Financial Inclusion Index was recorded as 53.9 in FY22 ending – with ~80% of
Indian adults having a bank account. Yet, ‘Neobanks’ have emerged in the
banking landscape disrupting the customer experience in new ways.
is a Neobank – and why does it deserve attention? Neo-banks are purely digital
financial institutions, as opposed to regular banks, which can offer online
services but continue to rely on their physical locations. Traditional banks
use an omnichannel approach that includes physical (branches and ATMs) and
digital banking presence. In contrast, neo-banks use technology and artificial
intelligence (AI) to provide a range of customised services to customers
Neobanking market is expected to grow @ CAGR 14% to reach US$ 16.7B opportunity
by FY26. In todays’ newsletter, we double-click on what is so ‘neo’ about these
banks – and what is driving their growth.
to a recent PGA Labs survey, customers prefer having an account with neo bank
for the long run if the transactional charges and services remain unchanged.
Among Neobank users, ~40% customers feel that customer support facilities can
be improved, while ~55% feel that cashback and rewards should be better.
Neobanks are disrupting the banking landscape in India, at current levels they might
not be able to fully meet the banking demands of non-tech-savvy customers,
especially those living in rural India. Lack of physical presence does not
evoke the requisite ‘trust’ that the traditional banks command due to their
legacy.Further, Neobanks currently offer a limited number of services, making
traditional banking irreplaceable in the overall financial services ecosystem.
Authored by (at the time of writing):
Vaibhav Tamrakar, Senior Vice President - PGA Labs