Neo Bank – Use Cases, Impact and how it is challenging the incumbents
The post first appeared on linkedin. To get more such insights, please connect with me here. 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 – Tide, Hylo, Monzo, Revolut 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 – Revolut, NiYO 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 – Chime, Starling, Varo Money, N26 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 – Atom, Masthaven 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 – Nubank, Tandem Neo Bank Impact and Challenging the players 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,
