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The Answer? Neo banks.

Written by: Keshav Sultania

Team: Jill Morakhiya (Research) and Aryan Tripathi (Editor)

The disruptor is here! We might have murmurs of the new concept prevailing in the finance industry, Neo Banks. Before beginning with what exactly Neo Banks are, let me tell you something. Start-ups succeed when they solve problems for their consumers. Problems that consumers didn’t know existed or needed solving. Technological innovation has been the answer to a plethora of problems. Especially now that the world is become more and more tech savvy, people need to, and are adapting.

Neo Banks are a banking system that sits on 100% digital and mobile performance, which means no physical branches. This is not an alternative but an addition to the traditional banking system, which is a bit cumbersome. A part of being a disruptor is that they have helped businesses grow and helped in personal finance. In the year 2018, the consumers had saved USD 5 billion by going through this channel.

The convenience of opening and operating accounts, seamless payments, transfers, and remittance solutions and alternate methods of gaining creditworthiness are some features that attract small scale workers, unbanked customers such as freelancers and workers in the gig economy. All the above features are not accessible to people, to which the Neo Banks offer financial services and products which were rarely available at a heavy fee and stringent agreement. Irrespective of whether you are a B2B, B2C, G2C, B2B2C, C2C, G2C, these banks have a solution for you.

Neo Banks are focused on new market clients who have never been served by the traditional banks, by the focus of age and geographical location, as developing countries are characterized by the low level of banking services penetration.

The traditional banking system can never go out of fashion, so to accustom with the dynamic environment, these banks have associated themselves or have tied up with Neo Banks to retain and increase its customer base. To remain as profitable entities, traditional banks should invest in the new age technology and re-engineer their processes for a smooth customer experience.

With the competition mounting between the old and the new age traditions, technology, and non-banking entrants, it is yet to be seen if the Neo Banks are penetrative enough. So far, the results have been great but still the factors whether the geeky millennials market lets it grow sustainably and equitably. What I think may lead to their success would be a vital impediment in their regulations, cybersecurity, and verity products provided.


With all kinds of ideas coming in, people are being quiet preservative to associate and trust the system, because money is something that no one wants to risk. It has become difficult to predict whether the millennials being tech-savvy customers remain with digital banks. The bigger question is, are these people ready to switch to the new age or walk on the same old footsteps.

We know that when the technology of digital payments came into being, it took the market by storm. The amount of money transacted via the online services has overshot the traditional card payments marginally. Looking at the past trends, I believe that people are willing to change only if they feel safe, if these banks assure the safety of their money then maybe it would be the next disrupter. But least forgotten, all that glitters is not gold. They are on a rise but it’s questionable whether they will fully take over traditional banks or not.

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