How Neobanks Are Reshaping The Future Of Banking

Neobanks, the next generation of banks are revolutionising the way money is used across the globe. In a fleeting time, neobanks have disrupted a market previously dominated by large public and private banks with a massive network of branches and millions of customers. 

In India, banks and neobanks have struck a collaborative partnership. While banking remains the custodian of money, neobanks are emerging as the essential medium for empowering customers through data and technology. The global neobanking market size is expected to reach $333.4 Bn by 2026, a market growth of 47.1% CAGR over the next three years. 

Neobanks are truly digital because they have no physical presence. Traditional banks, too, provide online services. They only supplement the physical branches that are at the heart of their business. 

The Rise & Rise Of Neobanks In India

Here’s how neobanks are revamping banking in India, one disruption at a time.

Instant Account Opening

Opening a bank account in India can be a time-consuming process that involves multiple visits to the bank, filling out forms, and submitting a range of documents. This has made banking inaccessible to a large number of people, especially those who don’t have the time or resources to go through the process. 

As opposed to traditional banks, neobanks allow you to open an account instantly and online, within minutes. All that’s needed is a smartphone and a few basic details to get started. This has made banking accessible to a wider audience and has helped to bridge the financial inclusion gap in India.

Real-Time Transactions

Traditional banks in India can take hours, if not days, to process transactions. This can be particularly challenging for those who need to make immediate payments or need access to their funds quickly. Neobanks offer real-time transactions that can be done instantly, 24/7.

This has been a game-changer for many small businesses and freelancers who rely on quick access to their funds. Neobanks are disrupting the banking system with their customer-centric digital offerings across retail and Small-to-Medium Enterprise (SMEs) banking, remittances, money transfers, utility payments and personal finances. 

Personalised Financial Management

Managing finances can be an intimidating task, notably for those who are new to banking or have limited financial knowledge. Traditional banks in India have been slow to offer personalised financial management tools that can help customers manage their money more effectively.

Furthermore, neobanks provide a variety of personalised financial management tools designed to assist customers in saving money, tracking their expenses, and managing their finances more effectively. These tools are frequently integrated into the banking app, allowing customers to access them while on the go.

Lower Fees And Charges

Traditional banks in India are known for charging high fees and interest rates, which can be a significant burden for those who are on a tight budget. Neobanks have disrupted the banking industry by offering lower fees and charges, and in some cases, no fees at all.

This has made banking more affordable and accessible to a wider audience, especially those who are looking for a low-cost banking solution. Neo-Banks are also transparent about their fees and charges, making it easier for customers to understand the cost of their banking services.

Innovative Features

Neobanks are known for their trademark features, which are designed to make banking more convenient and accessible. Features ranging from AI-powered chatbots to voice banking to biometric authentication have revolutionised the banking experience for customers.

For example, certain neobanks offer voice banking, which allows customers to perform transactions and access account information using their voice. This is particularly helpful for those who are visually impaired or have limited mobility.

Customer Centric Approach

Unlike traditional banks, neobanks are not limited by the infrastructure and legacy systems that have been in place for decades. This allows them to be more agile and adaptable, and to cater specifically to the needs of different customer segments. By focusing on specific customer segments, neobanks can tailor their services and features to meet the unique needs of those customers.

For instance, millennial-focused neobanks may offer features such as easy mobile account opening, user-friendly interfaces, and personalised financial management tools, which cater to the needs and preferences of younger, tech-savvy customers. 

Rural empowerment neobanks may offer low-cost solutions that are tailored to the specific needs of customers in rural areas who may not have easy access to traditional banking services. SME-focused neo-banks may offer streamlined payment processing and invoicing solutions that can help SMEs manage their finances more efficiently. Neobanks that offer business ease tools can help businesses save time and money.

Way Forward

By applying a design-thinking approach to specific areas of banking, neobanks provide products, services, and processes that make banking easier and more convenient. Consequently, higher adoption rates have resulted from a differentiated experience for the end user. This customer-centric approach is one of the key reasons why neobanks are disrupting traditional banking in India and around the world.