Bank Management Assignment

Riwaz Shrestha
1920623
5 BBA F

Neo Banks:
Neobanks, often known as "challenger banks," are fintech companies that provide
applications, software, and other technologies to simplify mobile and internet banking. These
fintechs often specialize on certain financial products such as checking and savings accounts.
They are also more agile and transparent than their megabank counterparts, despite the fact
that many of them collaborate with such institutions to guarantee their financial products.

Banking is undergoing fast transformation. Products and services delivered and developed on
disruptive technologies are rapidly being placed in the hands of end customers, and bank
behaviors in terms of customer convenience, transparency, price, and customer service are
changing. The business and operational models evolve in tandem with changes in customer
behavior and expectations. There are a myriad of neobanks on the market. The worldwide
neobank market was valued USD 18.6 billion in 2018 and is anticipated to expand at a
CAGR of about 46.5 percent between 2019 and 2026, producing around USD 394.6 billion
by 2026.

Virtual banking licenses are still not given in India, despite the fact that foreign national
banks offer digital-only goods through their Indian subsidiaries. The Reserve Bank of India
(RBI) continues to place a premium on banks' physical presence, and has recently reaffirmed
the need that digital banking service providers maintain some physical presence. Neobanking
can function as an extension of measures taken to address the challenges of financial
inclusion and bundling banking services with other financial services—for example, services
such as opening bank accounts for immigrants, which can be facilitated through new
onboarding procedures that do not rely on traditional identification documentation. Neobanks
might experiment with restricted goals at first.

Although digital and neobanks are gaining traction, most have yet to demonstrate long-term
viability. Nonetheless, they have the potential to be major disruptors in banking and financial
services, and the key to becoming successful organizations would be persuading established
banks to invest in cutting-edge technology and re-engineer procedures to deliver smooth and
quick client experiences. With increased competition from traditional banks, new-age
FinTechs, technology businesses, and non-banking newcomers, it remains to be seen if the
market is deep enough for neobanks to expand sustainably and fairly. The primary drivers of
neobanks' success will be how they manage critical barriers like as regulation and
compliance, data and cyber security, smooth API connectivity, and product and service
expansion.