Neo Banking

What is Neo Banking?

Neo bank is a virtual bank. A bank without any branches. A bank that is entirely online rather than being physical. Neo banking provides complete digital banking experience through mobile applications.

Neo banks offer financial services including

Opening accounts
Payment and money transfer
Loans
Other services, including budgeting, etc

Benefits of Neo Banks

They provide trouble free banking on easier basis
They provide a soothing user interface. Customers don’t have to work through a glitchy netbanking site anymore.
They are highly responsive and well-designed to suit the needs of a customer.
They provide innovation first attitude to their customers and come with an advanced security level.
They have many mechanisms to provide client support.

How does a Neo bank differ from a traditional bank?

Neo Bank

Traditional Bank

Neo banks are fully digital mobile applications (with no branches)
Neo banks have few costs and they are transparent.
Neo banks have either no, partial, or full banking license,
Neo banks make this tedious task automatic and quick.
Neo banks’ customer support relies on a combination of chatbots and AI providing flexible, virtual, online support

Traditional banks have a physical banking service platform and branches.
Traditional banks need additional overhead costs (ongoing costs on rents, electricity, etc) which they collect from customers in the form of services like a bank statement, bank alerts, etc.
Traditional banks a full banking license is a must.
Any approval process (opening account, etc) is lengthy in case of the traditional bank as it is fully manual.
Traditional banks rely on in-person or telephone for customer support.

Advantages

Hassle-free account creation
Seamless international payments
User-friendly interface
Service Speed
Lower Fees
Value-Added Services

Scope in India

In India there are 10 neo banks at present. ICICI took lead and partnered with three of them namely- Free, Instant Pay and Yelo.
Neo Banks have been divided into licensed and non licensed. Non licensed banks tie up with a traditional bank and provide their products while the licensed banks obtain their licenses and work on their own.
Currently in India neo banks are not allowed to hold customer deposits and they are not even being granted virtual license by the RBI since it maintains the stand on the need of physical availability as per its 2014 guidelines.

What’s in it for businesses?

Businesses deal with tedious processes involving payments regularly. Neo banks save manual efforts and time at the same time providing useful business insights and financial statements and analysis.
In short, they are also of great use for businesses.
No more spending hours and hours with some rigid and complex software!
Neobanks are great for businesses, too!
In India, Neo banks are already on the rise and they are disrupting traditional banking models. Becoming the future of banking, their popularity has increased in a relatively short span of time.
Neo banks can play a key role in making India digital and providing customers with detailed, analysis-oriented all in one kind of banking experience.

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