8/8/2021 Neo Banks: Neo Banks in India are rising but will take some time to disrupt, BFSI

some time to disrupt, BFSI News, ET BFSI

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Globally, the Neo Banks model is picking up. Neo Banks I have read Privacy Policy
and Terms & Conditions
are expected to raise $394 bn by 2026. In India too, Neo and agree to receive
Banks segment is scaling up and they raised $90 mn last newsletters and other
communications on this
year. Currently, 10 Neo Banks are operating in India and email ID.
a few more are in the pipeline to begin their operations.
But, according to BoFA securities, Neo Banks will take 2-3
years to disrupt the market. ETBFSI explores what are the
FINTECH
major challenges for Neo Banks in India... What is the
business model that Neo Banks have adopted; the top
Neo Bank in India; and the partnerships between Neo
Banks and traditional banks?

Amol Dethe ETBFSI September 22, 2020, 13:23 IST Fintech / 1 hr ago
Decrypting Crypto Trends:
        
Are stablecoins really stable?

Fintech / 1 hr
ago

As digital achieves new high, the idea of banking View: e-

RUPI will
without banks and banks without branches is gaining
ensure
customers. Globally, many large banks have started leak-proof
DBT
reducing their branches. In India too, many banks
delivery,
have rationalised their branches and partnered with bridge
divides
new-age Neo Banks for a seamless customer
acquisition and product offering.

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8/8/2021 Neo Banks: Neo Banks in India are rising but will take some time to disrupt, BFSI News, ET BFSI

What
 isETBFSI
Neo Bank?

EXCLUSIVE BANKING INSURANCE NBFC FINTECH  BFSI VIDEOS EDITOR'S V

Neo Banks are 100% digital in nature. They operate

entirely online without any physical branch. Neo Fintech / 1 day ago
Banks offer multiple financial services from money Bitsz, a Made in India Crypto
Exchange Starts Accepting
transfer to opening a bank account. Neo Banks partner
Registrations from August 6
with the traditional banks and help them acquire the
customers in the most seamless manner.

How does Neo Bank work?

Fintech / 2 days ago

Being fully digital, Neo Banks focus on key areas
Top cryptocurrency prices
depending on their partnerships with the banks. today: Bitcoin, Ethereum,
Majority of the Neo Banks operate in the five Uniswap gain up to 6%

segments.

View More 

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RBI says
stress in
retail,
1) Targeted customer segment. Neo banks are
MSME
proficient in easier customer acquisition- customers loans is
not
include tech savvy millennials, SME and low ticket
alarming
salaried class, which are not the focus areas of legacy
banks,
2 days ago
RBI bets
inflation
2) Lower costs, due to lack of physical branches and
won't play
low capital investment,
spoilsport,
stays
bullish on
3) Lower fees/charges and easier customer acquisition, growth

4) ‘Born in the cloud’ tech platform,

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8/8/2021 Neo Banks: Neo Banks in India are rising but will take some time to disrupt, BFSI News, ET BFSI

5) Specialised
 business banking
ETBFSI EXCLUSIVE solutions
BANKING –with a
INSURANCE NBFC FINTECH  BFSI VIDEOS EDITOR'S V

whole array of services including payments,

receivables, budget and spend management. 2 days ago
RBI keeps rates unchanged,
Globally, the Neo Banks also operate in, credit cards, stance accommodative

forex cards and payments, cash flow management and

2 days ago
business banking services, expense management and
Will RBI
loan products.
take away
the punch
bowl from
Neo Banks in India
IPO
There are 10 Neo Banks operating in India currently. financing
party?
and a few more are in the pipeline. Neo Banks in India
have also managed to raise hefty funds. In 2019 alone,
Indian Neo Banks raised more than USD 90 mn. Neo
banks in India are taking a differentiated and less BFSI VIDEOS
confrontational approach in positioning their offering
vis-à-vis traditional banks.
ETBFSI Digital Banking
Dialogue with Charu
Mathur, IndusInd Bank
Here is the chart of top 10 Neo Banks of India:

ETBFSI Digital Banking

Dialogue with Charu Mathur,
IndusInd Bank

ICICI Bank, India’s largest private bank has taken a

12 days ago
lead in the Neo Banks segment and has partnered with
ETBFSI Digital Banking
three Neo Banks, Open, Instant Pay and Yelo.
Dialogue with Topendra
Bhattacharjee, RBL Bank

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8/8/2021 Neo Banks: Neo Banks in India are rising but will take some time to disrupt, BFSI News, ET BFSI
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Challenges for Neo Banks in India

While Neo Banks are scaling up their presence very

aggressively, there are lags. The major lag is the sticky
customers and lack of regulations. Reserve Bank of
India (RBI) has not permitted 100% digital bank model
in India yet. This will keep the destination of Neo
Banks blurry. They don't know whether they will be
allowed to lend on their books and raise deposits on
their credibility as an individual bank. Till then, they
will have no other alternative but to continue
partnering with the traditional banks. On the customer
front, though Neo Banks will magnetise many
millennials and population from the urban areas… the
challenge will remain with the rural market where
there is a vast population. Despite Neo Banks offering
an ease of access and better service, the majority of the
rural population will prefer to visit physical banks and
look for assistance from the personal relationship
managers. But with many more banks in the pipeline
in this segment and regulators initiative in this space

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8/8/2021 Neo Banks: Neo Banks in India are rising but will take some time to disrupt, BFSI News, ET BFSI

may
change
ETBFSIthe picture over
EXCLUSIVE the nextINSURANCE
BANKING 2-3 years. NBFC FINTECH  BFSI VIDEOS EDITOR'S V

Another business challenge that the Neo banks can

face is to find a stream of revenue. Low UPI transfer
charges, interchange fees, and payments may not be
the biggest source of revenue going forward.

