What is a Neobank?
To understand this concept thoroughly, let us imagine a bank without a building or a banking system without those typically long queues that we have seen for years. All thanks to this idea of neobanking, those queues may be completely gone for good. These banks offer multiple services to their clients and customers under a single roof. These services can be accessed via an application or a website. Their goal is to provide quick solutions with greater convenience to the customers and make banking a hassle-free process. Neobanking makes use of technology and AI to offer customised services to its consumers. Due to their digital structure, they can serve the neglected classes of consumers like the MSMEs and retailers.
Let us talk about neobanking in India.
It is worth noting that RBI does not yet recognise the neobanks in India. Due to the stringent compliance guidelines relating to the banking industry, RBI faces difficulty issuing licenses to these neobanks. This is why most neobanks in India offer their services as either a standalone firm or a fintech collaborated with a traditional bank, or they can only work as the front-end.
Why should we prefer Neobanking?
As consumers, we prefer to get our services at our doorstep or fingertips. This trait of providing convenience and a smooth experience to its customers is the main goal behind neobanking. These banks are customer-centric and do away with all the technological infrastructures of the legacy banks. The UI of the platform is seamless, pleasing to the eyes and remarkably lucid. This engages the user even more and helps perform tasks in a moment.
With advanced technology, neobanks have a quicker turnaround in providing new services or facilities to their users in contrast to the traditional banks. In addition, it is easier to adapt to new technologies with the help of neobanks as they are based digitally and leverage the power of AI and data-driven analysis to pivot consumer preferences.
Neobanks offer superior products and services in comparison to their traditional counterpart. By leveraging technology and using its digital prowess, the neobanks can fill the gap in the finance industry and prove to be a solution chosen by all.
As neobanks do not have any physical form and operate digitally, they can reduce their operating costs dramatically and pass on their users’ benefits by reducing the fees charged to their consumers to a great extent.
Transactions made via neobanks are instantaneous. They use technological platforms and involve the use of AI and machine learning. It allows neobanks to provide the user with transaction records. It will enable them to track their expenses, provide expense reports, and even provide insight about where one can save some money. It helps manage finances better. It can also track one’s expenses, predict spending activity and alert the user if they are going against their allocated budget.
If you are a tech-savvy individual and someone who loves convenience, then neobanking is for you.