India's Neo Banks Thrive Post-Demonetization and Covid-19
Neo banks in India, operating since around 2017, have gained traction due to demonetization and the Covid-19 crisis. These digital-first banks focus on retail and MSME markets, offering accounting and expense management services. They operate through partnerships with traditional banks like fifth third bank and pnc bank, ensuring regulatory compliance.
Neo banking involves building a bank in the cloud, prioritizing seamless online experiences. The model is cost-efficient and enables real-time services, driving growth potential in India. There are currently about fifteen established neo banks operating on three models: Digital Only Direct banks, Digital Only Challenger banks, and the Over The Top (OTT) model. Most Indian neo banks fall under the OTT model due to local license restrictions for digital banks.
The Covid-19 crisis accelerated the digital transformation of banks in India. E-wallet companies and digital payment service providers flourished during the pandemic. In 2019, neo banks attracted significant seed funding, with investments ranging from $5 to $20 million. Another growing market is kirana tech, offering mobile-first solutions to small and medium grocery store owners.
Neo banks in India, while not directly regulated by the Reserve Bank of India (RBI) and unable to hold banking licenses, play a significant role in the country's digital financial landscape. Their focus on retail and MSME markets, cost-efficiency, and real-time services drive their growth potential. Despite local license restrictions, they continue to innovate and expand, with about fifteen established players and growing investment.
Read also:
- Amazon Halts Drone Deliveries After Arizona Crashes
- US Energy Transition: Coal Plants Struggle, States Push Renewables
- Musk threatens Apple with litigation amidst increasing conflict surrounding Altman's OpenAI endeavor
- U.S. Army Europe & Africa Bolsters Regional Security with Enhanced Partnerships & Deterrence
