Neo-banking: The New Disruptor in India’s Banking Space

Reading Time: 3 minutes
Neo-banking: The New Disruptor in India’s Banking Space

There was a period when people had to knock on a bank’s doors to shift some money from one account to another. Lockers were a privilege, cheque leaves ruled, and the long queues to get something done, common.

Fast forward a couple of years, can you now think of having an account in a bank with no physical branches or one that runs explicitly online?

A hotly discussed topic in the FinTech realm, neo-banks are making strides with regard to how people perceive banking. So much so that numerous private equity (PE) and venture capital (VC) investors are heavily investing in various neo-banking start-ups. To date, Indian neo-banks have raised funding worth over $230 Mn.

Neo-banks have transformed India’s banking landscape, with an aim to provide low-cost extended banking services to the country’s unbanked population.


What’s Driving the Focus on Neo-banking?

Hassle-free On-boarding and Account Creation

Conventional banks require their customers to visit the branch several times to open an account or leverage other financial services. Neo-banks can complete the process on the move. With neo-banks, customers don’t need to visit branches, thus making it easier, faster, and more convenient, particularly amidst the COVID-19 crisis.

Accounting and Automated Reconciliation

Several businesses have to spend hours for payment reconciliation, looking into statements through a fine-toothed comb to tally every transaction and expense. Despite that, the chances of errors are super-high. Neo-banks automate this bookkeeping process with virtual accounts, all of which have an account number that lets neo-banks monitor and identify the source. What is amazing about the process is that it can be automated and linked with their current dashboards and ERPs while being trackable in real-time. 

Advanced Security

To ensure that customers can run their accounts in total privacy,
neo-banks come with several in-built redundancies, such as encryption, biometric verification, and other security measures. Moreover, they offer high-security features, including freezing and locking any time through the app. Besides, neo-banks have introduced leading-edge role-driven access control and two-factor authentication to keep ransomware attacks in their applications at bay. 

24/7 Assistance

Neo-banks offer round-the-clock support to their customers with Robo advisors and chatbots advisors that provide automated assistance to customers as per their transaction history. In addition, AI-powered software lets neo-banks run through customer data, account information, and trends and deliver custom financial services to customers as per their requirements. Further, neo-banks utilize customer earnings, recommend demographic-based programs, and enable customers to make their own investment decisions.

Seamless Payments Gateway

Most conventional banks levy hefty fees for international transactions. But, neo-banks remove the Forex mark-ups, a fee imposed during currency conversions, in overseas payments. Moreover, neo-banks leverage application programming interface (API) banking to ensure effortless and instant online money transfers across payouts – with easy beneficiary additions and without any cooling periods.


Neobanking in India: On The Verge Of Boom

If the first FinTech wave included InsurTechs, online payment, and wealth management, the second wave is led by neo-banks.

In India, neo-banks are picking pace and disrupting conventional banking models – and that too in a relatively short amount of time. With traditional banking heavyweights are grappling to keep up with tech-first operations, neo-banks will be among the biggest trends of 2021, and beyond.

And as India gets more tech-savvy, neo-banks will become a norm in the country and come out as one of the critical areas of innovation. Even though conventional banks are taking more notice of this and investing considerably in technology, startups will have the edge in terms of innovation and digital-first plays.

IIM Kozhikode, in collaboration with WileyNXT, is offering an
Advanced Management Course in FinTech that will help students develop business strategies using disruptive technologies – RPA, AI, and Blockchain – with a deep knowledge of the FinTech environment, business models, and regulations in India’s BFSI space.

Leave a Comment

Your email address will not be published. Required fields are marked *

Featured Blogs

Leave a Comment

Your email address will not be published. Required fields are marked *

Featured Post


Is the CPA...

Imprisoned by doubts about whether to pursue a CPA course...

16 Oct 21

Read more


Product Management vs....

Curious to know how product managers are different from project...

9 Oct 21

Read more


Capability: The Front...

For over two years now, the continuing spread of the...

28 Sep 21

Read more


Accounting for Sustainability:...

Zero-waste efforts, plastic reduction, and carbon-neutral supply chains - these...

18 Sep 21

Read more

Neo-banking: The New Disruptor in India’s Banking Space

Neo-banking: The New...

There was a period when people had to knock on...

16 Sep 21

Read more

Ways to Improve the CEO-CFO Relationship for a Healthy Business: strategic finance, strategic financial management, strategic financial planning

The Very Special...

One of the key drivers of a successful management team...

11 Sep 21

Read more

2021 – The Year of Unicorns and Startups and the “Zomato Effect”

2021 – The...

What happens when India's first indigenous food delivery startup ends...

9 Sep 21

Read more

Prospects of having a CPA as a Business Advisor

Prospects of having...

No matter the industry, all organizations have one thing in...

7 Sep 21

Read more

CFOs: The New-age Leaders

CFOs: The New-age...

Business is evolving. Technology, client expectations, employee roles, and the...

4 Sep 21

Read more

The Role of CFOs – Better Business Partnering Leads to Better Strategy

The Role of...

While strategic financial planning is a massive concern for the...

31 Aug 21

Read more