Neo Bank – Use Cases, Impact and how it is challenging the incumbents

Neo Banks Use Cases

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I often get this question – How different is a Neo Bank from a traditional bank?

I love to quote :

Neo Banks are “INCH wide and a MILE deep” platforms for users addressing their day to day decision making and banking integrated. Neo Bank initiative is just the right balance of banking and daily use tools/transactions in a user’s life, and my post of today would discuss in detail about them.

In case you are new to Neo Bank and its concept, please refer to my first post here.

Neo Bank Use Cases | Neo Banking application

Neo banks are packed with innovative features that help in overcoming the challenges of traditional banking with the ease and convenience of availing services at a reasonable cost. As you would see Neo Banks in Europe, US, Australia, and India are already making an impact with offerings like instant account, speedy credits, and seamless cross border payments. So, let’s explore into some of the interesting use cases of Neo Bank–

Instant Personal Bank Account, Business Bank account with Neo Banking

How often landing into a new city, you have to struggle to get a bank account as an individual or a businessman? With rules, legalities, and formalities one has to spend days and weeks to open a bank account. Not anymore, with the Neo Banks concept, you can open an instant bank account within a few minutes. So for a student, he/she can concentrate on studies, and for a businessman, he/she could surround himself with business strategies and revenue generation plans while Neo Banks take care of their banking needs.

As briefed, a student would definitely need an easy access to banking for easy inwards of money from home, spending from the same account in/around the campus, access to credit/loans and building their credit history right from their campus engagement.

Similarly, a business needs tools to have easy reconciliation of their payable/receivables, collections automated with reminders and updates, linkage of their purchases / sales, inventory and so on.

A neo bank is not just another mobile app, it addresses the needs of the target market 360 degrees around.

Neobanks address all nine yards of their customers’ needs in depth.

Examples – TideHyloMonzoRevolut

Hassle-free Remittances and International Payments with Neo Banks

The challenges faced by migrants globally, within the country borders or across borders remains an issue. However, with an easy access to open bank accounts, digital transactions and remittances the challenges could be resolved. The neo age challenger / Neo Banks are focussed on addressing the needs of billions of these individuals, delivering a delightful consumer experience and at the same time addressing convenience & lower cost of transaction.

Neo Banks acting as the authorized banks can release instant payments at reasonable charges. User can set recurring payments, transfer money globally, or send and receive money instantly.

Neo Banks proposes a customized solution to each problem.

Examples – RevolutNiYO

Take your bank with you with a Mobile Neo Banking

While banking apps have been in the market for you to carry your bank in your pocket, the exciting part of a neo bank is that you do not need to own an bank account and then register for mobile banking. You can get a personal or business bank account on your mobile. So funds transfer, instant notifications, savings and a lot more with Neo Banking on mobile. Many Neo banks also offer premium options like early access to credit or cashback with Mobile Neo Banking.

Neo Banks are truly Mobile Banks with no conditions apply.

Example – ChimeStarlingVaro MoneyN26

Access to quick credit, loans and different Mortgaging Options with a Neo Bank

Got an idea but looking for financing options? The traditional banks offer loans and credit options but only to select few – who are backed by corporates or have an asset to show or even a guarantor. With Neo Bank that all could be wiped off, you have a requirement, and you would have a customized banking service.

Got cash in hands – put it in a fixed deposit, got a killer idea – get an instant business loan, that all is possible with a Neo bank.

Neo Banks are a bouquet of banking services but customized for each user.

Example – AtomMasthaven

Spend Management and Account Aggregation, a possibility with Neo Bank

You have a bank app, and then either you would need a third-party app to look for your spending’s or wait for your bank to launch the analytics. But with Neo Bank – you can not only open a bank account but visualize your spending’s, and if you have multiple bank accounts, that could also be integrated into Neo Banking application. All on one screen at a single click. The power of Neo Banking!

Neo Banking empowers its users in true sense.

Example – Chime

Customize Financial Products and Enhance Savings with a Neo Bank

Would someone be interested in designing a financial portfolio for underserve market? Well, traditional banks can do that, but it costs them a lot on their operational and capital expenditure. With Neo Bank a digital platform; it could assist any individual to design a portfolio based on his income and needs. You don’t need huge assets or a good score, based on how a customer repays his loan; he is awarded a score that decides his next lending activity.

Example – Chetwood Financial Limited  

Credit cards reward a possibility with Neo Bank

A bank with no physical walls also provides access to credit cards and reward points for every purchase you make.

Example – NubankTandem

Neo Bank Impact and Challenging the players

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Variant market research predicts immense growth in the neo-banking sector with the category growth going up by 45% in 2025 from 2017. As I write this, the Neo Banks or Challenger banks are more than 100 in numbers at a global level.

Europe has Nu bank, Solaris Bank, N26, or tandem. While Mybank, Webank, Digibank, Open, Jibun Bank, Hylo, K-Bank are making a difference in Asia. One of the primary reason I see the wave hitting the millennials and tech-savvy consumer is its simplicity and hassle-free usage. They do not have the burden of the legacy system, yet can open doors of banking service without differentiating any segment of society.  

Each Neo Bank offers their own sets of solutions making it a customer focussed product and flexibility to customize.

Another fact with the growth of Neo Banks highlights the positioning of China and India, where the unbanked exist and could be a means to enable financial inclusion.

However, the players are prepped to handle the Neo Banking hurricane; they have an eye on how to target young customers and reap benefits of an established brand. Just for example JPMorgan launched Finn by chase or Goldman Sachs – Marcus and in India SBI launched their YONO while Kotak came up with a solution as 811.

Yes, we can argue that the players are yet in the game, but it’s not about brands and fintech or neobanks struggle, but it’s offering the right product to win a loyal customer. And who does that, wins the race….

And the key remains that while Neo Banks are technology driven, asset light models they still need to ensure the banking grade security and find ways to generate revenue per transaction right from the day-1. 

If you a Bank or NBFC looking to use technology and innovation in expanding the business and enable Neo Banking or Challenger Banking, we are here for you. 

Teknospire, a fintech firm offers Bank-in-a-box solution with omnichannel, agent/digital branches capability. The 360-degree banking solution reduces the CAPEX for a bank to set up a physical branch, but yet opens doors to expand their business. Our Neo Banking, Mobile Banking, and Agent Banking solution could help regional banks and cooperative banks to push Banking beyond physical walls. For details, please contact us here. 

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