Several Founders, Co-Founders, CXO Bankers, CXO Fintech professional & people who participated in the ePanel discussions:
- Mr. Anand Bhatia, CMO at Fino Payments Bank Ltd
- Ms. Saru Kaushal, Institutional Partnerships & Strategy, INDWealth.in
- Mr. Subbiaa Olimuthu, former Product Manager – Rupay Product
- Mr. Anand Aggarwal, Director, Product Management, Standard Chartered Bank
- Mr. Sandeep Todi, Co-Founder & CBO, Remitr
- Mr. Hemal Shah, Technical Product Manager, Mastercard
- Mr. C. K. Vardharajan, Vice President, Equitas Small Finance Bank
- Mr. Abhishek Mody, Associate Director-Payment & Digital Initiatives, IDFC Bank
- Vikas R Panditrao, Co-Founder, Forum of Industry and Academic Knowledge Sharing (FIAKS)
- Many other CEO/CXO Bankers & Fintech professionals on FIAKS Forum requested to remain anonymous
FIAKS community debates around why do we need NEO BANKS or VIRTUAL BANKS in India.
Firstly, let’s understand briefly what exactly is a Neo bank?
- A Neo bank or Virtual Bank is a 100 percent digital bank that operates without any branches. At this point in time no regulatory guidelines are available hence they are not regulated by RBI.
- Neobanks do not have their own licenses while they depend on existing financial institutions or other mainstream banks with regulated licenses and permits to piggyback on.
- Thus, neobanks partner with traditional mainstream banks in order to be RBI compliant.
- Ultimately, neobanks cannot compete with banks as they have to partner with them for the regulatory license until regulator issues guidelines for a separate license for neobanks
- These neobanks can be equated with fintech firms as they provide digital and mobile-first financial solutions payments and money transfers, money lending, etc.
- In simple terms, one can say that ‘neobanks’ is just a term for where fintech firms are attempting to build digital banking startups.
- This is how neobanks propose to differ from traditional banks- The most targeted segment by neobanks is tech-savvy customers by providing personalized banking solutions relevant to their requirements as against traditional banks which are more product-based rather than consumer-focused and which categorize customers according to age or income and then eventually push products.
Question 1: How are they going to be any different from the Payments Banks in India? Isn’t neo or virtual bank a subset of payments bank?
Question 2: Are regulators or founders or investors copying what is getting implemented in Singapore, UK, Hong Kong, and other markets?
Well to answer this, different ‘neobanks’ are making unique benefits available to customers though unfortunately most of them end up copying each other. The term “Neobanks” has now become a broad clubbing of everything that’s not a scheduled bank. European neobanks are the most further ahead driven primarily by progressive legislation in Europe while America has lagged precisely for this reason.
Now here’s are some of the responses on why neo or virtual bank can’t be termed as a subset of payments bank;
- A member opined that it can’t be shadow/subset to Payments bank also it depends on what kind of bank account is going to be given to the customer- Prepaid card/ Saving Account/ Prepaid Account with Credit BIN or Prepaid Card with prepaid BIN.
- A neo bank has not been launched officially in India. Everybody is either in the development stage or planning to launch and a couple of them actually signing up bank partnership for saving account based Neo bank.
- Actually launching a Neo bank and seeing customer response needs to be seen yet at least on the retail customers’ side.
- Customer Service is still an issue be it private or public sector bank. Only if you are an elite customer or with a high balance you get better service. So people would like to experience the service the Neo bank will provide.
- The current bunch of Neo bank which is work in progress plan to touch base only customers who are tech-savvy and aged between 21-30/35 age group only.
What all services neo bank can provide?
- Neo Banking is a superbank of sorts that will help banks in the cross-selling, acquisition, exploring new markets, and open a revenue model through API (Application Progamme Interface that facilitates interaction between different software) usage revenue sharing. Customers can look at a single platform & select the product and service best suited to our pocket and preferences.
- Lending, Digital Payments, and Merchant Acquisition are powerful use cases that can be leveraged without banks investing too much in technology.
So now the question here is which of these above-mentioned products and services can’t be done by Payments bank? Register and Read the complete discussions