A neo bank is an online-only fintech setting that has stemed from the need to transition to digital payments and banking facilities from the traditional walk-in bank facilities.

It has leveraged on the new age technology and artificial intelligence to provide it's customers with all those services that physical bank branches provide but also breaking the geographical barriers.

In layman understanding, it wouldn't be surprising if you think that Paytm is a neo bank. However, Paytm is not a neo-bank but simply a non banking financial company that allows payments and receipts.

The traditional banking ecosystem meets with a threat with emergence of Neo-banks. Not only are neo banks involved in higher customer acquisition but also provide wide range services such as fund transfers, personal finance to myriad set of customers : individual, retail and enterprises.

They are able to tailor their products according to the needs of different customers making it faster and convenient for the user to access banking information.
However, the question is whether neo banks can replace human touch and inter-personal connect that people look for in terms of security of their funds that the Traditional banks provide.
In a country like India, people feel more secure when they see human involvement or a personal sense of attachment with the banking system. So neobanks have to go a long way in inviting loyal customers.
The latter surely has an edge when it comes to the problems of human error as in the case of traditional banking system.

It's now on the end user to weigh the pros and cons of both the banking systems before choosing which side to align themselves with and why.

In my opinion, Neobanks will carve themselves a place in the banking ecosystem in the coming years by purely leveraging on the use of their technology and the changing banking environment with greater emphasis on digital transactions.


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