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This research paper explores the comparative advantages and challenges of Neo Banks and Traditional Banks based on consumer perception and adoption trends. With the increasing digitalization of financial services, Neo Banks have emerged as a transformative force, offering fully digital banking solutions without physical branches. This study aims to analyze key factors influencing consumer banking preferences, digital banking experiences, and trust in financial institutions.Using survey data, we examine the extent to which individuals prefer Neo Banks over Traditional Banks, considering aspects such as convenience, service efficiency, security, and financial stability. The study highlights critical determinants, including trust, customer satisfaction, interest rates, and service reliability. Additionally, we investigate challenges faced by Neo Banks, such as regulatory concerns, cybersecurity risks, and the lack of physical presence, which impact customer confidence.Our findings indicate a growing interest in Neo Banks, particularly among younger and tech-savvy consumers who prioritize seamless digital transactions and low-cost services. However, despite these advantages, Traditional Banks continue to dominate due to their long-standing reputation, financial stability, and customer trust. Many respondents remain cautious about fully transitioning to Neo Banks, citing concerns over security, financial protection, and the absence of in-person customer service.This study contributes to the existing literature on digital banking by providing empirical insights into consumer behavior and the evolving banking landscape. The results suggest that for Neo Banks to gain widespread adoption, they must enhance security measures, strengthen regulatory compliance, and improve customer support services. Furthermore, Traditional Banks must continue to innovate their digital offerings to remain competitive in an increasingly digital financial ecosystem. Ultimately, the study emphasizes the need for a balanced coexistence of both banking models to cater to diverse consumer needs and preferences.Neo Banks, Traditional Banks, Digital Banking, Consumer Perception, Cybersecurity, Financial Stability.

Copyright © 2025 Kevin Shiju . This is an open access article distributed under the Creative Commons Attribution License.