Neo Banks And Next Banking Revolution In India By Dhruv Narang .pptx

Neobanks, also known as challenger banks, are fintech firms that operate exclusively in the digital space. Unlike traditional banks, they do not have physical branches. Neobanks specialize in providing mobile and online banking services through apps, software, and other technologies. Some Benefits:
Convenience: Neobanks offer a user-friendly experience with quick account setup.
Tech-Driven: They leverage technology for efficient services.
Targeted Products: Neobanks specialize in specific financial products.

1. Neobanks and t he n ext b anking r evolution By Dhruv narang

2. NEO Banks Neo banks, also known as digital banks, operate exclusively online without physical branches. They offer financial services like traditional banks but often with lower fees and streamlined processes . Popular examples include RazorpayX, Jupiter etc.

3. Features: Customer centrictity. Mobile first approach. UI-UX design to create lucrative and user-friendly tools. Gamification of customer engagement. Hyper-personalisation. Real-time notification. In-app virtual assistants and chatbots for 24*7 Goal setting for spend and save. Spending and budgeting analytics. Third-party tool integration. Technology and AI to offer personalized financial services to customers.

4. License Virtual banking licenses not yet granted in India by RBI. This means neo banks cannot operate independently and must partner with traditional banks. Traditional banks are still important. The Reserve Bank of India (RBI) prioritizes physical bank presence, so neo banks need to work with existing banks to offer their services.

5. Traditional Vs Digital Vs Neo Banks

6. NEO Banks are focusing on : Gen Z Millennials Young Employees Because Traditional Banks Have: Network, Branches Trust Deep Pocket and Funds “According to a recent study, 49% of millennials and 53% of Gen Z customers use neobanks for their banking needs”

7. Largest Neo Bank in India is: As of year 2022, State Bank of India's digital arm Yono had around 54 million active users, the highest in the neo-banking sector. Instant pay followed with 10 million users.

8. How Neo Banks Earn Money? Interchange Fees: Major income source from merchant fees on card transactions. Loans & Credit Cards :Interest income from lending products. Subscription Fees : Premium accounts with extra features for a monthly fee. Transaction Fees : Charges for specific actions like international transfers or out-of-network ATMs. Partnerships : Referral fees or commissions from collaborations with other providers. Data Monetization : Anonymized customer data insights sold to businesses (ethically). Note: Revenue mix varies between Neo Banks based on their model and regulations.

9. Why Neo Banks are in loss? High Customer Acquisition Costs : Neo-banks rely heavily on digital marketing and partnerships to attract customers, which can be expensive. Coupled with a competitive landscape, these costs eat into their margins. Limited Product Portfolio: Most neo-banks offer basic banking services like savings accounts, debit cards, and payments. Expanding into more profitable segments like loans and investments requires regulatory approvals and infrastructure buildup, further straining their resources. Building Brand Trust : As newcomers, neo-banks need to establish themselves as safe and reliable alternatives to traditional banks. This involves investing in security measures, customer support, and brand awareness campaigns, which can be financially draining. Regulatory Uncertainties : The Indian regulatory landscape for neo-banks is still evolving, with new guidelines and frameworks emerging periodically. This creates uncertainty and hampers their ability to plan and scale their operations.

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