The financial landscape is undergoing a rapid transformation, driven by technological advancements and evolving customer expectations. At the heart of this disruption are fintechs, with their innovative solutions and agile approach, and small finance banks, striving to bridge the financial inclusion gap. This dynamic interplay raises a critical question: are these two forces destined to be competitors or collaborators? The intricate relationship between fintechs and small finance banks explores the potential synergies and challenges that shape their coexistence. Alignment and Shared Vision In today’s fast-paced era of digital banking, small finance banks aim to modernize banking through technology by aligning perfectly with fintechs’ commitment to financial innovation. This partnership leverages the strengths of both institutions, offering a wider range of accessible financial products and services through Fintech’s extensive distribution network. Enhanced Products and Convenience The usual product suite of small finance banks includes savings and current accounts with competitive rates and flexible features which could become conveniently available through a mobile app of any fintech company. This eliminates the need for physical visits to branches. A fintech’s secure payment infrastructure further strengthens the user experience. The collaboration between the two will empower aspiring entrepreneurs by providing financial support, flexibility, and expertise to grow their businesses. A 2024 report by the Reserve Bank of India highlighted that transactions through digital channels have seen a year-on-year increase of 30%, largely attributed to collaborations between SFBs and fintech firms. This surge reflects the growing integration of technology in banking services. Competition Fosters Innovation The rise of fintechs has challenged the traditional banking landscape, including SFBs. Fintechs often offer more convenient and affordable financial solutions, attracting customers away from established institutions. SFBs are caught between traditional banks and fintechs, particularly in the digital space. They must adapt quickly to compete effectively. This competition can drive positive change, pushing SFBs to invest in technology, improve customer experience, and explore new business models. The relationship between fintechs and SFBs is multifaceted. While they compete in some areas, collaboration offers significant potential benefits for both parties and, ultimately, consumers. Building Successful Collaboration Strategic partnerships require trust, clear communication, and a shared vision for financial inclusion and innovation. Supportive regulations and policies are crucial for fostering collaboration and a fair playing field. The NASSCOM Fintech Report 2024 stated that SFBs have significantly increased their investment in fintech solutions, with a 40% rise in funding allocated to fintech startups compared to the previous year. This investment is focused on areas such as digital lending, payments, and customer engagement. A Journey, Not a Rivalry The dynamic between Fintechs and SFBs is far from a zero-sum game. Instead of viewing each other as competitors, both sectors have the opportunity to thrive through collaboration and constructive competition. By joining forces and leveraging their unique strengths, fintechs and SFBs can drive meaningful advancements in financial services, enhance access for diverse populations, and uncover new pathways for mutual growth and prosperity. This partnership promises not only to reshape the financial landscape but also to foster an environment where innovation and inclusivity flourish together.
Tag: fintechs
Technology’s revolutionary power in accelerating financial inclusion in India
Technology has emerged as a transformative force in reshaping India’s financial landscape, particularly in the realm of inclusion. Its revolutionary impact has been profound, breaking down traditional barriers and extending financial services to previously underserved segments of society. This evolution not only fosters economic empowerment but also strengthens the foundation for sustainable development. By leveraging technological advancements, India is witnessing a paradigm shift towards greater financial inclusion, ensuring that all citizens have equitable access to essential financial services and opportunities. Technology as a driving force for financial inclusion India has a fintech adoption rate of 87 percent, which is significantly higher than the global average and illustrates how technology has transformed the financial landscape of the nation. Through the use of mobile banking, digital payment systems, and other fintech innovations, financial services are now more easily accessible and reasonably priced, which lowers transaction costs. The public digital infrastructure facilitated by UIDAI has streamlined the digital shift, enhancing access to online banking services through groundbreaking advancements in identity verification and Know Your Customer (KYC) processes. Complementary efforts such as the Pradhan Mantri Jan Dhan Yojana and the India Stack have notably advanced financial inclusion and fostered fintech adoption in India. These initiatives have not only facilitated the emergence of innovative tech products by fintech startups but have also laid a solid digital groundwork to support both public and private digital endeavors. Especially noteworthy is the substantial benefit extended to marginalized communities. The widespread availability of mobile banking services has sparked a transformative change in rural areas, granting underserved populations convenient access to online banking and credit facilities. This expansion has effectively bridged the rural-urban