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2000 FinTech companies in India. In recent years, there has been a huge increase in several online financial services in the form of digital payments, online banking, online investing, insurance solutions, etc. One of the products of the Fintech disruption is the neobanks.
The rise of digital financial solutions is not only driven by technological advancements, but is also driven by the increasing demand for solutions available at the push of a button. The numbers suggest the same, digital payments in India have seen a steep growth curve in the country in recent years. In 2020, India recorded
48 billion digital transactions, and is expected to represent 71.7% of the total payment volume by 2025.
As the banking ecosystem aligns with consumer demands, disruptive platforms like neobanks are making their presence felt. Digital banking and neo-banking look, feel, sometimes work similarly, but they are not the same. The digital bank is often the subsidiary of a bank established in the banking industry. A neobank exists exclusively online, which often helps them to rationalize their operations while respecting a dynamic regulatory framework. Here are a few reasons why the neobank will continue to enter the conversations and become the new conventional banking style:
Tangible benefits of a virtual setup
Neobanks are digital only, but the convenience they can offer is tangible. It can save end users money due to its low cost structure with no monthly fees and with almost zero withdrawal fees. Enriched with an intuitive interface for the user, it also offers higher rates on savings and term deposits 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 verification. International payments which are often required with many platforms are carried out flawlessly with the help of neobanks as they provide international payments at interbank rates through various banking and payment partners.
The perfect partnership for a tech-savvy experience
Millennials come from a tech-savvy background. Avenues and advanced technologies such as online banking have always been a must for them. Traditional banks have realized the importance of online presence with a growing consumer base within their digital banking ledgers. The younger generation represents 60% of the digital banking user base. The concept of neo-banking is very young and it is expected that it will replace traditional banking in the near future. The big players in the banking sector have started to associate themselves with neo-banking services because they realize that the potential is enormous. The global neo-banking model is different from what the paradigm is in India. The RBI has not yet licensed pure neobanks in India. Many traditional banks in India have collaborated with major neo-banking brands. Such a partnership has helped their customer acquisition, as well as leveraging the digital services of the new era.
The security conundrum
With advanced technologies such as the Cloud, neobanks have been at the forefront of managing large amounts of data in a secure manner. In the absence of a physical branch, people can often worry about the authenticity of neobanks processes and their security measures. Therefore, to protect sensitive and confidential information, neobanks deploy best-in-class encryption technology and other cutting-edge security measures to provide a more secure user experience for their customers. Today, neobanks are taking advantage of the advanced security features available in the market. In addition, these online banks are implementing measures such as biometric verification, 2FA (2-factor authorization) and RBAC (Role-Based Access Control) for user security.
Conclusion
Neobanks are the perfect way to manage the finances of the GenZ and Millennials who want it all at the push of a button. Fearing the traditional brick and mortar, young people benefit from the advantages of neobanks such as the absence of monthly fees, withdrawal fees, the possibility of carrying out international transactions, etc. The lack of a physical branch also offers the added benefit of more interest. in savings. Plus, there’s nothing quite like the hassle-free process of taking out a loan from neobanks. A neobank’s bundle of benefits also includes 24/7 customer support and advanced chatbots with a robust database that helps answer any customer queries, any time of the day.
The concept of Neobanks is still new in India but it is gaining popularity. Given its many advantages and the preference for everything online, Neobanks are the future.
The writer is CEO and founder of moneyHOP
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