Neo Bank V/S Traditional Bank
Over the years, my experiences with banking have evolved, just like banking, in general, has evolved. Neo banking in India, a fairly new concept is looking to bring changes to this ecosystem.
Neo-banks are completely online-based digital banking platforms. Simply put, they are not present physically. Traditional banking transactions can be time-consuming and labor-intensive for customers. Neo-banks ensure a seamless online experience by incorporating a digital and experiential layer on top of traditional banking. Because they are tech-driven, customers can easily sign up for accounts on their website/App and use their services.
Neo Bank: A Neo bank is an entity that provides banking services to customers. Since Neo banks in India have not yet been issued banking licenses by the Reserve Bank of India, they offer services in collaboration with a licensed bank.
India is currently growing faster than many other nations in terms of internet usage and smartphone penetration. Neo banks have capitalised on this situation by offering technology-driven services. This has attracted many millennials and technologically savvy populations. Neo-banks fill the void between the services provided by conventional banks and the changing expectations of customers in the digital era. They are transforming the fintech industry and may eventually surpass conventional banks.
How do they work?
Neo-banks have an entirely distinct business model compared to conventional banks. Neo-banks do, however, make a tiny profit between deposits and loans, just like traditional banks.
Additionally, because they are entirely online and have no physical location, the customer fees have been significantly lowered. Neo-banks provide personalised services powered by technology to their customers because they are customer-focused.
A neo-bank makes decisions using data as the primary factor. Due to the advanced nature of their platforms, they are better able to monitor and analyse customer activity in the neo-banking system. Instead of just using one or two data points, they group customers based on how they act.
Benefits Of Neo Banks
1. Lower Charges
2. Ease of Use
3. Smoother UI
4. Lesser Restrictions
Should we switch to Neo Banks?
Neobanking is for tech-savvy, experimental people who want to get the jump on a rapidly growing sunrise industry. New-age banking is . It is still in nascent stages but is all set to revolutionise the dusty old financial services industry. It’s not only Neobanks leading this revolution people are embracing digital payments at a large scale; these days, even tender coconut sellers on the roadside have a QR code for payments!
Our recent report explores the rise of digital payments in post-pandemic India. According to the report, online payment transactions more than doubled in 2021 compared to 2020, crossing a billion.
Considering these numbers, we see that neobanks have tons of potential in India. With the government promoting UPI infrastructure and pushing for more businesses to adopt technology, it is only a matter of time before Neo banks become mainstream.
Comparison of Neo Bank with Traditional Banks.
What are some of the best Neobanks in India?
With the rising popularity of Neo banking, there are more and more such new-age banks everyday. The top few are Fi Money, Jupiter, Freo, and RazorpayX.
Way Ahead
Neo-banking and cryptocurrency banking as a service are concepts that will “stay in the game” over the coming years and become the new norm in the fintech sector. Customers are becoming more aware of and knowledgeable about the huge potential of crypto-friendly bank development. As a result, major market players have already been investing in this evolving space and skillfully meeting the needs of modern customers. As an asset and a currency, cryptocurrencies are likely to have a big impact on wealth management, monetary and fiscal policy, and international trade in the coming years.
Happy Reading,
Jai Hind …
