Neobanks and Fintech – How do Millennials and GenZ Comprehend These Terms?

  • S Anand, Co-founder and CEO at PaySprint

  • 29.08.2022 01:30 pm
  • #neobanking

If you’re a millennial or Gen-Z, you must have heard of the term Neobank, and if not, at least the term Fintech very generously used in the last few years. Fintech is the integration of technology into financial services with the goal of easing various traditional financial processes and services for the end consumer. The technology used can range from artificial intelligence and blockchain to cloud computing and big data. But all this can seem like fancy, abstract words to the new-age reader. Let’s cut to the chase with Fintech and Neobanks by seeing their real-world application and growth and what they mean to the dynamic clientele of today.

The growth of Fintech

The birth of Fintech took place with the singular aim of making banking easy for everyday customers. Fintech never wanted to eradicate conventional banking but to complement and enhance it because traditional banking practices don’t sit well with the new-age generation. Sure, it is a banking system we’ve known and trusted in the past, but it failed to adapt to the changing needs of the present-day customer. Fintech is responsible for every financial process you can access on your smartphone today. From digital lending and credit, credit reporting, and ledger management, to buying any form of insurance and trading in the stock market – these are all the fruits of Fintech’s labour. Think about how many digital banking services you can access on the go, and the number of seamless transactions you can make without going all the way to your bank – that’s how revolutionary Fintech has been. The number of digital payments through the Unified Payment Interface (UPI) in this year alone, has been jaw-dropping – over 14.55 billion transactions in India itself. And the statistics for smartphone penetration are even more promising – by the year 2040, we can expect 96% of users to own a smartphone and consequently get on the Fintech bandwagon.

Neobanks and the future

We might not want to remember COVID-19, but the pandemic got on a lot of creative and entrepreneurial minds brewing with ideas. The number of entrepreneurs experimenting with their services and starting new ventures in the Fintech industry shot up exponentially. Neobanks comes under the wing of Fintech and started with the same intent – to make banking as quick and convenient as possible for the modern user. Neobanks are 100% digital and have no physical branch. They offer banking services that traditional banks may or may not offer. The differences lie in the quick turnaround time and the cheaper fees charged by neobanks. Because Neobanks don’t require operational costs and in-person manning, they can offer more personalized services and 24x7 attention to their clientele. These include offering credit, holding funds, account management, money transfer, end-to-end client servicing, and other speedy, on-the-go services. You can create an account easily and run it without paying any maintenance fee. They also provide customized attention to retail customers and small and medium enterprises, which traditional banks often fail to take care of as they are busy taking care of the big leaguers. Neobanks offer customers the boon of no waiting times and long queues. However, they don’t have the license to operate by themselves according to the rules laid down by the RBI. They have to partner with traditional banks to offer their services.

On the last note:

It is easy to get intimidated by Neobanks, Fintech, and other financial and tech-related jargon. But once you know the meaning behind it, you realize these are here to make our lives simple. Neobanks have a long way to go and the majority of customers are yet to put their complete trust in the concept. They have made a promising start and have seen millions of dollars worth of funding and investments and the increasing trust of the tech-savvy new-gen customer.

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