What is a Neobank? Everything You Should Know

Title : What is a Neobank? Everything You Should Know To eliminate monolithic brick-and-mortars, malfunctioned ATMs, huge banking paperwork in traditional banks, a new solution steps in digital banking. They are called neobanks. Neobanks breaks many stereotypes of traditional banking by delivering a highly engaging banking experience and guaranteeing a fantastic customer experience.

Let’s explore everything you need to know about neobanks and how they are stepping progressively in the fintech industry.

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What is Neobanks?

Neobanks are 100% digital banks with branchless banking facilities and face-to-face interactions like traditional banks do. They provide their services through internet and mobile applications only and hence operate through digital channels only.

Neobanks are bridging the gap between traditional banks and digital banking solutions to improve customer’s experience with banking services. Without any physical presence, neobanks do not have their own license rather they are bank partners to provide their banking services.

They focus mainly on tech-savvy customers who don’t like to stand in long queues and are involved with lots of paperwork. Traditional banks mainly operate on old IT infrastructure that is less convenient and slow whereas neobanks are harnessing new technologies and reshaping the banking solutions.

Neobanks provide various services including money lending, managing investing and saving accounts, credit cards and many more like other traditional banks do but in a more convenient way. The projected market size for neo banks as per Statista is $35 Billion in 2020 to $722.6 Billion with a CAGR of 47.7%.

The demand for neobank platforms is expected to rise more with the penetration of internet and smartphones. Neobanks are becoming popular among small and medium size enterprises(SMEs), and retailers as they provide affordable money transfer services.

How does a neobank work?

Neobanks have also known challenger banks and they receive licenses from regulatory authorities for their banking operations. We can say, neobanks are licensed digital banks that work on a unique Bank-as-a-Service business model, operate digitally without any physical branches. They don’t have bank licenses of their own but they are relied upon bank partners to offer banking services.

Banking as a service for neobanks and fintech companies lets you allow quickly integrate banking services from leading banks to your solutions. Neobank enables your customers to open bank accounts, accept deposits, make payments, check balances, earn interest, and link accounts.

Neobanks are quite secure as they are accomplished with biometric authentication and advanced with the use of artificial intelligence(AI).

Benefits of neobanks over traditional banks Digital banking is experiencing new shifts and is widely adopted by its customers. Users are more oriented towards digital solutions and neobanks are best suited for this tech-savvy generation.

Mobile banking solutions take the first seat and leave physical wallets, cash, and banks behind. Let's look into some of the advantages of neobanks over things traditional banks do. ● Neobanks is highly customer-centric and provides personalized and customized services to its users in more innovative ways. Neobanks prioritize their customers needs and expectations and structure their services and product as per customer’s preferences. This will help them to strengthen their foothold in the banking sector.

● Unlike traditional banks, neobanks are highly convenient. There are almost all banking solutions one-tap away from their customers. They provide convenience from opening a bank account and operating it effectively in a more interactive, hassle-free, and innovative way which helps to build a better customer’s experience. ● Neobanks is technologically updated and provides better infrastructure. ● Neobanks are 100% digital and operate in digital environments leveraging the elevation of the technology ecosystem. ● Neobanks charges fewer costs per service. Also, they provide a bit higher interest rates than traditional banks. ● New features and innovative solutions integrated into neobanks makes it more flexible and acceptable.

Overall, neobanks perform better than traditional and old banking solutions in many ways. Consumers are more comfortable with innovative solutions and prefer neobanks with their streamlined banking processing. But how it may help you in your business can be discussed in our next section.

How do neobanks help you in businesses?

Neobanks simplifies your banking facilities in more digital and innovative ways. It bridges the gap between old traditional methods and technologically advanced solutions in the fintech sector. Following are the ways by which Neo Banks and FinTech Companies can provide intelligent solutions to your business: Sample Image

Seamless Account Opening As it relies on digital banking solutions, the account opening in neobanks is quite frictionless. With some taps on smartphones and uploading important documents for instant KYC, your customers can easily open their accounts in a few minutes. Neither do they have to get involved in lots of paperwork like in physical banks nor have to wait for their turns by standing in long queues.

Account activation and onboarding of your customers are quick and highly convenient.

Hence, neobank makes the account opening process very smooth and seamless.

Better Payment services Neobanks enables your customers to use multiple payment gateways, IMPS/NEFT/RTGS, links, and API-based payment gateways to do the business operations in smoother ways.

These payment services provide quick processing time and better money transfer facilities.

Easy Loan Facilities and greater interest rates Neobanks offer both loans and deposit accounts sometimes through their partner banks and credit unions. Since neo banks are digital, their cost of operation is quite low in comparison to traditional and online banks. Thus, neobanks can provide loans and

interest to their customers at more affordable and comparative interest rates. Unlike traditional banks, less paperwork is required and hence loan processing time is reduced.

Better value-added services and infrastructure Neobanking provides additional services that add more value to your banking experience. As neobanks work on virtual platforms they provide many supplements to their banking services such as budgeting and planning, eCommerce, cash management, tax filing, automated accounting services, and many more to provide an excellent customer experience.

Neobanks works on better infrastructure and provides your customers with an intuitive dashboard and analysis platform to enhance their decision-making capabilities. They also support your customers with better expense management and personal profile management services.

Conclusion Neobanks are digital transformation reshaping the traditional old methods and faring well with financial inclusions. It is the best time for startup neo banking to seize the new opportunities as they are agile, innovative, and digital competitors of traditional banking methods. Consumers of traditional banks are now stepping forward for neobanks as they don’t want to deal with the tedious and long process of money transfers and payment solutions.

Customers are looking for more technical replacements in banking sectors and neobanks are the top-notch solution for their better user experience. Neobanks have competitive pricing, are simple and easy to use, transparent to their competition, and above all profitable for customers.