What is Neobanks?
A Neobank is a digital bank without a physical branch that offers services traditional banks do not. Neobanks offers highly personalized services at a lower price thanks to technologies like artificial intelligence and cloud computing.
Neobanks in India
It was inevitable that this transition would be witnessed in the banking sector owing to the rise of e-commerce and digital-first options in various segments such as payments, insurance, and investments. As the need to visit a branch decreases, digital-first banks appeal to millennial audiences unfamiliar with brick-and-mortar services.
The Indian market offers a large market for digital banking as it has the second largest market of internet subscribers, smartphone users, and social media users on the planet. The public digital infrastructure in India and other regulations and policies have enabled this growth. The technology that enables neo-banks has led them to grow significantly in the last few years.
A growing number of neo-banks are striving to fill the gap of traditional banks in order to meet customers demands. Traditional banks are not able to provide customers with all the services they expect.
SMEs and startups cannot obtain financial services from Indian banks due to legacy infrastructure such as payment gateways, invoicing software, and cash management tools. Banking is logically positioned to merge with other financial institutions owing to this disparity and the growth of mobile technology.
Neobanks have been successful in part because several factors contributed to their success in India, including the adoption of innovative technologies, millennials, and micro, small, and medium enterprises (MSMEs).
Neobanks in India benefits over traditional banks
- The neobanks platform allows users to integrate multiple accounts, apps, and services.
- Despite being more reliable and more trustworthy than neobanks, traditional banks often struggle to adapt to the demands of a tech-savvy generation because of legacy technology.
- As a cheaper alternative to traditional banks, Neobanks provide their customers with financial services.
- A neobank does not have the resources or customer base to overthrow a traditional bank, but it has something more valuable – innovation. By innovating faster and developing partnerships, neobanks can serve their customers more quickly and effectively.
- Technology and artificial intelligence are helping neobanks in India offer personalized services to their customers while reducing operating costs.
- Unlike traditional Indian banks, Neobanks offer innovative products and offer superior customer service to retail customers and small and medium businesses in India.
- Micro and small businesses, underbanked or unbanked customers such as freelancers and gig economy workers benefit from convenience in opening and managing accounts; seamless payments, transfer and remittance solutions, and alternative methods for assessing creditworthiness.
- Whether its minimum balance maintenance, deposits, withdrawals, or other banking services, the low-cost model for neobanks drives their substantial growth potential.
- A multitude of banking and payments partners enable most neobanks to offer international payments at interbank rates.
- Individualized offers and discounts depending on your income, expense, and spending limits. Access to partner and associate bank ATM networks for free.
- Integration of banking into accounting and payment infrastructure using APIs: Most neobanks build easy-to-use APIs.
- On mobile platforms, Neobanks provides accounting, balance sheet, profit and loss statements, and GST-compliant invoicing, tax-payments record keeping and reconciliation services at affordable costs.
Neobanks in India have the following features
Neobanks offer easy-to-use apps that can save your money and can alert you to expenses. For instance, you can set up auto-savings across platform and set up expense alerts.
- As part of neobanking, physical cards are becoming unnecessary, because online applications let you create a virtual card, which can then be used to make purchases using the phone connected to the virtual card.
- Embrace-connected banking, a payment gateway with more than 100 modes; payment with zero cooling-off periods, expense management with prepaid cards, and working capital to grow your business.
- Offering integrated & comprehensive current accounts for managing banking, payments, expenses & working capital for modern businesses.
- Automatically sync the status of paid invoices to Tally after importing Tally invoices directly to your pay-out account.
- Additionally, you can schedule mandatory payments in advance and not worry about overdue invoices. You can track card spending for a month and adjust expenses.
- Gets smart dashboards, insightful insights, and automated categorization of expenses, you can stay on top of your cash flow. You also gain access to transaction invoices, challan, and everything you CA needs.
- Online lenders want predefined criteria as well as easy choices. Neobanks provides rules-based funding approvals. The new functionality allows the latest to apply online for loans in case their eligibility for online lending programs has been predetermined by special algorithms.
- It is a well-known fact that Neobanks also leverage some of the most advanced security features. These measures include biometric verification, dual authentication, role-based access control (RBAC), and top-notch encryption technology – as well as many others that are designed to ensure that banking is safe for customers.
- Through IMPS, RTGS, NEFT or a preferred bank portal, the customer can transfer funds to the bank account or UPI ID that they received. The virtual account is the same as a regular account for payments and the customer isn’t redirected to another website.
Bottom Line:
A new trend in business banking in India is neobanking, which has been disrupting traditional banking systems for the last few years. By becoming digitally connected and introducing a unique banking experience, India stands to benefit from neobanking.
