{"id":143,"date":"2019-05-24T10:39:00","date_gmt":"2019-05-24T10:39:00","guid":{"rendered":"http:\/\/bankopen.com\/open-money-blog\/?p=143"},"modified":"2023-07-07T13:03:56","modified_gmt":"2023-07-07T07:33:56","slug":"neo-banking-what-does-it-mean","status":"publish","type":"post","link":"https:\/\/open.money\/blog\/neo-banking-what-does-it-mean\/","title":{"rendered":"Neo banking \u2014 What does it mean?"},"content":{"rendered":"\r\n

After hailing more rides on Uber than other public transports combined, I can\u2019t imagine a time when Uber wasn\u2019t around. How did nightlife thrive back then? I mean, how did the drunk ever even reach home? \ud83e\udd14<\/p>\r\n\r\n\r\n\r\n

Over the last couple of decades, the cab industry has whole-heartedly embraced Uber. And just like that, all major industries have undergone technological shifts that seem indispensable to life as we know it today.<\/p>\r\n\r\n\r\n\r\n

Well, mostly all. Banking has strayed pretty far from this norm for a while now. But fortunately, this is changing, all thanks to the emergence of neo banks. Let’s understand what neo banking really means.<\/p>\r\n\r\n\r\n\r\n\r\n\r\n

The media has been touting neo banks as the next big thing in the fintech space. We\u2019ve also had many people write to us asking\u00a0\u2014 What are neo banks?<\/strong>\u00a0Will they really transform banking?<\/strong><\/p>\r\n\r\n\r\n\r\n

Let\u2019s find out.<\/p>\r\n\r\n\r\n\r\n

Covering the basics<\/h4>\r\n\r\n\r\n\r\n
\"What<\/figure>\r\n\r\n\r\n\r\n

Until recently, most giants in the banking space, reveling in a monopoly of sorts, did not work towards delivering superior customer experience. So much so that, on a scale measuring technological advancements across industries, the big banks lagged far behind.<\/p>\r\n\r\n\r\n\r\n

That\u2019s when, neo banks emerged to balance things out perfectly, as all things must be.<\/p>\r\n\r\n\r\n\r\n\r\n\r\n

These are technology-driven smart banks that offer their services online and via mobile apps. In other words, they don\u2019t expect you to go to some branch and stand in queues to open an account or transfer funds. And while most neo banks don\u2019t have a banking license, they provide the same services by partnering with a traditional bank.\u00a0All to push the limits of how much a bank can do for you.<\/em><\/p>\r\n\r\n\r\n\r\n

The idea is to attract a growing customer base by prioritizing 3 things \u2014 unrivaled customer experience, well-designed and intuitive interface and a range of unique functionalities.<\/p>\r\n\r\n\r\n\r\n

The journey so far<\/h4>\r\n\r\n\r\n\r\n

Neo banks first emerged in the UK around 4\u20135 years ago, pioneered by Monzo and Atom. And in a short span, have left an indelible imprint on the fintech world.<\/p>\r\n\r\n\r\n\r\n

\"Neo<\/figure>\r\n\r\n\r\n\r\n

They sprung up because of the EU\u2019s progressive approach towards financial regulation. Curious to know what really changed? Let\u2019s have a look.<\/p>\r\n\r\n\r\n\r\n

The revised Payment Services Directive (PSD2) regulation<\/a><\/em> that got implemented in 2018,\u00a0broke the monopoly of the banks over consumer data<\/em>. It proved to be a major game-changer for the digitization of the economy.<\/p>\r\n\r\n\r\n\r\n

Implemented across all EU member states, this regulation significantly reduced the barriers for new entrants to the payments space.<\/p>\r\n\r\n\r\n\r\n

For once, the banks were mandated to provide third parties access to consumer data via APIs (as long as the consumer agreed).<\/p>\r\n\r\n\r\n\r\n

Such third parties have challenged the status-quo of the banking industry. Powered by consumer data, they\u2019ve been out finding ways to provide consumers more power with their money.<\/p>\r\n\r\n\r\n\r\n

A gist of what they do<\/h4>\r\n\r\n\r\n\r\n

Neo banks leverage technology to provide banking services that are faster, simpler, and affordable.<\/em><\/p>\r\n\r\n\r\n\r\n

All of this to appeal to a generation that\u2019s never been too big on the big banks. Neo banks with their tech-friendly nature are aimed at increasing financial inclusion in a lasting manner.<\/p>\r\n\r\n\r\n\r\n

One thing to note \u2014\u00a0no two neo banks offer the exact same services.<\/strong>\u00a0For example, Lidya offers easy access to credit, while Revolut enables free foreign transactions.<\/p>\r\n\r\n\r\n\r\n

But broadly, a major chunk of neo banks cater to the B2C market while a handful of them cater to the B2B segment. Here\u2019s a list of things you can do by signing up with one.<\/p>\r\n\r\n\r\n\r\n

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\"Features<\/figure>\r\n<\/div>\r\n\r\n\r\n\r\n

If you\u2019re a budding entrepreneur, we assure you that you couldn\u2019t have chosen a better time to start out. This is because SMEs<\/a> and startups<\/a> are no longer under-served in terms of banking.<\/p>\r\n\r\n\r\n\r\n

T<\/a>here are neo banks like Open<\/a><\/em> now that offer a business banking platform with integrated automated accounting<\/a>, bookkeeping, expense management<\/a> and a faster payment gateway.<\/p>\r\n\r\n\r\n\r\n

Today customers care more about \u2018ease of payment\u2019 than they ever did. And\u00a0neo banks help SMEs and startups<\/a><\/em>\u00a0like yours to rise up to their expectations while\u00a0leaving a lasting impact on your time and bottom line.<\/em><\/p>\r\n\r\n\r\n\r\n

The road ahead<\/h2>\r\n\r\n\r\n\r\n

Neo banks are the new wave. They\u2019ve revolutionized<\/a> how we do banking<\/em> and hopefully in some time will change how we perceive it as well. Banking is no more linear or too complicated to comprehend.<\/p>\r\n\r\n\r\n\r\n

But for neo banks to stay, they can\u2019t just capitalize on the momentary success. They need to carve a niche by offering features that can\u2019t be done without. And this is what we, at Open aspire to do each day.<\/p>\r\n\r\n\r\n\r\n

We\u2019re excited to see how the market responds and regulatory hurdles pan out and when they do, we\u2019d love to keep you in the loop. Happy Banking!<\/p>\r\n

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Related Articles –\u00a0<\/p>\r\n

Neobanks 101: Everything you need to know about neobanks<\/a><\/p>\r\n

What is Neobank? Everything you need to know in detail!<\/a><\/p>\r\n

Decoding neobanking: Why neobanks are winning over businesses<\/a><\/p>\r\n

Neobanking for SMEs: A lawyer\u2019s take on fintech<\/a><\/p>\r\n

How neobanks are disrupting the banking space<\/a><\/p>\r\n

Fast & Furious: The metamorphosis of fintech<\/a><\/p>\r\n

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