Although the Indian government pushing for un-banked people with various schemes and services, we are facing the usability issues for various un-banked and under-bank consumers to introduce into the banking system. The biggest challenge the banking system is facing is that they are not able to provide the services to these consumers at affordable pricing. This is where Neo Banks are coming into the picture.
Neo Banks are totally digital banks that use mobile or other digital platforms to perform financial services. Some of the main services these Neo banks can offer includes:
- Accounts
- Payments
- Loans
The main advantage of Neo Banks is that they do not have any branches that result in reducing the overhead. The limited functionality offered by Neo Banks also means that they do not have higher regulations from State or Central Governments or any other regulatory body like National Reverse or Federal Banks etc.
Neo Banks are becoming very popular in millennials as they offer transparency. Unlike traditional banking where the bank needs to comply with various regulations that end up passing the cost to the customer, Neo Bank has limited functionality so they can provide better transparency.
Neo Banks also offer better and faster integration with third parties. This means adding new payment providers, loan providers, etc. becomes fast and easy. This way Neo banks can offer instant loan approvals or add new biller institutions quickly. Platforms such as Open Banking becomes accessible via Neo bank’s digitization portfolio and expertise.
Neo banks are trending now and we believe that they will create a positive impact on the overall financial eco-system.
Kloden Technologies are consulting and services company who provides sales as a service, business development, and implementation services to various industries including banking.