Traditional banks form the backbone of the Indian banking system. There was a time, not so long ago, when traditional banks, with their endless paperwork and strict work timings, sufficed. However, the smartphone-led population, with its internet and fast-paced lifestyle, demands a more seamless banking experience. Unfortunately, digital initiatives by traditional banks have met with limited success, that’s where neobanks, the banks of the future, come into the picture.
With access to banking services more than doubled over the last decade, digital banking is surely gaining prominence. Banking in India is highly regulated, with RBI allowing for various banking licenses to fulfil inclusion & innovation use cases. Payments banks, neobanks, digital apps by scheduled banks, and digital banks are the four main categories within the digital banking arena. Neo banks are digital-only entities, partnered with traditional banks, transforming the retail banking experience through better technology.
This report explores the way forward for neobanks, the challenges, and what the overall market situation looks like for this FinTech sub-segment.