How to Check If a Bank or Neobank Is Safe (Takes 5 Minutes)
To check whether a bank or neobank is safe, find the legal entity named in the small print of its website, look that entity up on the regulator's own public register, and confirm two things: that its authorisation is active, and whether it holds a banking licence (your money is a deposit covered by a guarantee scheme) or an e-money or payment licence (your money is safeguarded but not covered). Those three checks take about five minutes and catch the problems that cost people money: unlicensed platforms, clone firms using a real company's name, and apps that look like banks but are not.
This tutorial walks through the checks in order, with two worked examples and a table of the main deposit schemes, each limit taken from the scheme's own website in October 2026.
Why This Matters
The rise of digital banking has made it easy to open accounts with platforms you have never heard of. Many are legitimate and well-regulated. But some operate in regulatory grey areas, and a small number are outright scams disguised as sleek fintech apps. The difference between a safe platform and a risky one is almost always visible in public records — you just need to know where to look.
Step 1 — Find the Legal Entity Name
Scroll to the bottom of the platform's website, or open its terms and conditions. A regulated firm states which company provides the service and who authorises it, for example "authorised by the Prudential Regulation Authority" or "licensed by the Monetary Authority of Singapore". Write down three things: the exact legal name (often different from the brand), the regulator, and any licence or reference number.
What to look for:
The brand and the legal entity are rarely identical, and one app can use different entities in different countries. If a platform names no regulator anywhere on its website or in its terms, treat that as a red flag.
Step 2 — Open the Regulator's Register Yourself
Do not click a "verify our licence" link on the platform's own site; type the register address directly. These are the official registers for the regulators that appear most often on this site:
- UK (FCA and PRA): register.fca.org.uk
- Germany (BaFin): portal.mvp.bafin.de/database/InstInfo
- United States (FDIC): research.fdic.gov/bankfind
- Singapore (MAS): eservices.mas.gov.sg/fid
- Australia (APRA): the "Authorised deposit-taking institutions" register on apra.gov.au
Step 3 — Search by Legal Name or Licence Number
Search the register with the legal name or number from Step 1. A licence number gives the most precise match. If the name returns several similar firms, compare the registered address and website listed in the register with the one you are about to use. Fraudsters copy the names and numbers of real firms; the register entry shows the genuine contact details.
What to look for:
A matching entry shows the legal name, address and the activities the firm is permitted to carry out. If nothing appears, try the parent company's name before you conclude the firm is unregistered, and never rely on a screenshot sent to you by the platform.
Step 4 — Confirm the Status Is Active
The register shows whether the authorisation is current or has been cancelled, suspended or restricted. Only deposit with a firm whose status is currently authorised. Note any restrictions listed: a new bank may be authorised with limits on what it can do while it builds up.
Step 5 — Identify the Licence Type
This is the check that matters most, because it decides what happens to your money if the firm fails.
- Banking licence (credit institution, deposit-taker, ADI): your balance is a deposit and is normally covered by the national deposit guarantee scheme up to its limit.
- E-money licence: your money must be safeguarded, kept separate from the firm's own funds, but it is not covered by a deposit guarantee scheme.
- Payment institution licence: similar to e-money; funds are safeguarded rather than guaranteed.
Wise, for example, states in its own help centre that it does not lend out customer money and instead safeguards it by keeping it separate from its own funds, and that banks, unlike Wise, insure deposits through schemes such as the UK's FSCS. That is a clear, honest description of an e-money model. Our explainer on who actually holds your money at a neobank covers the safeguarding model in more depth.