gap, fueling economic development and mitigating income inequalities. Moreover, it has facilitated easier access to credit services for micro, small, and medium enterprises, thus contributing to the overall growth of the economy. Fostering Equality Through Technological Advancements In the fintech realm, various risks, including cybersecurity threats, regulatory complexities, data privacy concerns, disparities in digital literacy, and issues with customer trust, pose challenges. To sustain growth, all stakeholders must address these challenges thoughtfully while encouraging innovation. Continuous investment in Digital Public Infrastructure (DPI) is crucial to establish a resilient digital environment for fintech transactions and to ensure fair competition. Countries such as Singapore and India have already demonstrated success in deploying DPI through collaborative efforts between the public and private sectors. Another noteworthy development is the recent approval of the First Loss Default Guarantee (FLDG), which underscores the effectiveness of the bank-fintech partnership model in digital lending. With a global count exceeding 400 million, MSMEs underscore the pivotal role of technology in transformation. Technology has revolutionized the way millions of Indians access and manage their finances, speeding up the process of financial inclusion. Even with the tremendous advancements, continued work is essential to improve infrastructure, cybersecurity, and digital literacy. Taking care of these issues will allow India to enhance its ongoing efforts to promote innovation and partnership among stakeholders, paving the way for a more accessible and prosperous future through initiatives aimed at enhancing financial inclusion.
Challenges Faced by Fintech Companies Adopting AI
Artificial intelligence has emerged as a game changer in the fintech business, with enormous potential to transform operations, improve client experiences, and drive innovation. However, despite its promised benefits, fintech organizations confront a number of hurdles in properly implementing AI. Data Quality and Availability One of the key issues that fintechs encounter when using AI is data availability and quality. To train efficiently, AI models require massive amounts of accurate, relevant, and diverse data. Fintech startups, on the other hand, frequently deal with data fragmentation, outdated systems, and data silos. Furthermore, obtaining high-quality data from reliable sources can be expensive and time-consuming. Regulatory Compliance Fintech firms operate in a highly regulated environment and must adhere to severe regulatory requirements. The adoption of AI brings new challenges because AI models frequently operate as black boxes, making it difficult to explain the judgments they make. Transparency, justice, and accountability are all required by regulatory agencies in AI systems, generating issues about regulatory compliance. Talent Acquisition and Skill Gap AI implementation necessitates a skilled workforce capable of designing, deploying, and managing AI systems. However, due to tough competition and high demand, fintech organizations frequently experience issues in hiring and maintaining elite AI expertise. Furthermore, there may be a considerable talent gap among existing teams, restricting their ability to properly embrace and exploit AI technologies. Ethical and Bias Concerns AI systems are only as good as the data they are trained on. Biases in training data can lead to biased results, raising ethical concerns and the possibility of discrimination. Fintech firms must solve these concerns in order to provide fair and unbiased AI applications. Solutions: Companies in the financial technology sector must invest in data infrastructure and governance. They must establish strong data management practices, ensure data cleanliness, and devise strategies for integrating and consolidating data from several sources. Collaborations with data providers and the use of third-party data sources can also aid in overcoming data availability issues. Fintech companies should take a proactive approach to regulatory compliance by collaborating closely with regulators to identify and address their issues. They should create explainable AI models and guarantee transparency in decision-making processes. Collaborating with RegTech firms can provide essential tools and solutions for effectively navigating the regulatory landscape. Fintech companies might invest in upskilling their existing personnel through training programs and partnerships with educational institutions. Collaboration with AI start-ups and research organizations, as well as using consulting services, can help overcome the talent gap. Building a diversified team with experience in data science, machine learning, and domain knowledge is critical for effective AI adoption. Fintech firms should put comprehensive systems in place to identify and eliminate bias in AI models. They should undertake regular audits and testing to determine the fairness and ethical implications of their AI systems. Implementing diverse and inclusive data collection practices and involving multidisciplinary teams in AI development might help handle bias concerns successfully. Despite the hurdles, the deployment of AI provides enormous opportunities for fintech companies to revolutionize the financial system. Fintech start-ups can overcome these obstacles by tackling concerns such as data quality, regulatory compliance, talent acquisition, and ethical considerations. Strategic investments in data infrastructure, coordination with regulators, workforce upskilling, and implementing ethical AI practices will be critical to successfully embracing AI and realizing its full potential in the fintech sector.
