How Rise of Neo Banks is Shaping the Fintech Industry

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Neo banking has gained momentum in India lately. In fact, neo banks are capturing the fintech industry on a global level. You may be wondering what the buzz is there about neo banks.

With the digital world achieving new heights, the concept of banking without banks and banks without branches is picking up. Every now and then, there is a new player on the market that wants to simplify financial services, gaining customer attention to a greater extent.

What are neo banks?

Neo banks are online entities without any physical branches, providing an orchestra of services tailored to enhance the banking experience for customers. They are nothing but financial service providers that largely target today’s tech-savvy consumers.

Neo Banks

With digital and mobile-first financial solutions for payments, money transfers, and lending, neo banks are a godsend. A neo bank has no license of its own and relies on accredited banking partners for licensed services.

Neo banks are a boon in disguise for consumers. With chatbots providing uninterrupted customer service round the clock, neo banks are adopting artificial intelligence and machine learning. By being the intermediary, Neo banks can resolve challenges for businesses like

  • Money lending & disbursals
  • Reconciliations
  • Payment collections, and
  • User onboarding

Why neo banks?

Customer experience has become one of the major factors. No wonder the financial landscape is shifting towards it. Most traditional financial institutions have been slowed down by their legacy-based infrastructure. So, naturally, they fail to aid small and medium-sized businesses with financial services such as providing a payment gateway, cash flow analytics, a software invoice and more.

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Some payment gateway providers are taking the initiative to simplify, accelerate and boost every aspect of businesses’ financial operations in the form of neo banks. Whether it is accepting payments from

  • Customers
  • Managing cash flow
  • Reconciling transactions, or flexible payouts, neo bank has made everything possible

Neo banks offer the best of both worlds, trust of conventional banks, protection, security and seamless user experience of fintech. In addition, they are more flexible, advanced and convenient than traditional banks.

They target tech-savvy millennials, low salaried classes, SMEs that are not the target areas of legacy banks. On top of that, they have a lower operational cost as there are no physical branches.

  • Spend management
  • Payments
  • Budget
  • Money lending are some of the noticeable financial services that a neo bank offer.

Fringe benefits of neo banks

Since neo banks are digital, they present an array of advantages to their users. Let us find out the ways neo banks can ease out every aspect of money lending, transferring and payment.

Account creation and digital onboarding

Thanks to the digital nature of neobanks account creation and onboarding have become smooth. Anyone can install the neo bank’s app to create a new account in no time. Moreover, user verification through KYC and compliance checks are now possible by integrating with API banking fintech.

Easy payments

Neo banks leverage API banking to aid in providing effortless and instant money transfers and payments with easy beneficiary additions.

SME money lending

When it comes to money lending, it is quite a task for SMEs. It is hectic for traditional banks to evaluate the business’s credit history to approve or reject them for a loan. Unfortunately, the issue does not seem to resolve anytime soon.

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With the rise of neo banks, it is only fair to say that SMEs will be at ease, thanks to the assistance of the credit underwriting process. They help connect businesses with suitable lenders at the right time. What’s more? With Open Credit Enablement Network, neo banks can deal with loans in bulk, set collection mandates and automate payouts.

Smart reporting

It takes a matter of minutes for transactions through neo banks. The transaction details provide you with an up-to-date account balance. Thus, you can see all the history of transactions, payments on the application only.

In addition, they also provide you with an overview of your expenses. Besides, you can create a saving goal according to your vision. That means managing your finances has become easier with neo digital apps.

How can neo banks help SMEs?

Apart from customers, businesses can also leverage the advantages that neo banks have to offer. For example, if your business needs you to manage the time-consuming process of payments and disbursals, neo banks are probably the best move for you.

You spend hours and manual efforts in collecting payments. Naturally, you blame that multiple buggy software and complex infrastructure. You do not get to view the cash flow and certainly have no insight on payouts. As a result, you fail to make informed business decisions, which may eventually turn out to be a significant business loss.

With neo banking facilities provided by payment gateway service providers, you can simplify your financial operations. Be it

  • Flexible payouts
  • Transactions
  • Cash flow management or accepting payments, everything is super smooth with neo banking
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Surprisingly, your business will benefit from instant payouts with manual effort cutouts. You provide an unmatched customer experience and have access to a dashboard that helps you analyse, track and control money movement. In the long run, you will be able to make an informed choice that will help your business move forward.

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