Step 6 — Check the Scheme Limit and Do the Arithmetic
If the firm holds a banking licence, check what the scheme covers and compare it with what you plan to hold. All limits below were read on the scheme's or regulator's own website on 16 October 2026.
| Country | Scheme | Limit | Basis |
|---|---|---|---|
| United Kingdom | FSCS | GBP 120,000 (since 1 December 2025) | Per eligible person, per authorised firm; banks sharing one licence count as one |
| United States | FDIC | At least USD 250,000 | At each FDIC-insured bank; crypto, stocks and funds are not insured |
| Germany (and the EU standard) | Entschädigungseinrichtung deutscher Banken | EUR 100,000 | Per depositor per bank; each joint holder has their own limit |
| Singapore | SDIC | SGD 100,000 | Per depositor per Scheme member; foreign-currency deposits not covered |
| Australia | Financial Claims Scheme (APRA) | AUD 250,000 | Per account holder at each bank, building society or credit union |
Three worked examples show why the basis column matters:
- UK, over the limit. You hold GBP 150,000 at one UK bank. GBP 120,000 is covered; GBP 150,000 - GBP 120,000 = GBP 30,000 is not. Splitting the money across two banks that hold separate licences would cover all of it.
- Two brands, one licence. You hold GBP 70,000 at each of two brands in the same UK banking group that share one licence. The FSCS treats them as one bank: GBP 140,000 held, GBP 120,000 covered, GBP 20,000 exposed.
- Singapore, foreign currency. You hold SGD 40,000 and the equivalent of SGD 60,000 in US dollars at one Singapore bank. Only the SGD 40,000 is insured, because SDIC does not cover foreign-currency deposits.
The UK scheme also protects temporary high balances, such as house-sale proceeds, of up to GBP 1.4 million for up to six months.
Step 7 — Search for Enforcement and Warnings
Search the company's legal name together with "fine", "enforcement" or "warning", and look on the regulator's website for any consumer warnings it publishes about unauthorised or clone firms. One old, minor fine is not necessarily a concern. A pattern of action, or a warning about a clone using the firm's name, is.
Finally, note anything that would affect access rather than safety: frequent outages, frozen-account complaints or app-only support. A licensed bank can still leave you without access for days, which is why our guide to a backup plan for app-only banks recommends keeping a second account.
Worked Example: Checking a Full Bank
Take N26. Step 1: its General Business Conditions name N26 Bank SE. Steps 2 to 4: a search of BaFin's company database on 16 October 2026 lists N26 Bank SE as a CRR credit institution, meaning a full banking licence. Steps 5 and 6: its terms state deposits are covered by the Entschädigungseinrichtung deutscher Banken up to EUR 100,000 per depositor. Result: a deposit, covered up to EUR 100,000, by the German scheme rather than the scheme of the country you live in. Our N26 review has the plan-by-plan detail.
Summary
Find the legal entity, look it up on the regulator's own register, confirm it is active, identify whether it holds a banking or an e-money licence, check the scheme limit against your balance, and search for enforcement. If any step fails, do not deposit until it passes. For a country-by-country view of regulators, see our global banking regulation guide, and for the extra risks of holding money in another country, how to protect your money while banking overseas.
Frequently Asked Questions
How do I know if a bank is licensed?
Look up its legal name or licence number on the regulator's own public register, typed in directly rather than reached through a link on the bank's site, and check that the status is active.
Is an e-money account as safe as a bank account?
It is protected differently. E-money funds must be safeguarded, separate from the firm's own money, but they are not covered by a deposit guarantee scheme the way a bank deposit is.
How much of my money is protected if a UK bank fails?
Up to GBP 120,000 per eligible person per authorised firm since 1 December 2025, with brands that share one banking licence counted as one firm.
Are foreign-currency deposits protected?
It depends on the scheme. Singapore's SDIC, for example, does not cover foreign-currency deposits at all, so check the scheme's own rules before holding large balances in another currency.
Written by Thomas Lovas Lokoy — researched and drafted with AI assistance from published sources; edited and published by NorwegianSpark SA | Last updated October 2026
Disclaimer: BestAiGlobalBank is an independent comparison site. We may earn commission when you open an account through our links. This does not affect our rankings. Always verify terms directly with the provider before applying.
By Thomas Lovas Lokoy — researched and drafted with AI assistance from published sources; edited and published by NorwegianSpark SA.
