Neobanks: Leading the Way in Digital Banking Innovation

See how Banks and NBFCs compare to Digital-first Financiers in the race toward Digitalization

Neobanks are innovation powerhouses for customer experience, which has helped transform Global Banking. With everyone going digital at an ever-accelerating pace, neobanks have a huge window for innovation in diverse segments. One major segment for expansion consists of Gen-Z. And, then there are other exquisite niche consumers that have new age demands.


In India, neobanks are still tasked with having to carefully gauge changes in regulatory compliance. To date, brick-and-mortar banks have the upper hand because their regulations are spelled out to the tee. Naturally, neobanks have no choice but to cater to the same segment that their counterparts have dominated for years.


As digitization intensifies, neobanks could soon lead the way. Though still, the current scenario is a rare instance for industry leaders to be toe-to-toe and still learn a thing or two about innovating at a faster pace.


Neobanks v/s Digital Banks: Better Analysis of Data is the Tie-breaker


It’s no surprise that data plays the biggest role in tiebreakers for the bigger piece of the pie. The better existing data is understood; the better these players get at 'customer acquisition'.


On the other hand, 'customer retention' is a bit complex. When it comes to brand loyalty and better customer relations, data needs to be looked at differently. A major question asked here is what data are banks allowed to capture and how can banks maximize insights.


Indian Neobanks’ priority is to proactively identify and build new products and services that customers want. Products backed by strong research and favoring regulations may get them to the door, but building platforms that genuinely enable new-age insights and risk supervision is a primary requirement.


For digital banks, offering customizations for a niche consumer base comes with the responsibility to better your services as you progress. Though, the question is similar – do our everyday banks have systems that will help them understand data cyclones brewing over new-age market segments?


New Age Analytics Services Level the Playing Field


India has never avoided taking striking decisions and is most talked-about for its reforms to drive the Fintech industry forward. UPI by NPCI - National Payments Corporation of India, for instance, received acclaim worldwide because of which many countries, such as UAE, are pursuing the model ambitiously.


Similarly, Indian regulators have called for the adoption of technologies that have put both players at par –


Advanced AI/ML-Driven Management Information Systems


In India, one major hurdle for neobanks is that new regulations have forced their offline counterparts to catch up in the digital sphere. RBI's mandates for end-to-end report automation have given Banks’ management the roadmaps to ramp up systems and make use of reports of superior quality.


Major business decisions like increasing customer centricity and transforming an outlook towards major assets are now possible with revamped analytics systems. In an attempt to strengthen systems, data lakes are being implemented using cloud storage for easy, seamless data processing and AI/ML-driven intelligent automation.


While staying ahead in the tech-frenzy atmosphere, Neobanks needs to safely model analytics systems around current regulatory requirements and also account for future amendments. Meanwhile, Banks and NBFCs need to pay close attention to insights into customer behavior to continue to stay on top of the game.


360° Credit Monitoring Systems for Diverse Customers


Credit offerings are changing at an increasingly fast pace. Line of Credit (LoC) is majorly favored by various MSME borrowers, and it is working really well as a credit solution. With new credit solutions becoming mainstream, banks are burdened with new tasks for comprehensive risk analysis.


Back in the day, banks could only pick up patterns inferred from first-party data, though now RBI has allowed the implementation of models that track early warning indicators from alternative data sources too. Scalable technologies are needed to cover more data and cutting-edge Machine Learning (ML) algorithms are needed to derive insights.


As neobanks enter the corporate sector, superiority in consumer behavior analytics will be the game-changer for both players. Currently, Financiers can analyze customer behavior trends with data from Transactional, Financial, and Alternative sources. Though, keeping a watch out for new trends and possibilities is the only way either one can improve.


Conclusion: The Real Differentiator


Banks can leapfrog technology adoption with emerging tools. They can build technology ecosystems to improve product development life cycles, enhance digital connect for customer satisfaction, and increase efficiency in internal operations. When well architectured, these boost profitability in the long run.


Ultimately, the real winner will be decided not by the speed of their journey toward digital transformation, but by the readiness of their teams to proactively adopt the changes headed our way.


Get in touch with D2K Banking Fintech Consultancy Experts for more information on roadmaps for deploying new-age technologies for comprehensive analytics services.