Author: Tom White, Partner at Benzinga
Neobanks once promised a revolution: they were supposed to simplify finance, make it accessible, and attract those excluded by traditional banks. However, over the years, the centralization of neobanks and their reliance on outdated systems have limited their impact.
The evolution continues with Deobank — a decentralized online bank that places neobanks' sleek, mobile-first design on blockchain rails. Paperless KYC, instant global payments, and protected self-custody of funds will be accessible to all, making significant strides in financial inclusion.
From Neobanks to DeFi
When neobanks emerged, it was like a breath of fresh air. Old banks became a thing of the past with their brick-and-mortar branches, cumbersome money transfers, and paperwork. New solutions like Revolut and Chime disrupted the market: they eliminated physical branches and introduced user-friendly apps with real-time analytics.
Digital transformation has been progressing at full speed; however, neobanks have not been able to distance themselves from traditional banking infrastructure, leaving its core issues unresolved.
Globally, 1.4 billion people remain unbanked. In developing countries, approximately 29% of the population lacks a bank account — primarily due to lack of funds, distance to nearby financial institutions, and insufficient documentation. Neobanks rely on frameworks that require sufficient paper identification from people to open accounts — often, they do not have this. Traditional KYC practices create insurmountable barriers for millions.
Banks' AML policies allow accounts to be frozen without prior notice, rendering customers vulnerable to the institutions' arbitrary decisions. Ultimately, outdated systems suffer from interbank slow transactions and poor transparency: users do not know how their funds are stored and managed.
Neobanks have made significant strides in simplifying the banking experience, but their core infrastructure has hindered efficiency and financial inclusion. This is where blockchain comes in to provide an alternative.
Decentralized finance (DeFi), a blockchain-based financial ecosystem, emerged in response to inaccessible centralized solutions. Its vision is straightforward: to create a trustless, inclusive environment where anyone can participate, regardless of their location, citizenship, credit history, or wealth. Anyone with a mobile phone and internet connection can access financial services like lending, borrowing, earning interest, and making instant peer-to-peer transactions.
This vision has garnered the favor of many: the total market capitalization of DeFi grew from $600 million in 2020 to $98 billion in 2025. Broad factors support this trend: last year, the number of active crypto users reached 220 million, while the use of mobile wallets hit an all-time high.
DeFi harnesses the best capabilities of blockchain technology. Users store crypto in their wallets, meaning they have full control over their funds: no central organization can freeze them at will due to minor suspicions. Money transfers are settled in seconds instead of days, and fees drop to just a few cents. Anyone can join any service without permission. For example, to receive crypto from a decentralized lending protocol, no credit check is required: if you have some coins, they serve as collateral.
Despite their advantages, DeFi has primarily gained popularity among a tech-savvy audience. Wallets and platforms often lack intuitive interfaces, making them confusing for the average consumer. Poor integration with traditional finance limits real-world use cases — such as the ability to spend crypto for everyday purposes.
Deobanking returns to the original vision of DeFi: inclusive finance for all and a convenient alternative to restrictive traditional tools.
Deobank: Banking on DeFi rails
Deobank is a term pioneered by the WeFi banking platform, launched by former executives from Tether, Wise, Exflow, and Tradeleaf. It takes the sleek interface of neobanks and combines it with the financial freedom of DeFi. The main goal of Deobank is to simplify DeFi: wrapping decentralized tools in familiar banking functions to facilitate mass adoption.
Among those in need of simplicity are 1.4 billion unbanked individuals. This segment wishes to join the financial system but finds it impossible — banks often require paper identification and stable corporate employment, leaving those without advantages behind. The first type of Deobank ecosystem will gradually implement paperless AI-based KYC with behavior-based identification, opening doors for all those in need of access to financial services.
Another segment of the unbanked population does not trust centralized institutions and prefers to hold their money independently. For those who want full control over their finances, WeFi offers self-custodial accounts. Users store their funds online and have access to private keys, making it impossible to impose withdrawal restrictions or freeze their accounts.
Stablecoins are at the heart of Deobanking. They enable transactions to be conducted almost instantly and with very low fees — something the blockchain infrastructure boasts, as all intermediaries are eliminated. Using stablecoins is straightforward and allows users to manage their funds. They also support many other DeFi functions: customers can deposit, earn interest, borrow funds, stake, and provide liquidity to grow their portfolios. Early adopters and WFI token miners can enjoy exclusive rewards, differentiating them from low participation rates of neobank users.
WeFi's vision for the future encompasses two directions: expanding DeFi opportunities and enhancing the platform's use cases. For the former, WeFi integrates with LayerZero omnichain protocol by connecting to other blockchains. For the latter, it introduces virtual VISA cards, allowing users to pay with their crypto anywhere in the world with a single tap (via Google Pay and Apple Pay); withdrawing cash from ATMs and exchanging cash for stablecoins are also planned.
WeFi's strategic positioning in stablecoins was made as their total market capitalization reached a record $230 million. At the same time, traders are increasingly transitioning from centralized platforms to decentralized exchanges. This indicates a strong demand for self-custodied and borderless money, paving the way for financial services for a new generation.
