Neobanks have made a splash in the fintech industry. New players have entered the market in considerable numbers. Their uniqueness is, they simplify financial services to the point where they meet the expectations of today’s digital generation.
So, how is a neobank different from the traditional banks we are used to dealing with? The answer lies in the definition.
A neobank is a digital bank that does not have any branches. Instead of having a physical presence at a set location, neobanking is entirely online. A broad collection of financial service providers, who primarily target tech-savvy customers, comes under the umbrella of neobanking. Basically, a neobank is a fintech firm that provides digital and mobile-first services like payments, debit cards, money transfers, lending, and more.
Neobanks bridge the gap between the services that traditional banks offer and the evolving expectations of new-age customers. They do this by providing personalised experiences, employing data-driven insights and offering value-added services.
While traditional banks continue to struggle with bringing their legacy-based infrastructure into the digital age, neobanks leverage its modern digital platforms modern digital platforms to analyse customer data and make data-driven decisions.
Neobanks can also afford to slash customer fees by a significant amount since they don’t have to bear the expenses of running physical locations.
Among the user experience enhancements that neobanks offer because of their tech-driven nature, is hassle-free account creation.
Since Neobanks don’t have a physical office in neighbourhoods, consumers can create their accounts from their mobile devices from the comfort of their home. And, given their technology-driven KYC process, the account can be ready in just a couple of minutes.
And, how do you avail of a neobank’s service? The same way you order food over Zomato or book an Uber cab. By using an app. Neobanks provide services via its mobile application.
In India, neobanks don’t have a bank license of their own. Instead, they count on bank partners that are regulated to provide bank-licensed services. The likes of Jupiter, Fi, Niyo, and RazorpayX are currently working in partnerships with traditional banks.