NeoBanks Transforming Fintech Landscape

Article by Mr. Suman Gandham, Founder & CEO, Finin

In recent years, we’ve seen a prominent shift in the finance industry. One of the driving forces of this change was the surging internet and mobile phone usage among the users. This led to increased awareness and adaptation of fintech services. It started with online payments, to financial lending and end-to-end cash flow management.

The past decade alone saw the advent of fintech that took the country by storm. Today, there are over 2000 fintech players in the market; with digital payments becoming the trend with users. This is one of the reasons why customers are making a shift from physical banks and cash towards online banking and wallets. Making online payments through Google Pay, PayTM, PhonePe and other payment apps, have become a popular hit, now more than ever.

Looking at this, we can see the potential neobanks have in India. Neobanks have the opportunity to provide the fluidity that traditional banks do not. An amalgamation of several factors has influenced customers to make this shift.

Faster Onboarding and account opening

For opening a bank account, the process usually involves going to the bank with original documents like proof of address, identification documents, employment contracts, etc., meet with the bank associate who then sends it for a review process. This can range from anywhere between a day to a week or two.

Neobanks, on the other hand, have been able to build new digital processes that cut down on wait times and friction. They often leverage technology such as AI and facial recognition to streamline and automate the account opening process, all without compromising on stringent compliance and regulatory requirements.

Deeper Customer Understanding

Traditional segmentation i.e. based on demographic factors such as age, financial parameters, profession, income, and geographical location is no longer adequate for comprehensive customer understanding.

The Indian Fintech landscape saw an upheaval, especially in the past 5 years. Events such as demonetization pushed India from a cash-dependent country towards digital payments. Apps such as PayTM, Mobikwik and subsequently, Google Pay and PhonePe have now become the norm.

This further gave neobanks the opportunity to delve deeper into the behaviours, attitudes, life stages, lifestyle factors as well as tech-savviness of users to get a nuanced understanding to build actionable strategies.

Personalised User Experiences

User experiences that help customers to get what they want at the time they want it are the main drivers for delightful experiences. Some of these experiences can be quick and efficient transaction processing to easy accessibility with relevant information, prompt customer support and personalised services.

According to a survey by EY, nearly two-thirds of customers perceive little or no differentiation of products and services across the banking sector, a situation that nontraditional players identified through the promise of the better customer experience.

This created the pathway for neobanks to look at challenges with a focused customer-centric lens. The value for customers here is that neobanks take that extra mile to understand the specific pain points and create intuitive solutions to address them.

Lower fees due to reduced overhead costs

PWC revealed in a study that 61% of customers still feel that physical branches are important, however, with more than 1 branch for every 5,000 residents, savings on these overhead costs are typically passed onto customers in the form of lower fees or interest charges.

Here’s where neobanks differ completely. Opening neobank accounts are typically free to open and use. Moreover, neobanks are not bound by a physical location and are 100% online — which drastically cuts down the hidden customer fees levied by the traditional banking systems.

Neobanks are changing the banking experience

While there were many players in the fintech space trying to address each of these problems individually, there was no particular solution that catered to all these issues together. Moreover, with the fintech ecosystem in the last few years, all applications have been pushing users to spend easily or lend money pushing them into a credit crunch.

These factors facilitated the birth of Finin, a consumer-centric neobank which helps users to Manage, Save and Invest their money in a simpler and smarter way, making them financially independent. Finin’s main objective is to help users save money, build emergency funds and break the cycle of living from paycheck to paycheck or EMI to EMI. We want to make their money work for them instead of them working for it.

Dealing with the current lockdown

Finin aims to provide services that would help users to achieve their financial goals despite the extenuating circumstances that the world is currently experiencing. One of the major impacts that people have faced during lockdowns is the complete change in their spending behaviours. Here are some of the features Finin is offering during the time of crisis.

Automated customer service - One of the major complaints that people have faced during a lockdown is limited to no response to customer service. It becomes extremely difficult for traditional banks that rely on human help to function with the same capacity and productivity as before, making it difficult for customers to reach out to the banks. Powered by AI and Machine learning, Finin aims to empower the customer to seek out quick and reliable options which will be personalised based on their spending and saving patterns.