Neobanks for the SME sector
Facilitating change to bringing in the efficiency in banking
The emergence of Neo Banks has led to innovation in banking technology to a whole new level that is unrestricted by any of the rules and regulations and mandates prescribed by the RBI. Fintech companies offering Neobanking for their customers provide a whole range of digital financial services such as payments, transfer of funds, loans to businesses and individuals, the facility of savings bank accounts, besides also helping in budgeting, prompt reminders as an when payments are due, calculation of tax etc. In other words, Neobanks provide majority of the banking services through a simple, efficient mobile application all at the click of a button.
How can the Neobanks be of help to small businesses and medium-sized business enterprises
The 42.50 million-strong SME sector can benefit significantly from the offerings of Neobanks as they are typically designed to suit the necessities of the new-age consumers and millennials in general. The superior digital banking services are aimed to fill the gap between the customers and the traditional banking system makes it popular among the new-age businessmen. In what could be termed as a mobile-first environment that we are living in today, Neobanks have created an ecosystem for the users wherein branchless transactions and services is possible through the integration of digital tools.
Small businesses no longer have to depend on consumer banking or make endless visits or even comply with the endless regulatory regimes for loans and advances. Some of the key challenges that businesses face are concerning the opening of current account, GST compliances, tax filing, access to working capital requirements, vendor payments etc.
The growth of Neobanks has led to the evolution of the next-gen business landscape driven by technology backed financial solutions. The stringent rules and regulations which otherwise is a feature of the brick-and-mortar banks are absent here. With the Neobanks having created a user-friendly landscape, there are several benefits that one can avail of-
-streamlined account opening services
-reminders for payments and receipts
-expense tracking and automated invoicing is an in-built feature
-use of messaging for notifications for the benefit of the customers
-intuitive mobile design by understanding the digital behaviour of the users
-in-app access to customer service
Clearly, digital technology is the core of the business proposition for the Neobanks. The ease of operation as compared to the full-service banks is what strikes the chord with new customers and prospective businesses. The ability to generate new business value and engage customers in a whole new way through the use of digital technology has led to the paradigm shift. Digital economy is the future, as we all know and acknowledge. With traditional banks posing a whole lot of challenges for entrepreneurs, Neobanks aim to bridge the gap when it comes to operations and execution, thereby redefining the ease of conducting business in a whole new way.
Digital extension in the traditional banking system is seen as a welcome change adding to the convenience offered to the customers. Small and micro SMEs being the lifeline of the Indian economy can see increased opportunities and seamless financial transactions by shifting from brick-and-mortar banks to the Neobanks. The simplicity of operation, understanding of consumer sentiment, personalization of services are ways where Neobanks can stay relevant during the present times.
A revolution in financial technology
The change in the legislative framework has led to the Fintech companies to come up with innovative ideas as banks continue to evolve. Understanding customer needs and transformation of the industry in accordance with such necessities can especially help small and medium banks who usually wish to grow aggressively. Addressing the risks and vulnerabilities, bringing in a possible solution with can empower both banks and these businesses. If this is true in the case of individual customers, banks have a lot to benefit from as well. The robust growth of Neobanks powered with technology and strategy can ably assist bankers to weed out the bad loans, frauds in the banking system and address these issues by early detection and taking pre-emptive action at the right time.