Page 48 - Banking Finance May 2021

ARTICLE

histories. Artificial Intelligence (AI) based algorithms make
it possible for Neo banks to tap evolving customer needs and
provide personalized solutions that best fit their needs in an
unobtrusive manner.

Advanced security features: Security is one of the key
areas of concern for customers using digital banking
products.

Data protection regulations require banks and financial
institutions to secure customer information from
unauthorized access.

criteria that lure customers look for today. Traditional banks Fintech apps have multiple redundancies built in to ensure
have high operating costs in terms of workforce salary and that users can operate their accounts in complete privacy.
rent incurred to maintain branches, ATMs and other In addition to two factors authentication, Neo banks have
infrastructure. These costs are passed to customers in the implemented advanced role-based control logic in their apps
form of various charges for services like account statements, to prevent malware attacks. However, they are not
cheque book, transaction, alerts, debit/credit cards, completely immune to third party interference.
processing charge etc.
User-friendly interface: Neo banks provide an excellent
Neo bank operates on a digital model, so operational cost customer experience. Neo bank apps are very crisp, Clean
is less and able to offer high-interest rates without any and user friendly. They are highly responsive and well
monthly charge. Customers can avail a wide range of designed to suit the needs of a customer. The ease of use
services including mutual fund purchase, insurance, bill makes the app popular amongst its customers.
payments, money transfers etc. with their digital Neo bank
account. Neo banks may enter in partnership with a Smart reporting: Transactions made via neo banks are
traditional bank and leverage the latter's extensive physical immediate. The transactions details are populated instantly
infrastructure to deliver services. provide and up to date balance on account any time
anywhere. All transactions and payments appear on app and
Value added services: Traditional banks offer standardized there is no need to go anywhere else for this information.
services for a broad audience, there is not much attention
given to niche customer needs. The segmentation strategy Ease of doing business: In traditional banking, businessman
used by traditional banks is coming under pressure due to spend hours on manual efforts because of complex infra
falling profits and increased regulatory oversight. Neo bank system. Money movement views can also be complex. But
use historical account information and data analytics to neo bank simplifies accelerate business environment. Neo
recommend products to customers. The app interface banks provide hassle-free making and accepting payments,
includes a host of statistics and insights that can be managing cash flow, reconciling transactions.
leveraged by customers to identify products that will best
suit their needs. Neo banks leverage customer profiles based Able to serve to unserved / unbanked: Neo bank provides
on values, personality characteristics and interests to virtual banking, fulfils the needs of underserved market
position products rather than relying only on demographics segments such as unbanked, immigrants, freelancers and
such as age, income levels and education. independent contractors and small business. Neo banking
endured monthly and annual fees due to low account
24*7 customer support: Neo banks provide round the clock balances or lack of direct deposit and lack of proper advice
customer support to their customers through the use of from large banks and their one size fit all models. Neo banks
chatbots and robo advisors that provide automated use the customer data in an innovative way and launch new
recommendations to users based on their transaction products, partnerships and engaging customers- for the

48 | 2021 | MAY | BANKING FINANCE