Nowadays, fintech is considered a lucrative business option for emerging entrepreneurs, specifically after the news of Nithin Kamath's salary. People have started to see fintech as the hype. And we doubt they are not wrong.

A phenomenal innovation known as Neobank has taken the banking industry by storm. It may even disrupt the present banking system!

Want to know about this innovation? Let's get started.

What is Neobank?

A bank's presence is known by the number of branches it has. But what if the bank has no physical presence at all? That's where Neobank comes into the picture.

It is a digital bank, which provides services like other banks. But here's a catch. It doesn't have any physical branch! You can consider them as fintech firms that will bring a disruption in the banking sector. After all, why would anyone visit a bank? When they can transact at the click of a button. So, it is only natural that banks are shifting to digital banking. Neobank takes it to the next level. And eliminate the need for a physical bank.

How do they work?

Although they are similar to banks, their business model says a different story altogether. Their profit is not limited to the difference in the lending and borrowing rates. As they are entirely online, they can save costs significantly. Due to this, the service charges are much lower as compared to big banks. But this doesn't end here. The technology used enables them to offer personalized services to their customers.

You should have heard, "Data is the new oil." Well, we don't need to justify the statement. Due to their modern platform, the Neobanks can collect and analyse data effortlessly. It helps them to make informed and data-driven decisions.

Why Neobank is the Future?

What Is Neobank And How Does It Differ From Traditional Banking? – Softensy

The continuous technological advancements have led to a drastic change in the banking industry. Nowadays, customers don't want the hassle of visiting a bank. And they don't want to store cash physically either. That is why online banking became a hero among them.

With the emergence of fintech giants like Paytm, entrepreneurs see immense potential in Neobanks. As it overshadows the traditional banks for the following:

  • Effortless account opening process: Gone are the days when you have to follow a tedious procedure to open your account. Now, you can open a bank account without stepping a foot outside your home. And it takes just a few minutes to open an account.
  • Fewer charges: You would have noticed the debit card charges getting debited from your account. It is painful to see, right? Not anymore. Neobanks offer a free debit card. You can even freeze the card or change its PIN directly from your phone.
  • Instant Transactions: Neobanks helps you to transact in the blink of an eye. Also, the transaction details and the available balance appear immediately. It even contains a record of all your transactions in the app only.
  • User-friendly Interface: Are you one of them who gets frustrated due to technical glitches in net banking? If yes, then Neobanks are your stress relievers. Their mobile app is responsive and well-designed to optimise customer interactions. You also have a chat option to get all your queries solved there and then.
  • International Transactions: What's more, you can also make international payments without any additional charges, and that too at current exchange rates. So, you don't have to face any problem with transactions, as long as you have your debit card.
  • Savings: This feature is the icing on the cake. Besides the above features, Neobanks also helps you to manage your expenses and save money. After all, you can't invest without saving!

Neobank: A Business Companion as well

All the above features relate to the customers. If you are a business owner, don't worry. We've got you covered.

  • Ease of business: Business owners are very busy. From arranging money to marketing the products, they have to see it all. On top of that, they have to ensure that they comply with the laws of the land. That is why they get frustrated when they spend hours on complex and buggy software.

So, they consider Neobanks as the 'right hand' of their business. They simplify and accelerate their financial operations. In simple words, they can easily accept payments, manage their cash flows, and reconcile their transactions.

  • Cost Saving: It is rightly said, "Time is money." By saving time in their financial operations, business owners can prioritize their work. It helps to improve the efficiency of the business, besides saving their valuable time.

Neobanks also provide a unified platform to control and analyse their expenses and money.So, it helps them to manage their expenditure and the cash flows. To them, it acts as a mobile-friendly financial manager.

  • Superior Customer Experience: Imagine yourself to be a customer. Will you prefer interacting with a business that takes a long time to process transactions? Definitely not! Neobanks help the customers in having a superior experience. It not only helps to retain customers but also increases them. As you know, word of mouth is the most effective marketing technique. Besides, it also helps to manage and track money movements for vendors, customers, and employees.
  • Seamless Compliance: India is popularly known as the land of laws. A business has to comply with many laws such that the list is endless. What's more, they can't afford to violate them. But the majority of the small business cannot afford a Company Secretary either.

But this magnificent technology of Neobanks takes into account compliance as well. That is why they help to automate the payroll process entirely. It makes business owners hassle-free.

Summing Up

The majority of banks are providing online banking services. But Neobanks takes a step ahead. Their business model is considered better due to low cost and increased access to data. Due to its competitive advantages, it outweighs traditional banks in many aspects.

Hence, it is no doubt that they will be the future of the present banks.

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