Neo Bank: The Future?

With fintech, the financial sector has adapted to the changing technology environment. Fintech has empowered financial institutions and banks to offer personalized advanced digital services. This increasing arrangement is called Fintech as a service (Faas).

Faas provides a complete stack of payments, commerce, business, and financial services with the capability to coordinate into any of the applications.

On account of Neo Banks, Banking has been redefined as more user-friendly and has become more popular in recent years. Many customers today prefer to involve their fingers in baking rather than using their feet to visit a branch.

What is Neo Bank

Neo Bank is a virtual bank without any physical branches and offers digital-only financial services. A bank that is completely online rather than being physical. As a direct bank, Neobank reaches customers with its mobile-first financial solutions. Neo Bank provides a complete Digital banking experience through mobile applications.

These are fintech firms minimizing the operating costs and offering a customer-friendly interface. Considering the tech-savvy, Neo bank is predicted to surge to approx. 98 million users by 2024.

It has become increasingly popular due to its innovative banking and financial services, attractive fees, savings, and expense monitoring, hassle-free account creation, and personalization.

Neobanks are on the verge of extending measures to address the challenges of financial inclusions and other financial services offered by the traditional bank.? With such driving features, Neobank is gradually becoming a sustainable and lucrative business model in the fintech industry.

Neo bank is an emerging financial tool that has an exponential demand for worldwide wide adoption to provide niche solutions and detangle challenges of traditional banking.

How Does Neo bank Work?

The first thing to keep in mind is that Neo banking is different from digital banking. Neo bank offers solutions in a way that conventional banks do not, with the key objective of providing a smooth customer experience.

From the customer's point of view, Neo bank is probably just an app you use to manage your money and make decisions. For a tech-savvy person, Neobanks accounts are easy and quick to set up. In most cases, you establish a relationship with an online bank and start using services without signing physical documents. Just sign up and download the app.

Neo bank works on the ‘Banking as a service’ model, which fixes the gap between traditional banks and the customer's expectations. Neobanks have modernized platforms that assist them in gathering information from their targeting customers and based on that data they adjust their marketing methodologies for making Clients.

Features of Neobank

1. Banking as a Service- Neobanks aims to simplify the user's financial management process with a digital banking experience. Neo bank also has a third party that cross-sells value-added services to add a better user experience.
2. Scalable platform- Neo banks are scalable as compared to traditional banks. They are referred to primarily as technology, secondarily as banks, and are much more tech-oriented than regular banks. You can perform most of the common functions such as opening an account, sending money, and customer support with just a few tabs. Opening a virtual bank account and managing your finances with neo bank is so quick, and easy to access digital platform.
3. Strategic marketing approach- One of the major points of neo banking is the marketing approach. These days neo banking serves as a great support to new startups. Online banks promote campaigns across digital and social media with a focus on community building and influencer marketing. With increasing customer engagement, neo banks serve as better options than digital banks.

Advantages of Neo Bank-

1. Less cost- Neobank doesn’t bear the brach maintenance cost, and online banks have lower operating and transaction costs. Due to fewer rules and no credit risk, Neobanks can keep the cost low. The basic version is also free for the customers. Most of the services are affordable and do not charge a monthly fee.
2. Convenient-? Neobank allows you to make most of the banking transactions through an app and allows you to access your account anytime, anywhere, and conduct banking easily, quickly, and conveniently. In traditional banking, customer needs to upgrade their card with the bank to an international card to make international payments but Neobank overcome this issue by allowing foreign currency transactions and currency exchange.
3. Quick access- Neo bank allows quick account setup and processing. These tech-savvy organizations allow customers to quickly create accounts and process requests. Neobanks which offer loans can use creative methods to analyze loans and accelerate the process instead of the time-consuming loan applications process.?Neobanks offers fast and convenient international money transfers with secure global payments and transfers at affordable rates.

Disadvantages of Neo Bank

1. No Physical Branch-? Neo banks are fully digital banks, so they don't have any physical branches. A bank branch is better in this regard. So in this case, you have to do every task without direct contact. Although many Neo banks offer reliable customer experience tools some prefer to ask questions directly.
2. Security-? Neo bank is not legally considered a bank, there may not have a well-defined procedure to follow if any problem occurred within an app or service. There are scandals, fraud, and errors that are still undermining. With respect to that, Traditional banks are still much safer due to the strictest regulations.

Are Neo banks a perfect challenge to traditional banks?

The Neo Bank is breaking down the traditional banking system by using technologies and artificial intelligence to provide customers with a variety of personalized services. On other hand, Traditional banks are taking an omnichannel approach i.e both physical and digital banking.

Neo bank is aimed not only at the individual customer but also at small businesses where traditional banks are generally inadequate serviced. They are using the mobile-first model to help individuals by introducing innovative products and services.

Neo banks offer a wide range of features to customers in private and small business categories. Neobanks apply a design thinking approach to specific banking, customizing products, and services to make banking easier and more convenient for users.

Conclusion-? FinTech companies around the world, especially the banking and financial services sector, have more than 15 million customers,? more than half of which are acquired by online banks.? The rapid adoption of online banks has increased the interest of investors, businesses, and venture capitalists around the world.? Neobank was created for the new digital age and for the weaknesses associated with the old financial services market.? Despite the coronavirus pandemic, Several Neobanks have seen rapid growth in their customer base due to the need for more flexible banks.

Cash in favor of contactless card payments to curb the spread of the virus is not recommended, and the concept of a cashless society seems to dominate in the future.

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