Neobanks is one of the most popular fintech services among millennials that is disrupting traditional banking

In the recent past, we have witnessed a monumental rise in several online financial services in the form of digital payments, online banking, online investments, insurance solutions, etc. Numbers paint the same picture, digital payments in India have witnessed a sharp growth curve in the country they last years. In 2020, India recorded 48 billion digital transactions, and is set to account for 71.7% of the total payment volume by 2025. This wave of digital financial solutions is not only a result of technological advancements, but is also led by the increase in demand for solutions available at the push of a button. And with the banking ecosystem adapting to consumer demands, disruptive platforms like Neobanks have proven effective.

The tech-savvy generations of Millennials and Gen-Z are preparing to say goodbye to long lines, endless paperwork and slow/inefficient bank clerks. Neobanks is how. Neobanks are financial institutions that operate exclusively online and without physical branch networks. They are financial technology (FinTech) companies that offer money management services digitally or via mobile apps. It uses advanced technology and artificial intelligence (AI) to provide personalized services to customers while minimizing operating costs.

Neobanks is expanding at a rapid pace by leveraging state-of-the-art technologies to attract customers. They require minimal paperwork, are affordable and charge very low transaction fees. Some even offer higher than average interest rates on deposits. Now, compared to traditional banks, neobanks offer a more personal and user-friendly experience. They provide users with sub-accounts for budgeting and organizing their money, automatic categorization of their expenses, monthly overviews, etc. They are set to challenge the status quo by offering banking solutions hitherto the preserve of traditional banks and beyond.

Neobanks presents new benefits such as cost-effective transactions, no withdrawal fees, lower interest rates, convenience and the ability to access banking services anywhere, 24/7 in real time. They are designed to rely heavily on technology with minimal or no human intervention, reducing transaction errors. They succeed in reducing operating costs through fewer employees and the use of AI-powered chatbots or online-only customer services instead of human-staffed call centers.

The key to the success of Neobanks lies in building trust among consumers, adopting the right technology, business strategy and work culture. Neobanks lays the foundations for a data-driven economy. They help bridge the gap between the services offered by traditional banks and the ever-evolving expectations of customers in today’s digital age. While it is still in its early stages in India, it could very well be the new normal going forward.

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