Neo Banks Globally

Globally the Neo Bank segment is a decade old. The

global Neo-bank market was worth USD 18.6 billion in
2018 and is expected to accelerate at a compounded
annual growth rate (CAGR) of around 46.5% between
2019 and 2026, generating around $394.6 billion by
2026. The Neo Banking market is big in the UK, with 15
licenses granted since 2005. 9% of the British adults
have a Neo Bank account. Neobanks have nearly
tripled their customer base in the past year, from 7.7
million customers in 2018 to almost 20 million in 2019
― this current growth rate of 150% outpaces the 2%
growth for traditional challenger banks and 1% for
incumbents.

Neo Banks globally are famous for faster customer

acquisition and consumer appeal vs legacy banks. They
offer wider products as globally Neo Banks are allowed
to take deposits and lend on their own books.
However, Profitability and competitive agility remain
pressure points for Neo Banks globally.

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Fintech Neo Banks RBI BofA Securities upi

traditional banks Neo Banking msid digital bank

Cloud computing

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8/8/2021 Neo Banks: Neo Banks in India are rising but will take some time to disrupt, BFSI News, ET BFSI

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Decrypting Crypto Trends: Are

stablecoins really stable?
Regulators across the globe are concerned about the unprecedented growth of
tokenized money, stablecoins in particular, and its potential to disintermediate
incumbent financial institutions , create volatility and financial stability risks.
Sharat Chandra ET CONTRIBUTORS

 Click Here to Read This Story

View: e-RUPI will ensure leak-

proof DBT delivery, bridge
divides
Using financial technologies to revolutionise the life of the common man is an
ambitious project of the PM. He has been encouraging startups to innovate and
come out with solutions using artificial intelligence, data mining and processing.
Creating a startup ecosystem through tax concessions and making investible
funds available, the roadmap of the government is clear.

ET CONTRIBUTORS

 Click Here to Read This Story

Bitsz, a Made in India Crypto

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8/8/2021 Neo Banks: Neo Banks in India are rising but will take some time to disrupt, BFSI News, ET BFSI


Exchange Starts Accepting
ETBFSI EXCLUSIVE BANKING INSURANCE NBFC FINTECH  BFSI VIDEOS EDITOR'S V

Registrations from August 6

Disclaimer: The following press release comes to you under an arrangement with
Newsvoir. PTI takes no editorial responsibility for the same.) Hyderabad, Andhra
Pradesh, India (NewsVoir) The global economy is slowly but inevitably moving
towards digital ecosystem.
PTI

 Click Here to Read This Story

Top cryptocurrency prices today:

Bitcoin, Ethereum, Uniswap gain
up to 6%
The global crypto market cap declined to $1.65 trillion, about 2 per cent higher
compared to the last day. However, the total crypto market volume jumped 22
per cent to $100.09 billion.
Pawan Nahar ETMarkets.com

 Click Here to Read This Story

IIFL launches dedicated fund to

invest in Indian fintech startups
The IIFL fintech fund, sponsored by IIFL Finance and IIFL Securities, is already in
advanced talks to invest in a few financial technology companies, including
Leegality and FinBox.
Saikat Das ET Bureau

 Click Here to Read This Story

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8/8/2021 Neo Banks: Neo Banks in India are rising but will take some time to disrupt, BFSI News, ET BFSI


Zomato launches digital
ETBFSI EXCLUSIVE BANKING INSURANCE NBFC FINTECH  BFSI VIDEOS EDITOR'S V

payments entity
Food delivery giant is adding a different flavour to its business. It has
incorporated Zomato Payments Pvt Ltd. a wholly-owned subsidiary for digital
payments.
ETBFSI

 Click Here to Read This Story

Fintech companies can build on

existing stacks, says Ashish
Chauhan
Chauhan said this while addressing the NSRCEL―the incubation arm of Indian
Institute of Management, Bangalore (IIMB)'s day-long Fintech Festival
Dia Rekhi ET Bureau

 Click Here to Read This Story

With doorstep service, Indiagold

eyes the glitter of gold loan
financiers
By taking gold loans to customers’ homes, Indiagold is looking to change the
traditional lending model. Co-founders of the start-up and former Paytm
executives, Nitin Misra & Deepak Abbot, speak to ETBFSI about how they are
looking to tap and create opportunities around the gold stacked inside almirahs
of Indian households.

ETBFSI

 Click Here to Read This Story

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 ETBFSI EXCLUSIVE BANKING INSURANCE NBFC FINTECH  BFSI VIDEOS EDITOR'S V

Ether falls 1% ahead of major

upgrade to ethereum network
Ether fell about 1% ahead of a technical adjustment to its underlying ethereum
blockchain that would alter the way transactions are processed.

Reuters

 Click Here to Read This Story

Rising challenges for Indian neo-

banks
Not having a physical branch saves neo-banks bucket loads of money while also
making the entire process convenient and cost-effective for the customer.
However, there are several other challenges that neo-banks are facing. ETBFSI
explores.
ETBFSI

 Click Here to Read This Story

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