Page 26 - Banking Finance March 2023

ARTICLE

CHALLENGES AND

FUTURE OF NEO

BANKING IN INDIAN

BANKING INDUSTRY

- A WAY FORWARD

Introduction As a result of the loss of confidence in the established banks
during the global financial crisis, neo banking business models
Neo Bank has acquired popularity recently as a result of its
spread around the globe. In 2015, it reached adulthood in
introduction into the financial technology market. If one
markets like the UK, where it has since grown up. There
wishes to characterise Neo Banks, they can be described as
appear to have been three distinct forms of these
Banks with no physical presence who exclusively
"challenger banks" (so-called since they appeared in the
communicate with their customer base online. The phrase
wake of the global financial crisis).
combines the words artificial intelligence and information
technology. A Neo Bank's main goal is to give its clients a
The article focuses on neo-banks and online marketplace
flawless online banking experience.
lenders as two subsectors of the Fintech industry. While
online marketplace lenders seek to exclude traditional banks
from the credit-processing chain, modern banks offer low-
About the authors
cost deposit services to customers. Both categories of
newcomers assert that their aspirations will transform the
Dr. S. Amudhan
financial sector by "disrupting" long-established
Assistant Professor, Department of Management,
St Jospeh's University, Bengaluru, conventional commercial banking business models.
Dr. J. Poornima
Neobank is still a name that many people in India are
Assistant Professor, Department of Profession Accounting
& Finance, Kristu Jayanti College (Autonomous), unfamiliar with, but this is soon likely to change as Fintech
Bengaluru investors and some major entrepreneurs are becoming
Dr Pacha. Malyadri interested in it. Because of its customer-centric approach
Former Principal & ICSSR Senior Fellow, to service and the entry of players like NiYO and YONO, India
Center for Economic and Social Studies, Hyderabad will soon be emerging as a playground for Neo-banks.

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