliminates the confusion that plagues neobank structures. When a business banks with your institution, there’s no question about who holds deposits, who responds to fraud, or who can resolve issues. Business owners have one phone number to call, one entity responsible for solutions, and one relationship manager who understands their account history. This clarity becomes invaluable during crises when businesses need immediate answers and action.
Direct access to decision-makers gives traditional institutions response capabilities that multi-party neobank structures can’t match. When a business faces fraud or compliance holds, your institution’s fraud team can speak directly with the account holder, review specific circumstances, and make decisions without coordinating across multiple entities. A business can call your operations team and get real-time information rather than submitting requests through a technology platform to a third-party bank.
Local presence and personal relationships create trust that digital-only platforms fundamentally cannot provide. Business owners know where your branches are located, have met their relationship managers in person, and can walk into a physical location if they need face-to-face help with serious problems. When a construction company’s account gets frozen due to unusual activity, the owner can sit down with a banker who knows their business rather than filling out online forms sent to anonymous reviewers.
Competing With Neobanks: Offering Digital Tools Without Sacrificing Accountability
The strategic imperative for financial institutions is clear: match the digital capabilities that make neobanks attractive while maintaining the direct accountability that represents your fundamental competitive advantage.
Small businesses don’t actually want to bank with technology platforms. They want the specific features those platforms provide: easy account opening, modern interfaces, integrated invoicing and payment processing, and real-time business insights. When traditional institutions offer these same capabilities while maintaining direct banking relationships, they eliminate the primary reason businesses consider neobanks in the first place.
White-labeled digital platforms allow traditional institutions to offer neobank-equivalent capabilities while maintaining complete brand control and customer relationship ownership. Rather than referring businesses to third-party platforms or building expensive technology in-house, you can deploy proven digital tools under your institution’s brand. Small businesses get the modern features they need, you maintain the direct banking relationship, and accountability remains crystal clear because only one entity is involved.
How Finli Helps Traditional Banks Compete and Win
Finli provides financial institutions with comprehensive digital business management tools that match neobank capabilities while preserving the direct, accountable relationships that traditional banking offers. Our white-labeled platform delivers the features small businesses seek—professional invoicing, integrated payment processing, automated collections, and real-time business insights—all branded as your institution’s services.
Finli operates entirely under your brand and within your digital banking environment. Small businesses access these tools through your institution’s platform, eliminating any confusion about who provides their banking services. Every feature appears as your service, deposits flow directly into accounts at your institution, and you maintain complete ownership of the customer relationship.
Traditional institutions can launch comprehensive digital business tools in under 24 hours without allocating internal IT resources. This speed-to-market advantage allows you to respond immediately to competitive threats from neobanks rather than spending months or years building internal capabilities.
Beyond providing the digital tools that businesses need, Finli gives your institution unprecedented visibility into client operations through real-time data on invoicing patterns, payment collection, and cash flow trends. This operational intelligence enables your relationship managers to provide proactive support and demonstrate genuine understanding of client businesses—capabilities that strengthen the direct banking relationships that define your competitive advantage.
Implementation Strategy: Winning Back Small Business Deposits
Financial institutions ready to compete effectively against neobanks should implement strategies that address both technology capabilities and relationship positioning.
Evaluate your business banking platform honestly from a small business owner’s perspective. How long does account opening actually take? Can businesses send invoices and accept payments through your platform? Identifying gaps helps prioritize which capabilities matter most for competitive positioning.
When marketing enhanced digital services, emphasize that businesses get modern capabilities without sacrificing the clear accountability that direct banking relationships provide. The core message should highlight that businesses can access the digital tools they need from the institution that actually holds their money and will answer their calls when something goes wrong.
Develop outreach campaigns specifically for businesses banking with neobank platforms. Highlight recent neobank outages, compliance issues, or customer service problems that demonstrate accountability risks. Offer streamlined switching processes that migrate businesses to your institution with minimal disruption.
Equip your team to discuss accountability challenges in neobank structures confidently with prospects and clients. Relationship managers should understand how to explain multi-party structures, articulate the risks businesses face, and demonstrate how your institution provides superior solutions without requiring businesses to sacrifice digital convenience.
Takeaways
Neobanks attract small businesses with legitimate digital capabilities that address real operational needs—easy onboarding, modern interfaces, integrated invoicing, and payment processing. However, their multi-party structure creates accountability gaps that become dangerous when businesses face fraud, technical issues, or disputes. The question of who actually holds deposits and who’s responsible for solving problems gets answered with finger-pointing rather than action.
Traditional financial institutions hold a fundamental competitive advantage that technology alone cannot replicate: direct, accountable banking relationships where businesses know exactly who holds their money and who they can reach when problems arise. The strategic imperative isn’t competing on technology sophistication alone but offering the digital capabilities small businesses need while maintaining the transparent accountability that neobank structures cannot provide.
Platforms like Finli enable this competitive response by providing financial institutions with comprehensive, white-labeled digital business tools that match neobank capabilities while preserving direct banking relationships. Small businesses get modern features without sacrificing accountability, deposits flow directly into your institution, and you maintain complete ownership of customer relationships.
The institutions that win in this competitive environment will be those that recognize digital tools as essential competitive requirements rather than optional enhancements, implement solutions that match neobank capabilities without compromising direct accountability, and position their offerings around the fundamental value proposition that businesses deserve both modern technology and clear responsibility when their financial partner manages their money. When small business owners realize that convenience without accountability isn’t actually convenient at all, they’ll choose institutions that offer both—and your institution can be ready with compelling alternatives that neobanks fundamentally cannot match.
