Page 47 - Banking Finance May 2021

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35 years. Mobile penetration is more than 90 per cent Y Freelancers: Neo banks provide additional support like
within which nearly more than forty-four million people are tax calculations, withholding and employee benefits
using smartphones. More than 80% of Indians have a bank
Y Immigrants: Assist in quick online opening of accounts
account now. It indicates that the youngsters are tech-savvy as a newcomer and having access to savings & credit
and digital banking is their choice. The government is also
focusing to develop digital infrastructure for increasing Y Small businesses: Support needed in managing
mobile connectivity throughout India. Digital payments are receivable and payable in their accounts and expense
embraced at such a large scale. Customers are moving away monitoring
from physical cash and more towards online banking and Y Customer-centric: An education-based bank for
wallets. Day to day Indian consumers transacts digitally and learning how to effectively budget, save and build credit.
their numbers of transactions are increasing day by day. Customized support on access by the power of attorney,
They feel more comfortable to avail online payments custodianship, family trust, wealth preservation,
through the various apps like U Mobile, Google pay, YONO, retirement benefits and insights on healthcare
PhonePe, Paytm etc. Y Travelers: Ability to use a global account and card

without additional fees or challenges.
If we think about numbers and amount, we can see the
potential of neo banks in the country. Neo banks provide the Benefits of Neo banking
flexibility that traditional banks don't. The traditional banks
Time saving: In Traditional banking, customer has to visit a
have its own limitations, they can't reach the far in rural areas,
branch multiple times to open an account, Neo banks fulfill
but Neo banks can reach these areas and provide basic banking this requirement through an app-based option. In terms of
services to them. They can easily sustain themselves and turn the total time you can expect to spend at a branch, there is
out to be profitable. Neo banks are completely digital.
simply no comparison between the two. According to a
report by the RBI, on an average, a customer has to spend
Neo bank gives the consumer a wide variant of choice and
nearly a day to complete account opening formalities in a
better value for money while bringing the benefits of
financial inclusion to all. The evolution of India's banking bank branch. However with Neo banks, if the customer has
sector shifted its focus after the RBI liberalizing bank licenses PAN and Aadhaar, through e-KYC account can be opened
within a minute. For SME customers, Neo banks offer faster
for corporate since 2016.
access to loans by leveraging advanced Artificial
intelligence-based risk assessment tools while fully complying
Functioning of Neo bank with Anti Money Laundering and other lending regulations
Neo banks have a completely different business model, but specified by the RBI.
like traditional banks, neo banks do make marginally
between money inflow and lending. Neo bank hasn't a Lower charges: Low charges are one of the important
physical location, they are completely online, and the
customer fees are slashed by a significant amount. Neo banks
are customer-centric; they provide personalized services to
their customers through technology.

Data-driven decisions make the process of a Neo bank
customer-centric. Their platforms are also much efficient.
It is easier to collect and analyze data as also understand
how their customers behave in the Neo banking ecosystem.
Based on these observations and the customer's action, they
create cohorts of customers. Accordingly, they design their
products rather than sticking on one or two products.

Neo banks focus on customized features for specific target
groups like:

BANKING FINANCE | MAY | 2021 | 47