2000 Fintech companies in India. In the past few years, there has been a tremendous rise of several online financial services in the form of digital payments, online banking, online investment, insurance solutions, etc. One of the products of the Fintech disruption is Neobanks.
The rise of digital financial solutions is not merely because of technological advances but is also led by the increase in demand for solutions available at the touch of a button. Numbers suggest the same, digital payments in India have witnessed a sharp growth curve in the country in the last few years. In 2020, India recorded
48 billion digital transactions, and is all set to account for 71.7% of the total payments volume by 2025.
With the banking ecosystem aligning itself with consumer demands, disruptive platforms like neobanks are making their presence felt. Digital banking and neo banking look, feel, sometimes work in a similar manner but they are not one and the same. Digital banking is often the subsidiary of an established bank in the banking sector. A neobank, exclusively exists online, which often helps them to streamline their operations in compliance with a dynamic regulatory framework. Here are just some reasons why neobanking will keep coming into conversations and become the new conventional style of banking:
Tangible advantages from a virtual setup
Neobanks are digital-first exclusively, but the convenience that they can provide is tangible. It can save the end users’ money with its low-cost structure alongside no monthly fees and near-zero withdrawal charge. Enriched with a user-intuitive interface, it also offers higher rates on savings and fixed deposits when compared to traditional options. Being the technological marvel that it is, the dynamic environment in which it operates offers seamless real-time updates on payments and balance checking. International payments which are often required with many platforms are done immaculately with the help of neobanks as they provide international payments at interbank rates through various banking and payments partners.
The perfect partnership for a tech-savvy experience
Millennials are from a tech-savvy milieu. Advanced avenues and technologies such as net banking have always been a go-to for them. Traditional banks have realised the importance of online presence with a swelling consumer base within their digital banking registers. The younger generation makes up for 60% of the digital banking user base. The concept of neo banking is very young and it’s anticipated that it will replace traditional banking in the near future. Big players in the banking industry have started to partner with neo banking services as they realize the potential is massive. The global neo banking model is different from what the paradigm is in India. The RBI has not allowed pure-play neobanks in India yet. Many traditional banks in India have collaborated with leading neo banking brands. Such an association has helped their customer acquisition, as well as leveraging the new-age digital services.
The safety conundrum
With advanced technologies like Cloud, neobanks have been at the forefront of managing a large amount of data in a secure way. In the absence of a physical branch, people can often get concerned about the authenticity of the processes of neobanks and their security measures. Hence, to safeguard sensitive and confidential information, neobanks deploy top-notch encryption technology and other state-of-the-art security measures to provide a safer user experience to their customers. Today, neobanks are leveraging advanced security features available in the market. Furthermore, these online banks place measures like biometric verification, 2FA (2-factor authorization), and RBAC (Role-Based Access Control) for the safety of the users.
The neobanks are the perfect way to manage finances for GenZ and millennials who want everything at the touch of a button. Dreading the traditional brick-and-mortar, the youngsters enjoy the advantages of neobanks like the absence of monthly fees, withdrawal costs, ability to make international transactions, etc. The non-existence of a physical branch also gives the added benefit of more interest in savings. Also, there is nothing like the hassle-free process of taking a loan through neobanks. The bouquet of advantages of a neobank also includes 24*7 customer support and advanced chatbots with a robust database that enables answering all client queries, at any time of the day.
The concept of Neobanks is still new to India but it is gaining popularity. Given its numerous advantages and the preference for everything online makes Neobanks the future.
The writer is CEO and Founder of moneyHOP