Neobanks are digital banks with no physical branches. In the 21st century, the Neo banking experience is the one that looks ideal keeping in mind the progress in technology and cultural shift.
Let us explore more about Neobanks here.
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What aspects are there behind the foundation of Neo banks?
With the beginning of the digital journey of banks, the fintech industry emerged. Fintech is a way of providing digital services to various financial and economical agencies. These services include online & offline payments, banking, insurance and various other stuff.
As customers tend to shift from the traditional banking system, they slowly embraced different sorts of preferences. There has also been a change in the general banking pattern of individuals.
With the change in preferences, there emerged a new trend of digital payments over cash. People changed the notion of trusting some person or organization for money rather they choose comfort and convenience for payments.
The concept of Neobanks emerged at this point in time. Then, what is neo banking? Neobanks are completely different from traditional banks as they do not have any kind of physical branches. The Neobanks were introduced in 2015 and they are continuously leading in the top position in the banking industry.
Neo banks have also coined the name challenger banks or open banking. There are some characteristics that are being followed by neobanks.
Let us have a quick look at them.
- They take care of the convenience of the customers- Neobanks are extremely customer friendly. They vouch to provide a completely digital approach to their customers with their user-friendly interfaces.
- No physical presence- These days, everyone wants to do things with the help of a click sitting in the comfort of their homes. In this regard, they resort to neobanks which do not have a physical branch. All the operations are conducted through the web by means of laptops or mobile phones.
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Why are customers preferring neo banks over traditional banks?
Although we say that do not judge a book by its covers, we generally do the stark opposite while doing any new things. This happens in the case of neo banking too and here neobanks come with a bang. Neo banks have been instrumental in making the process of opening accounts super fast and user-friendly. Customers get amazed with their service from the initial step itself.
Today, the cost of every product is on the rise. So consumers are keen on finding services that have a low amount of costs. Here, in this condition, customers can resort to neo banks as they are very affordable. As there is no cost of labour and cost of branches, neo banks are ideal for consumers who want to get their banking done at low rates.
Everyone appreciates the personal touch of their services. Neobanks are special in this case, as they do offer their customers personalized services and reports. This aspect of personalization is not available in traditional banks. Neobanks get to know the personalized updates from your search history and google analytics.
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What is the distinction between neobanks and traditional banking systems?
You can shift to neo banks after reading about them on various social media platforms but you must stay aware of the different pros and cons of neobanks over traditional banks. So, come let us see the different distinctions between neobanks and traditional banks.
- Neobanks do not possess any banking licence or partner with banks with License whereas the traditional banks come with their banking licences.
- Neobanks are completely dependent on technology. In the case of traditional banks, there are a lot of costs involved to cover the labour and maintenance cost.
- For being a customer of neobanks, you must stay technologically aware. In the cases of traditional banks, illiterate customers with no or fewer technological customers can easily avail of their services.
- The physical banks or traditional banks have almost failed to give a proper digitalized service to the users. In this regard, neobanks guarantees its user a complete digitalized approach to working.
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What are the positive aspects of a neo bank?
Neobanks have a number of positive effects which drive customers to go for them instead of the traditional banking system. Let us see what are those positive impacts of neobanks.
- They can reach a large number of customers- As the mode of working and the entire operation of neo banks are online therefore they can reach a wider number of customers than the traditional banking systems. They are reaching people from all walks and segments of life.
- No operational cost- As there are no physical branches or ATMs of these banks there is no operational cost involved. It also decreases the cost of appointing staff and maintenance of the banks.
- Personalized services- Neobanks take the help of search history, google analytics and other similar kinds of software to make a personalized report for each and every customer.
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What is the major thrust of Neobank’s growth from the FinTech industry?
Neobanks, in recent days, is getting a major push from the FinTech industry that is helping them to trend and set a benchmark in the banking industry. Come, let us see what are those thrusts.
- Digitalization- Recently, there is a trend to do everything digitally, from the comfort of our home, with a click or tap. From ordering food to buying medicine, we are now comfortable doing everything online. So, this was the right time for Neo banks to introduce themselves in the FinTech industry.
- Change in mindset- Earlier people used to believe a person or a financial institution and keep their money with them in a trusted manner. These days, the notion of trust has changed over time and now people are comfortable trusting any and everyone they see online.
Final words
The digital experience of neobanks is one of the finest. Akudo is one such neo banking service which is the ideal one keeping in mind the aspect of Neo banks for teenagers. Not only they focus only on the aspect of banking for teens, but also they are on a mission to educate GenZ’s and millennials with content on money management and financial freedom.
