Neobanks and fintech: What these terms really mean for the new age generation

In order to better cater to the younger generations, many financial services companies have modernised their business practices. They’ve experimented with social media and content marketing to varied degrees of success, and developed such apps that enhance the online banking experience. The days of visiting a bank branch during business hours and waiting in line to complete any transaction are long gone.

The advancement of technology has drastically transformed how banking is currently done. Despite their best efforts, traditional banks fall behind the emerging generation of financial institutions known as “Neo banks” that are built on financial technology (fintech). Old customers may be satisfied with the services offered by traditional banks, but the tech-savvy new generations lack the patience and mindset to complete all tasks using outdated procedures.

Neobanks are fintech companies that offer a wide range of financial services, including lending, money transfers, mobile-first financial solutions, and many others. Neobanks’ principal goal is to provide a degree of seamless customer service that no traditional bank has ever been able to achieve. The speed and affordability of Neobanks make the new age generation shift from traditional banks.

Neobanks also lower their banking expenses, which enables them to lower their fees and offer their services to those who are underbanked. Small and medium-sized businesses, which are often deemed underserved by traditional banks, are catered to by neobanks. By releasing cutting-edge products and offering top-notch customer service, they use the mobile-first strategy to set themselves apart.

Neobanks and digital banks are frequently confused with each other. Both provide banking services via phones and other devices but the similarities stop there. Neobanks fill the gap between the services provided by traditional banks and the shifts in consumer expectations in the digital era.

They are altering the face of fintech. Neobanks lack the resources and clientele to dethrone traditional banks, but they do possess a unique weapon: innovation. In comparison to traditional banks, they can offer products and form partnerships considerably faster.

One of the driving forces for the development of Neo banks is the adoption of new technologies by new generation, micro, small and medium-sized enterprises (MSMEs), and those with irregular revenues and earnings. Investors’ attention has been sparked by Neo banks’ strong adoption rates and profitable business models. Neo banks have sped up banking transactions, but they also provide a wide range of other services that make handling finance simple.

Neobanks also make it easier and more convenient for those who have never used banking services before to complete day-to-day banking tasks. This helps a significant segment of the unbanked and underbanked population become financially included. The author is CEO and Co-Founder of PaySprint.

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