NEO Banks: Future of Banking Sector

Banks have existed for a very long period. In India, banking has a long history reaching back to 1750 BC. We have always relied on banks for all of our financial needs as individuals and organizations.

From checking and savings accounts to credit cards, numerous types of loans, insurance, and investment programs, banks have provided us with everything we needed. However, as fintech companies grow in popularity, businesses' reliance on traditional banks for these services is waning.

These new-age financial service companies are referred to as neobanks. With the use of technology, they are dismantling traditional banks. In what way, specifically?

The phrase "neobank" has recently become somewhat of a buzzword in the fintech sector. In recent years, a slew of neobanking platforms has sprung up, causing a global uproar. Because of the media, the term has gained so much traction that it has become a hot topic.

In the worldwide financial start-up industry, neo-banking is the current buzzword. They are totally online banks that do not have any physical locations. A neo-bank is a partnership between a fintech company or a non-bank and a bank or financial institution that aims to improve client accessibility. They work with established banks to assist them in gaining new clientele in a timely manner. Through this agreement, non-banks hope to provide a variety of financial and value-added services. For this aim, the non-bank relies on the partner bank to provide important regulated services.

As a result, the non-bank function as a service broker. While a non-bank may assist a customer in opening a bank account or applying for a loan, the partner bank or NBFC must provide the real services.

What Neo bank Offering:

Consumers and businesses can use neo-banks to open digital savings or current accounts. The RBI's recent revisions to its KYC requirements will drive neobanks to develop a fully virtual customer onboarding process. Neo-banks also facilitate international payments and money transfers by utilizing existing payment systems. Business neo-banking solutions also offer automated bookkeeping and payment reconciliation.

Small and medium businesses that would normally have to go through extensive procedures to obtain loans from traditional banks might use credit cards to satisfy their working capital needs.

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