#NeoBank #neobanking

Neo Bank segment is scaling up



A neobank is a kind of digital bank without any branches. Rather than being physically present at a specific location, neobanking is entirely online. It’s a wide umbrella of financial service providers who beseech today’s tech-savvy customers. Neobanks can be called fintech firms that provide digital and mobile-first financial solutions payments and money transfers, money lending, and more. Neobanks don’t have a bank license of their own but count on bank partners to provide bank licensed services. As digital achieves new high, the idea of banking without banks and banks without branches is gaining customers. Globally, many large banks have started reducing their branches. In India too, many banks have rationalised their branches and partnered with new-age Neo Banks for a seamless customer acquisition and product offering.

Globally, the Neo Banks model is picking up. Neo Banks are expected to raise 394 billion dollars by 2026. In India too, the Neo Banks segment is scaling up and they raised 90 million dollars last year. These Neo Banks also operate in, credit cards, forex cards and payments, cash flow management and business banking services, expense management and loan products. Currently, 10 Neo Banks are operating in India and a few more are in the pipeline to begin their operations. But, according to BoFA securities, Neo Banks will take 2-3 years to disrupt the market. Neo Banks are 100% digital in nature. They operate entirely online without any physical branch. Neo Banks offer multiple financial services from money transfer to opening a bank account. Neo Banks partner with the traditional banks and help them acquire the customers in the most seamless manner. Neo Banks globally are famous for faster customer acquisition and consumer appeal vs legacy banks.


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