Neo banks are expected to transform the functioning of banking environment holistically in the country. Elaborate (200 Words)
Refer - Business Line
Enrich the answer from other sources, if the question demands.
IAS Parliament 5 years
KEY POINTS
· Neo banks are digital and operate online, and they do not have any physical branches, minimise operating costs and offer a customer-friendly interface.
· They partner with conventional banks and deliver better solutions with the use of technology such as artificial intelligence and machine learning.
· The characteristics of neo-banks include convenience, cost-effectiveness, various banking and financial functionalities under one umbrella, and personalisation.
· Challenges of neo banking include: complex IT legacy; inadequate data architecture; higher cost management; lacking advanced technology; and organisational resistance
· Neo banks offer wider choices and better customer experiences with the following features: (a) a new account online can be opened in just a few minutes; (b) connecting of existing bank accounts; (c) receive payments immediately with integrated payment gateways; (e) pay bills through multiple options.
· The Reserve Bank of India recently strengthened the criteria for providers of digital banking services, giving priority to physical presence.
· Neo banks are AI-driven and incorporate the entire financial portfolio onto a single platform. It keeps you in the know of your entire banking operations receipts, payments and transactions24x7 and in real-time.
