Neobanking in India

Some of the services offered by Neobanks in India are:

1. Account opening
2. Transfer of money from one account to another
3. Loan
4. Services such as budgeting, investing customer's money in investment tools, etc.

Why Neobank?

There are various reasons why neobanking services in India can be a suitable option. We will have a look at some of them below:

1. Customers prefer digital payments over paying through cash and prefer platforms such as Google Pay, PhonePe, Bharat Pay, etc. to conduct financial transactions within minutes.
2. Neobanks avail the services of artificial intelligence (AI) and chatbots so as to analyse patterns followed by customers, credit history, and collate other data which would help lenders offer better services to them.
3. Neobanks are fluid when compared to traditional banks in India. It is easier for a customer to avail banking services through a mobile app rather than visit a branch. This allows the neobanks to sustain themselves and also make profits.

How does a Neobank work?

1. Neobanks follow a completely different business model to make profits. However, like traditional banks, marginal profits are made by neobanks through money inflow and lending.
2. They are completely online. They do not have any physical presence, due to which the customer fees are reduced by half.
3. Neobanks are customer friendly and rely heavily on technology to provide personalised services to their consumers.
4. Data is an important part of the whole business process for neobanks to sustain itself. It collates data and analyses them to understand customer behavior and offer financial services accordingly.

Advantages of Neobanking:

1. Account opening in a hassle-free manner: You can sit at the comfort of your home and open an account online with a neobank, removing the hassle of visiting a bank's branch. You can fill and submit the application form along with the documents online to open a bank savings account in a hassle-free manner.
2. User friendly: Neobanks in India provide platforms that are user friendly. Neobanks offer mobile apps which are responsive and designed to be as customer friendly as possible.
3. International payments done seamlessly: In case of traditional banks, you will have to request them for a debit card which you can use for international transactions. However, in case of neobanks, you get a debit card which you can use to make international transactions on the go with the current exchange rates.
4. Information easily available: You can login to the neobank mobile app to find all the relevant information such as your bank balance, list of transactions completed, etc. online very easily thus saving you time and effort. You can also use the app to manage your finances in a seamless manner.
5. Lower fees: In case of traditional banks, you may have to shell out a fee to avail services such as getting transaction alerts, requesting for account statements, etc. Neobanks completely eliminates these charges, allowing you to save money.
6. Security features are advance: Neobanks ensure that all the transactions made are extremely secure and hence they implement advance security features.

Things you should consider before opting for Neobanking:

1. Ideal for tech savvy customers: People who are not tech savvy may not be comfortable using neobanking services. However, with more customers opting for digital payment and account management gateways, this shouldn't be a problem in the future.
2. No physical presence: Even though customers in India are embracing digital transactions, many still prefer visiting a bank's branch in case of any query which in turn allows both the lender and customer to develop a healthy banking relationship. In case of neobanking, this feature will be completely absent.
3. Less regulated: Neobanks are not considered banks completely. Hence, they are not strongly regulated. This may in turn reduce a customer's trust in them.

Top four neobanks in India:

1. Razorpayx: This is a neobanking platform offered by Razorpay. Customers and businesses can avail the services of this platform. E-commerce websites can use the services of Razorpayx to make instant refunds to bank accounts, UPIs, and credit cards. On opening an account with Razorpay, one can avail banking features such as debit card, cheque book, generating statements, etc.
2. Niyo: Niyo began its operation in 2015 and serves millions of customers from different sectors. One can use Niyo platform to avail services such as payment of bills, transfer of money from one account to another, online shopping, access to ATMs, etc.
3. InstantPay: This platform offers banking services to individuals and businesses alike and offers 24x7 customer support. InstantPay has partnered with lenders such as Axis Bank, Yes Bank, IndusInd Bank to offer neobanking services to its customers.
4. Open: This is a Bangalore based company which started its services in 2017 and helps startups and small businesses open bank accounts and avail credit cards. Businesses can use the services of Niyo for making payments instantly, as well as generate invoices, and send payment links to their customers.

With more businesses integrating neobank-driven apps to their system to manage their financial operations, it's safe to say that neobanks will play an important role in shaping up the future of India's fintech industry.