The Rise of Neobanking

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The Rise of Neobanking

Aren’t you tired of waiting endlessly in lines at the bank just for a simple transaction or an answer to a query? Well, with the rise of neo banking, looks like all that is about to change!

What are neo-banks?

Neo-banks are online-only fintech companies that operate exclusively digitally via mobile apps.  They are digital banks that do not have any physical branches and provide their financial services to the customers via apps that are accessible with a click few clicks on their smartphones. They are also referred to as challenger banks because they have disrupted the entire traditional banking model with a tech-driven alternative. The digital nature of neo banks makes account creation and onboarding of customers hassle-free and smooth.

The growing customer base of neo-banks includes people who travel globally, students, tech-savvy millennials and now even a person clueless about finances can easily access their bank accounts while on the go on their mobile phones.

Neo banks have created a paradigm shift in the way Indians are handling their money and banking requirements today. These digital financial institutions employ the latest technology stack to ensure secure banking transactions for their consumers while also managing their finances and investment with a personalised approach — all in a virtual mode. 

You can create an account with a neo-bank in just 10 minutes with minimal paperwork, and you’re sent a virtual debit card for use immediately. Additionally, access to global investment opportunities, easy international student banking and low-cost global spending are a few more key features of a neo bank.

Neo banks offer financial services including:

  • Opening accounts
  • Payment and money transfer
  • Loans
  • Other services, including budgeting, etc

Along with the boost of mobile technology and financial inclusion, there is a massive drift in the financial industry. Indian customers are embracing digital means and moving away from conventional cash transactions. The integration of technology and banking services has changed the banking industry making transactions more customer-oriented.

At the same time, chatbots and AI are making it plausible to understand customer patterns, credit history, and other data to curate realistic data models for recommending financial services based on their lifestyle choices.

Relatable Article: “Payment Gateway Terminologies Entrepreneurs Need to Know” 

What are the Advantages of Neo banking?

Since neo banks are completely digital, they open up a wide window of advantages to a customer. Here are some key advantages:

Hassle-free account creation

Everyone knows and has gone through the pain that is creating an account in a traditional bank. Sure, this process had become more simplified, but still, the rigidity is not completely gone. Creating an account with neo banks removes this tediousness altogether.

As mentioned, neo bank is a completely digital bank, thus eliminating the possibility of a storefront. So, users can create an account without going anywhere. Neo bank functions fully on mobile, making this process comfortable and the account gets ready in a very short amount of time.

Seamless international payments

With traditional banks, there is always this line differentiating how we transact nationally and internationally. We may need to upgrade the current debit/credit card or get altogether a new card to transact internationally.

Neo banks overcome this disadvantage and allow transacting nationally and internationally with current exchange rates.

Relatable Article: IBAN- International Banking Account Number 

User-friendly interface

As mentioned above, neo banking is all about customer experience. This customer-oriented banking facility provides an extremely user-friendly interface that is easy to understand and operate. Neo banking apps are responsive, crisp, and are well designed according to the need of customers.

Service Speed

Neo bank transactions are real-time and immediate. It provides you with a dashboard with an overview of every transaction and up to date balance. It also helps you manage your finances, expenses, and savings and can be customized according to your requirements.

Reduction in Fees

One of the disadvantages of the traditional bank is its high operating cost which often comes in the form of charge for services like account statements, transaction alerts, etc.

Sometimes, customers end up paying more for charges. Neo banking eliminates this. It operates digitally and makes a wide range of services available for customers with just a few clicks.

There is no physical infrastructure, maintenance for physical branches, and ATMs in the case of Neo bank, which saves additional charges. Neo banks offer their basic services free of cost.

Skipping on all the extra service charges, neo banks make themselves a great and promising alternative.

Value-Driven Services

Banking is not only about payment transfer anymore. Neo banks use account information, customer data, patterns, etc. with AI and recommend other financial services for customers as per their needs.

Neo banks prioritise customer profits, recommend services based on demographics, and make it easy for customers to make their own investment decisions.

Enhanced Security Features

Security is and always will be the most concerning factor when it comes to digital transactions. Neo bank application implements 2FA (2-factor authorization), Biometric verification, RBAC (Role-Based Access Control), encryption technology along with other security measures to protect customer data.

The applications are built to ensure compliance with anti-money laundering laws, complete privacy of customers, and prevent malware attacks.

The future of  Neo-banking

With competition mounting among traditional banks, new-age fintech, technology companies and non-banking entrants have started growing sustainably. However, in terms of rules, regulations, and compliance, neo banks handle essential impediments. The essential elements of their success are awareness, cyber security, API integration and advanced products and services.

With the main goal of providing a seamless customer experience, neo banks provide solutions in ways traditional banks cannot. Neo banks are cheaper, faster and they can integrate the entire financial portfolio into one single platform.

API integration is critical when it comes to merchants looking to optimise their financial services as well as payment gateways. But how do you know what kind of API integration is needed? 

With Payomatix, you can revolutionise your payment system functionality by operating all your payment gateways through a user-friendly dashboard with its stellar all-in-one features. Best of all, with a single integrated API you can guarantee customer satisfaction and a rise in conversion rates by eliminating payment failures and wait times as well. We unify India by unifying payments, so if you are a business looking to grow – Payomatix is the way to go.

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