Should you bank with the so-called neobanks?

Recent years have seen a rise in the popularity of neobanks. In a country where fintech is growing rapidly, Neobank stands out as a key player. The growing popularity of fintech products can be attributed to their convenience, 24/7 service of money transfer, and ability to fill in the gaps left by traditional banks.

So what exactly are neobanks?

Some people use the words neobanks and digital banks interchangeably, but the fact is they aren’t the same. Neobanks are digital banks completely providing their services online whereas digital banks are an extension of traditional banks used to expand their services.

A neobank offers banking services such as payments, debit cards, money transfers, and lending. Their products and services are seamless, and they provide excellent customer service.

Should you be using neobanks?

When you become a neobank user, you can take advantage of many benefits. Neobanks make opening an account hassle-free and very convenient, right from the initial process of opening a bank account. You can do it in the comfort of your home, you don’t have to physically go to a brick-and-mortar bank and fill up forms and do the whole procedure, with neobank it’s just a few clicks and you’re done.

Neobanks are extremely customer-oriented and more transparent as compared to traditional banks. Neobanks provide you with a better view of your financials which can help you plan your investments better.

Some neobanks are AI-driven which helps you manage your money better. AI helps with providing you with your financial history, and credit score based on your payment patterns, neobank chatbots help you solve your queries within seconds, unlike traditional customer service which took hours if not days.

In India, neobanks are emerging in collaboration with traditional banks. Fintechs are using the latest technological advancements and trying to inculcate the average Indian family–who lacks the exposure and opportunity to avail of financial services. Neofam for example is striving to provide a solution to the under-served class. We aim to achieve this using interactive technology and existing networks to strike the right balance for the user. This further enables us to provide all banking products and services to the underprivileged and deprived segment of the society to reduce their unnecessary financial hardships.

Neobank applications provide a variety of services to its user like:

• Easy and trustworthy fund transfer between members of the family.
• Voice search and recognition.
• Petty cash savings.
• Easy bill payments.
• Starting a gold journey by buying and selling gold.

These services are provided to make the banking procedure as convenient as it can be for users which is the main focus of all neo banks.

So undoubtedly neobanks are game-changers introduced by the fintech industry which will change the dynamics of the financial industry across the globe. Also, with the growing tech-savvy population neobanks might just be the revolution the banking system was long due.

But there are certain cons of neobanks as well in comparison to traditional banks. The first and worst drawback is the trust component that comes with traditional banks. Traditional brick-and-mortar banks have existed for a long time and thus, they have a legacy and goodwill which makes customers trust them.

Neobanks are still growing and developing to make a name for themselves and so it’ll take some time for them to gain the same trust from customers as they have for traditional banks.

Also, currently, neobanks are also not fully chartered and licensed by the government to full-fledged work on their own as a separate entity they have to be backed by a traditional bank.

The bottom line is like everything even neobanks have certain cons and limitations but at the end of the day, it is diversifying the banking system and provide customers with a better banking experience.

The author is Chief Executive Officer and Founder of Neofam, a neobanking platform. Views are personal.

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