Neobanks are online financial institutions that have similar offerings to that of a traditional bank. A neobank is marked by its online presence and direct interactions with its clients.
While neobanks are typically confused with digital banks, there is one big difference between them. While digital banks are an online-only part of an existing traditional bank, neobanks are either independent or collaborate with a traditional bank for their functioning.
Here are some of the top features of neobanks that separate them from traditional banks:
Banking as a Service
Neobanks aim to simplify the financial management process for their clients, and the key to achieving that is by providing existing banking facilities to the clients through their platform. They build products and services different from the core banking products offered by their banking partners. This helps them to cross-sell their offerings.
Tech-based Platforms
Neobanks are more technologically advanced than traditional businesses and are entirely digital. Most of these are based on mobile apps, through which the users can efficiently perform banking tasks like creating virtual accounts, managing funds, and contacting support with just a click.
Focus on Marketing
While traditional banks leverage their legacy and consumer loyalty to attract new clientele, neobanks make up for it by focusing on client engagement activities, mainly on digital marketing platforms like Facebook and Instagram, especially targeting today’s tech-savvy youth.
Rise of Neobanks in India
Over the last two years, the Indian neobanking ecosystem has witnessed exponential growth. While there are over 18 players in the sector planning to increase their operations, factors like different target demographics and unique service offerings ensure that each of these has a developing potential in the coming years.
With improved banking services, new banks, and advanced Fintechs, the financial services journey of India is shifting with client needs in mind. Moreover, factors like interest from private equities and traditional banks seeking out strategic alliances with neobanks contribute to the country’s neobanking growth narrative.
In a recent blog by the digital magazine Inventiva, ZikZuk has been featured as one of the top 5 neobanks in India.
ZikZuk is an SME neobank whose mission is to provide a financially sustainable environment that helps SMEs manage and grow their business by fulfilling their credit and working capital needs.
It helps small and medium businesses manage their business finances efficiently and gives actionable insights that help them make sound business decisions.