Introduction
If one wishes to characterise Neo Banks, they can be described as Banks with no physical presence who exclusively communicate with their customer base online. The phrase combines the words artificial intelligence and information technology. A Neo Bank's main goal is to give its clients a flawless online banking experience.
As a result of the loss of confidence in the established banks during the global financial crisis, neo banking business models spread around the globe. In 2015, it reached adulthood in markets like the UK, where it has since grown up. There appear to have been three distinct forms of these "challenger banks" (so-called since they appeared in the wake of the global financial crisis).
The article focuses on neo-banks and online marketplace lenders as two subsectors of the Fintech industry. While online marketplace lenders seek to exclude traditional banks from the credit-processing chain, modern banks offer low-cost deposit services to customers. Both categories of newcomers assert that their aspirations will transform the financial sector by "disrupting" long-established conventional commercial banking business models.
Neobank is still a name that many people in India are unfamiliar with, but this is soon likely to change as Fintech investors and some major entrepreneurs are becoming interested in it. Because of its customer-centric approach to service and the entry of players like NiYO and YONO, India will soon be emerging as a playground for Neo-banks.
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