Channel

Banking

How banks work today, from the ledger in the back office to the app on your phone, and what protects your money along the way.

This channel explains modern banking for complete beginners: what makes a company a bank, how neobanks and banking-as-a-service apps work, how deposit insurance protects you, what core banking systems do and how banks earn money.

Start here: read these first

A person scrolling on a smartphone while holding a takeaway coffee — Photo: “Hands-coffee-smartphone-technology (23698591814)” by www.Pixel.la Free Stock Photos, CC0 1.0 (edited)

Banking

What is a neobank, and is your money safe in one?

Neobanks live on your phone instead of the high street. Some hold a full banking licence; others are apps built on top of somebody else's bank. That difference decides how your money is protected.

7 min read

A massive round bank vault door seen from the front — Photo: “University National Bank building - door to safe deposit room 02” by Photo by Joe Mabel, CC BY-SA 4.0 (edited)

Banking

How does deposit insurance work?

If your bank fails, a government-backed scheme repays your deposits up to a set limit. Knowing that limit, and what does not count as a deposit, is one of the most useful money facts you can learn.

6 min read

A bank branch's hanging sign above a shopping street — Photo: “Bank sign (8129523079) (2)” by psyberartist, CC BY 2.0 (edited)

Banking

Is a fintech app a bank?

A money app can look exactly like a bank and still be something else. The legal status behind it decides whether your balance is an insured deposit or something weaker. Here is how to tell.

6 min read

More in Banking

8 explainers & comparisons

Key terms ↓

BankingExplainer

What is banking as a service, and how does it work?

Many money apps do not hold a banking licence. They plug into a licensed bank through software and contracts. This model is called banking as a service, and the record-keeping in the middle is where the risks hide.

Photo: “HP ProLiant BL685c G7 Blade server” by Seeweb from Itay, CC BY-SA 2.0 (edited)

BankingExplainer

What is a core banking system, and why is it so hard to change?

Behind every banking app sits a much older and more important piece of software: the core. It decides what your balance is. Here is what it does, why many banks still run decades-old cores and what happens when a migration goes wrong.

Photo: “DEC PDP-10 (DECsystem 10) mainframe computer system at Living Computer Museum (strongly edited image)” by Joe Mabel, CC BY-SA 3.0 (edited)

BankingExplainer

How do banks make money?

Your bank account looks free, so where does the bank's profit come from? Mostly from interest, partly from fees, and always by taking risks that it must manage carefully.

Photo: “Interest rate Uganda 2011 okt” by Mobergefinance, CC BY-SA 3.0 (edited)

BankingExplainer

How does the Fed's discount window work?

Minutes released on October 13, 2026 show how the Fed raised its primary credit rate to 4% in September. Here is what the discount window is, who can use it and why it matters for your bank.

Photo: “Federal Reserve Bank, Cleveland, Ohio LCCN2010630382” by Carol M. Highsmith, Public Domain Mark 1.0 (edited)

BankingComparison

Neobank vs traditional bank: what is actually different?

The obvious difference is branches versus an app. The differences that matter more are hidden: the licence behind the brand, how your money is protected and how much depends on a partner company.

Photo: “Old Bank of England interior 2026-03-05 (1)” by The wub, CC BY-SA 4.0 (edited)

Key terms in Banking

Glossary

What does neobank mean?

An app-first bank, or an app that looks like one.

Photo: “Smartphone Use” by Océanos y dados, CC0 1.0 (edited)

Glossary

What is an IBAN?

The long account number that makes cross-border transfers less error-prone.

Photo: “Bank statements, deposit slips and other account information” by Union Colony of Colorado, compiler, Public Domain Mark 1.0 (edited)

Glossary

What is e-money?

The legal form behind many wallets, prepaid cards and payment apps.

Photo: “Kyash Card Silver and App” by Dx6682, CC BY-SA 4.0 (edited)

About this channel

#What this channel covers

Banking used to mean a building on the high street. Today the account you use may come from a licensed bank, an app built on a partner bank, or an e-money firm, and on screen they can look identical. The guides here separate those layers in plain English. We start with the question that matters most for your money: is the company you are dealing with actually a bank? Then we look at how neobanks are licensed, how banking as a service lets non-banks offer accounts, and what goes on inside a bank's core banking system.

#Why the licence behind an app matters

Deposit insurance protects deposits at licensed banks up to a limit, for example $250,000 per depositor, per insured bank, per ownership category in the US⁠^[1] and £120,000 per person per authorised firm in the UK from 1 December 2025⁠^[2]. Money held with a non-bank payment or e-money provider is not covered by the UK scheme if that firm fails; it should be safeguarded instead⁠^[3]. Our guide how deposit insurance works shows how to count your protection, and is a fintech app a bank gives a five-step check.

#How to use these guides

Every number, date and rule on these pages links to a regulator, central bank, statute or standards body, and every worked example is calculated with code. Nothing here is a recommendation to open or avoid any particular bank or app. If you are new, read the three guides in the 'Start here' list in order, then use the glossary entries for neobank, e-money and IBAN whenever a word is unfamiliar. Banking connects to the rest of fintech, so you will also find links to payments and open banking.

Sources for this introduction (3)

Sources

Understanding Deposit Insurance — Federal Deposit Insurance Corporation, 2024 Primary
FSCS welcomes higher deposit protection limit of £120,000 — Financial Services Compensation Scheme, 2025 Primary
Using payment service providers — Financial Conduct Authority, 2026 Primary

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