Ecosystem be it environment or business, every sector in existence has changed due to technology and innovation and so has changed the Banking sector.
Banking sector is the backbone of an economy and for the economy to keep pace with time, technology and innovation it is vital to change. And the latest change that the Indian economy is still adapting to is NeoBanking.
Unlike traditional banks, Neo banks are financial institutions that operate entirely on digital platforms using internet, mobile applications and websites. They do not have any physical existence and office but have a vast virtual presence. The only part where they lack behind traditional banks is the trust and interaction part with the customers as there is still a part of customers who either does not trust or do not want to go for neo banks due to lack of face to face interaction, still not entirely but in one or other way use neo banks.
Neo banking in India has witnessed considerable profitability over the last several years, with the entire fintech ecosystem geared toward simplicity of use and client pleasure. And, if experts are to be believed, neobanks in India have a promising future.
These companies in India do not have their own bank licences and rely on bank partners to provide licenced services. This is because the Reserve Bank of India (RBI) does not yet permit banks to be fully digital. The RBI has stated that banks’ physical presence should be prioritised, and that digital banking service providers should have some physical presence as well.
Top Neobanks in India
It is one of the most used neo banks for online payments for ecommerce.
It helps to automate manual, repetitive financial chores and provide insights into money flow, mostly for business owners and online merchants. Payouts are simplified, credit solutions are available, and current account ledger assistance is available.
Individual bank customers can use it for money transfers, cash withdrawals, savings accounts, and NFC-enabled prepaid cards. It has a dashboard for viewing and monitoring transactions.
Provides zero-balance accounts with features including salary advances and free accidental death insurance. Users can also track, manage, and collect employee benefits with the use of forex cards and tax-saver cards.
Open is a neo bank that provides deposit accounts, money transfers, debit cards for online and offline purchases, expenditure management, and invoicing management to enterprises and startups.
Individuals can use digital banking services like savings accounts, prepaid cards, bill payments, and money transfers. It also enables for interest-bearing savings and money management information.
According to reports, InstantPay is the country’s largest neobanking platform. It provides a comprehensive range of financial services to individuals and businesses of all sizes. The neobank conducts over a million transactions every day, according to data. In India, it is most known for providing accessible banking products, such as
Account activation in seconds, Money tracking in real-time, Customer Support available 24/7, 365 days a year.
Customers can use the InstantPay website or download the InstantPay mobile app. Both platforms are extremely user-friendly and intuitive. Businesses can quickly perform financial transactions by integrating InstantPay’s API with their accounting systems. Businesses can use the API to automatically scale from zero to a million transactions per day.
Payzollo is another neobank that is doing well in India. It’s a digital-only platform created with millennials in mind. Its goal is to create a new type of banking where individuals may discuss, suggest, and comprehend financial details. To put it another way, it serves as an intelligence hub where people and businesses can learn new things, share advice, and help one another flourish.
Chqbook is “India’s first neobank for small company owners,” according to the neobank’s website. Its five pillars – banking, khata, lending, insurance, and rewards – provide a wide range of exclusive and tailored financial services to small-scale Indian enterprises.
Its goal is to empower the disadvantaged, suffering small and local businesses by providing financial aid and protection. Chqbook currently has around 8 lakh customers from all around the country. Services are provided by chqbook includes Current account with daily transaction incentives, Loans with no fees, customised insurances, transaction records are tracked and maintained via digital ledger services. Chqbook’s platform is powered by artificial intelligence and data analytics, allowing small businesses to have better financial control and extend operations beyond easy.
Neobanks for Rural India
Neobanks have the power to take business banking to some other heights due to their enormous offerings. Within no time they are accepted by Small and medium businesses, in urban as well as rural India, as they work with a low- cost model and are customer-focused.Here are the few benefits of Neobanks
- 24×7 business banking-
Unlike traditional banking, with neobanking the worry of banking hours and banking days is over. Irrespective of time, day and date one can use a bank and its service anywhere, anytime using neobanks. Be it services like NEFT, RTGS, UPI, Refunds, payouts, neobanks facilitates these all all round the clock.
- Smart reporting-
Businesses can get an analysis of their work expenses as well as a savings goal that they can tailor according to specific circumstances. Businesses can also browse and download financial data and summaries to aid in decision-making.
- Ease of adding beneficiaries-
Unlike the time taking and complicated process of adding beneficiaries in traditional banking, in neobanks beneficiaries is as easy as adding contact to phone directory. Simply add the contact details and the business is ready to have the transactions
- User-friendly application performing interface-
Neobanks have additional flexibility to implement solutions that streamline financial operations because of powerful and user friendly APIs. APIs’ real-time capabilities have sparked a spike in their use in banking, resulting in improved visibility in financial management.
- Unified platform-
Business gets access to a single platform that allows them to create, control, track, and analyse all types of financial transactions. It also facilitates tools such as Financial CRM to organise and track money transfers to vendors, customers, and staff.
- Seamless Transactions-
Businesses can manage payroll and compliance with ease using, RazorpayX, a neobanking platform, they can automate and execute the complete payroll process with minimal manual interaction. Businesses also don’t have to bother about PT, ESI, PF, or TDS because they’re all handled automatically.
Neobanks, unlike regular banks, have been shown to be cost-effective. Users won’t have to worry about devoting a lot of resources to business banking because most operations are conducted online, resulting in saving a lot of time and money.
Maintenance of business operations is smooth, and ease business banking processes without having to interfere every now and then. Payouts can be queued or scheduled, businesses can upload any number of contacts at once and perform payouts in bulk, users can spot mistakes with intelligent error-code mapping, and so much more!
Neobanks Vs Traditional Banks
While the future of neobanks in India is bright, the prospect of them erasing the traditional banks’ appeal and legitimacy is a long way off. Neobanks lag behind regular banks for due to-
Traditional Indian banks provide a wide range of services and products to customers from various socioeconomic backgrounds. As a result, conventional banks can be found even in India’s most distant areas without access to the internet. The best neobanks in India, on the other hand, provide a limited number of products and services tailored to a certain consumer group.
With a smartphone penetration rate of 54% in India by 2020, the number of non-tech savvy people in the country is enormous. The traditional means of banking from brick-and-mortar institutions recognised by the RBI retain the concept of a bank to them. Furthermore, because neo banking is a relatively new idea in India, even the tech-savvy population’s willingness to transfer to neobanks appears dismal.
With the growing number of neobanks in India, it’s safe to say that the sector has a promising future. Neobanks must, however, develop policies, products, and services that appeal to a broader audience, not just India’s youth, in order to challenge the old banking system.
Future of Neobanks in India
Despite the fact that neo banking is a relatively new idea in India, the future appears bright, with the youth and a growing number of businesses preferring these virtual banks to their traditional equivalents. Although InstaPay and RazorpayX were among the first neobanks to emerge in 2013, it was only in 2018 that this virtual form of banking began to thrive in the Indian Market.
By 2018, 7.7 million Indians preferred net banking, which rose to triple by 2020, thanks to pandemic. And, with e-commerce and internet enterprises continuing to thrive in India, the future of Neo banks looks bright.
Reijiro Networks’ RJ Neo Bank is a neo bank that aims to provide financial inclusion to the last mile of rural India. In rural Bharat, it is establishing a Neo Bank Platform with a network of banking and non-banking financial services kiosks. The RJ Neo Banking platform and the Reijiro Reseller Network are intended to provide comprehensive banking services. It improves the efficacy, efficiency, and quality of all financial procedures, enhancing the corporate banking experience.