The term neobank first came into prominence in 2017 when fintech players and digital financial services providers were looking to challenge the hegemony of the traditional banking system. Drawing inspiration from the march of financial services and payments into a digital future, many startups looked to change the face of banking with their bold ideas and design-led approach to finance.
Startups in the UK, US, China, Germany, Argentina, Brazil, Australia and other markets kicked off the neobanking wave, which is all set to crash on India this year.
While India already has neobanking startups and companies, things are still at an early stage from the regulatory point of view, the bandwagon of players is still emerging from the depths of the market. And with customer needs evolving, neobanking models are also being tailored to suit the needs of the pockets of markets where they operate. The list includes Open, Namaste Credit, NiYO, SBI YONO, Kotak 811, Hylo, PayZello, InstaDApp, 0.5Bn FinHealth (YeLo), Forex-Kart, Walrus, Neo-Bank, Fin.in, RazorPay X among others.
Nilesh Agarwal, CEO and cofounder of 0.5Bn FinHealth’s YeLo, prefers to offer a simple definition for neobanks. He says a neobank is a digital-only mobile-first banking experience having deep integration with traditional banks. That last bit is very crucial in the Indian context as we will see.