An FBO, short for For Benefit Of, account is a single custodial account at a bank that holds money belonging to many end users at once, owned by the company (often a fintech) for the benefit of those users. The bank sees one pooled balance; who owns what within it lives on the fintech's own ledger. This is a common structure for fintechs that aren't banks themselves: it lets them offer balances and payments while a partner bank actually holds the funds. How customer funds are protected depends on the specific setup and isn't automatic.
In a flow
A neobank app shows each user their own balance, but under the hood those balances are slices of one pooled FBO account at a partner bank; the bank holds the total, and the neobank's ledger records each user's share.
Common misconceptions
Myth: Each user in an FBO account has their own bank account.
Reality: There's typically one pooled account at the bank. Individual user balances are sub-balances on the fintech's ledger, not separate accounts the bank tracks per user.
Myth: Money in an FBO account is automatically insured per end user.
Reality: Whether pass-through deposit insurance reaches each end user depends on the specific account titling, recordkeeping, and whether the partner is an insured bank. It's a structure-dependent question, not a guarantee, and this is educational framing, not advice.
Related terms
See it in a guide
Sources
- Deposit insurance and pass-through coverage concepts ↗ · FDIC. Conditions under which deposit insurance can pass through to underlying owners.
- Correspondent banking and custody structures ↗ · BIS / CPMI. Context on pooled and custodial account structures in payments.
Educational, plain-English explainers. Not legal, compliance, tax, or financial advice. These cover fundamentals, not current fees, limits, or rates (which change). Rails and parties vary by program and country, so verify specifics against primary sources. Last reviewed June 2026.