Page 29 - Banking Finance March 2023

ARTICLE

Neobank's goods are compiled in a useful mobile app. From Customers prefer to keep their accounts with Neo Bank over
the comfort of their home or any other location, consumers the long term if the transactional fees and services stay the
have access to their money around-the-clock. Typically, these same, according to a recent PGA Labs poll. Customers of
banks don't offer the complete spectrum of financial services. Neobank believe that customer service facilities can be
They often develop a few specialised items. Their services improved by 40% and that cashback and rewards can be
are also considerably more useful and superior to improved by 55%. By FY26, the Neobanking industry is
comparable ones provided by conventional banks. anticipated to grow at a CAGR of 14%, creating a US$ 16.7B
opportunity.
Traditional Bank Vs Neo Bank:
Challenges of Neo
Banking
The technical sector has been
growing quickly and steadily, and
with it have come an increase in the
hazards that come with it. According
to study done by Accenture in 2019,
cybercrime has become a significant
issue related with technology in the
financial sector and banking industry
and has been rising sharply.

2019 Acenture The same analysis
indicates that the cost of cybercrime
against the financial sector has been
rising continuously.

According to the Accenture analysis,
there is risk associated with
innovation and growth. This aspect
must be taken into account when
examining the burgeoning
Neobanks, which are quickly gaining in popularity.
Impact of Neo banking on customer
Services Neo banking has the same constraints any fledgling
endeavour would encounter because it is a new paradigm.
Neo banks have upended the banking sector and had a
a) Lack of Personal Interaction: Being entirely online is
significant impact on how customers are served. With their
considered as a disadvantage in overhead and expense
astounding presence in India and their quick ascent to new
reduction.
heights, they represent a new cliff for the market for neo
banks' accelerated expansion. Together, our distinguished b) Cash payments: Even though Indians engage in online
guests will delve further, learning about the contribution shopping and transactions, the preferred method of
neobanks have made to the banking sector and the potential payment at the payment gateway is cash on delivery in
it offers going forward. the majority of cases. As a result, neobank must address
the needs of making physical cash available and finding
Neobanks fill the gap between the services provided by alternative sources of income rather than through
traditional banks and the changing client expectations in the payment gateways. c) Limited financial products: are
digital era. They are altering the face of fintech and may given by neobanks because they lack a full licence to
eventually supplant conventional banks. operate as a bank and are covered by another

26 | 2023 | MARCH | BANKING FINANCE