NEP banks are expanding exponentially, leveraging state-of-the-art technologies to win over consumers who expect financial services that are easier, quicker, and more efficient. They provide a complete experience of digital banking through a mobile application. However, Neo banks have been the next big thing in the FinTech industry in recent years and grow drastically in the years to come.
According to Zion Market Research, worldwide, it has been observed that the neo-bank is projected to grow at a compounded annual growth rate of 46.5% between 2019 and 2026, generating about $394 billion by 2026.
But do you know what Neo banking is and what are Neo banks? Let us understand what they truly mean?
What is Neo Bank?
The Neo Bank is a virtual bank that is entirely operated online. These banks are digital instead of being physical. In other words, these banks work without any physical branch. Hence, they provide a digital banking experience through mobile applications. However, account opening with these banks is fully paperless.
Types of Neo Banks:
There are two types of Neo Banks based on banking license. They are as follows:
- One is where the Neo Banks does not have a banking license themselves and instead partners up with a traditional bank to provide their product and services.
- While in the second scenario the Neo Banks obtain a banking license themselves to operate fully on their own.
5 Main Segments of Neo Banks:
- They run on targeted customer segments that are not the concern of legacy banks such as SMEs (Small Medium Enterprises), tech-savvy millennial, and low wage classes
- Lower charges and fast retention of customers
- Built with technologies from cloud services
- Specialized financial systems, such as payment expenditure, receivables, and control of expenses
- Neo banks also focus on forex cards, credit cards, cash processing, cost management, corporate banking services, and loan products globally
Customer Services of Neo Banks V/S Traditional Banks
The customer services of Neo Banks depend on a mix of chatbots and Artificial Intelligence (AI) to provide flexible, automated support; whereas traditional banks rely on customer support in person or by telephone. However, we cannot deny that traditional banks are at the frontline of increasing rivalry from many digital world areas as neo banks offer solutions in ways, with the key objective of providing a smooth customer experience that traditional banks do not due to their ongoing technology and changing that will require a lot of expenditure. On the other hand, neo banks are small, nimble, and are fully digital. They open up with a large window of benefits like they are cheaper, quicker, and can leverage a single network with the entire financial portfolio.
Reasons Why Neo Banks Are In Need
In today’s scenario and in the years to come, neo banks are simultaneously becoming the backbone of banking services and FinTech Businesses due its innovative products and services. Some of the important features which make neo banking a better option are as follows:
- Hassle-free banking experience
- Soothing user interface
- Innovative-first attitude
- Advanced security level
- Supporting clients