The customer-centric approach to Neo Bank

For nearly 9 years now, I have been working with the fintech industry and have had the opportunity to work on some of the most complex problem statements in digital lending and payments. I was interviewed for a position at a Neo bank last week, and was asked if I was going to start a Neo Bank from scratch, what would my solution be?

The best place to start would be: If we can branch out and build banking strictly on a customer-centric approach, we can group them basis their financial needs.

1. Payments - I need to pay someone.

2. Credit - I need money

3. Investment - I have money but need to grow it

4. Financial input- Where I am going wrong, suggestions to improve my current financial situation

Therefore, Neo banks should build the first 3 products centred around these needs. This fourth product should function in a coordinated manner fetching data from the top 3 products and providing insights (not advice) on how the customer could best manage their finances.

Here's why personalization will be the best bet

1. Primary Bank Account- at the core, this should be the primary account linked to all other accounts via the AA framework. Consider it to function like CRED, but on steroids. Some features which I feel would be killer

• Using advanced data, it should suggest which payment method and account to be used for this payment.
• How much money is safe to spend after meeting all my commitments. Some foreign players have done amazing work in this area. For instance - just last month, my EMI got bounced for the first time in a couple of years, just because I forgot about one of the SIP I scheduled. In this scenario, my bank is aware of the minimum balance I should hold, since this is a recurring expense that gets deducted on a set date every month.

2. Credit Account - Customer will have different needs basis their requirement depending upon cost, size, time period, and terms. Ideally, Neo bank should be able to consolidate all

As a customer, credit requirements grow with your age at par with your income. A college student might need credit to pay for a budget smartphone, whereas a professional in his mid-career might need credit to buy a home or card

How to build a better lending product? Though this is a very broad topic in itself, However, I will try to answer a few must-have features

• Consolidating all my debt products and suggesting some re-financing options which might help me save more in long term.
• Advising on how to maintain a healthy credit score.
• Restructuring of loan products. (This feature was not there in mostly all lending apps until covid happened)

3. Investment - Customers with excess money would want to ensure that they earn a decent return on their funds. Investments can be classified below categories if we take need as the driver

• I want my money to grow with time basis my risk appetite
• Factoring different instruments basis my end goals. It can be equity, PPF, pension schemes, insurance etc

Any traditional bank would try to push its own products to ensure customer's stickiness and thus increasing its LTV. However, A Neo bank can act as an advisor and present a true image of each of the savings products that are available in the market using the visual and modelling technique so the customer has a clear picture of the future.

While this bit does explain how my money grow, it doesn't answer the question that how am I mitigating basic risk to my life, my assets and how can I be impacted in case of a threat

A very simple example can be making the purchase of insurance products as easy as a toggle on and off button. This can be easily extended to sachet insurance products such as accidental coverage, travel insurance etc. However, your typical insurance products journey will still be better if its an aided one.

How Nubank enables the purchase of insurance products

4. Financial Input - The beauty of this system it works with all the other modules in unison to provide insights, so the customer can make a rational decision about his/her finances. Imagine your app alerting you that you are short of 100 bucks on the day when your EMI is scheduled or an x insurance product is better from Y given the price and other features, there can several other examples which I can quote.

In our country, the beauty of Neo Bank is that the app can be linked on the backend to multiple third-party players and will not promote the product of only one bank or organization. I also recognize that everything I wrote above sounds very simple, but from a technological and regulatory point of view, the architecture behind it can be very complex.

In conclusion, I would like to point out that both banks and fintech need each other to create a framework that is simultaneously free, transparent, affordable and easy to use.