How the changing Economy forces Banks to Rethink Fintech Partnerships?
The fast-paced advancement of financial technology (fintech) has disrupted the old banking landscape, compelling banks to rethink their strategies and adapt to a changing economic environment. Fintech firms challenge traditional banking methods by bringing agility, innovation, and customer-centric solutions. Banks are recognizing the need to reconsider their approach to fintech collaborations as the economy advances. Such collaborations, which can take many forms, can provide clear benefits to both parties: fintechs gain market legitimacy and access to capital to accelerate their growth, while banks typically gain access to more advanced technology to help them meet customer demands for improved and more personalized experiences. Evolving Customer Expectations Customer expectations have shifted in the digital age, with customers seeking personalized, convenient, and efficient financial services. Fintech firms have excelled at matching these expectations by providing user-friendly interfaces, quick and frictionless transactions, and customized financial products. Banks must embrace fintech collaborations to expand their digital capabilities and deliver the seamless client experiences expected in today’s economy in order to remain competitive. Enhanced Product Innovation Fintech firms are renowned for their agility and ability to develop and market new financial products and services quickly. Banks have access to a larger pool of ideas, technology, and skills by cooperating with fintech start-ups. These collaborations allow banks to shorten their product development cycles and bring new and innovative solutions to market more quickly. Banks can promote product innovation and remain ahead of the competition by embracing fintech partnerships. Addressing New Market Segments The changing economy has resulted in the emergence of new market niches and consumer needs that may fall outside the typical banking scope. Fintech firms are well-positioned to target these new segments due to their rapid operations and concentration on specialised consumer niches. Banks can enter these sectors by collaborating with fintech firms, expanding their reach, and uncovering new growth potential. Agility in a Competitive Landscape The banking industry is under increased competition from non-traditional firms such as huge software companies and challenger banks, as well as other banks. Fintech collaborations enable banks to improve their agility and competitiveness by leveraging innovative technology, data analytics, and process automation. These agreements enable banks to adapt more effectively to market developments, achieve operational economies, and provide better goods and services to clients. Regulatory Compliance and Risk Mitigation The shifting economic landscape has resulted in tougher regulatory requirements and a greater emphasis on risk management. Fintech collaborations can help banks navigate this complexity by employing technologies that help with regulatory compliance, risk assessment, and monitoring. Banks can increase their risk management practices and maintain adherence to developing compliance regulations by cooperating with fintech firms specializing in regulatory technology (Regtech). The changing economy has prompted banks to reconsider their strategies and embrace fintech partnerships. Banks can satisfy growing client expectations, promote product innovation, expand into new market segments, improve agility, and handle regulatory compliance and risk management concerns by cooperating with fintech firms. Fintech collaborations allow banks to utilize the capabilities of both traditional banking and fintech innovation, resulting in a more customer-centric, efficient, and competitive financial services ecosystem. As the economy evolves, building and maintaining these partnerships will be critical for banks to remain at the forefront of the industry.
Financial Inclusion; the need and future
Financial inclusion refers to the process of ensuring access to affordable financial services, such as banking, insurance and credit, to all sections of society, particularly the underprivileged and low-income groups. Data Points to understand Financial Inclusion The need for Financial Inclusion Addressing poverty – Financial inclusion can help to alleviate poverty by providing access to formal financial services and promoting savings and investment habits among low-income households. Currently, India faces poverty in 75% of rural and 50% of urban households, totaling an official poverty percentage of 62.5%. Addressing the basic financial needs of the said population is the need of the hour to ensure we boost financial inclusion. Promoting economic growth – Financial inclusion can contribute to economic growth by enabling the flow of credit to small and medium-sized businesses, which are often the backbone of the Indian economy. With MSMEs contributing over 30% of the GDP, it is a pressing priority to assist them financially. Reducing income inequality – Financial inclusion can reduce income inequality by providing financial services to underserved sections of society, including rural areas and women. As per data, the pandemic has led to a further contraction of income and wealth in the bottom 50% of India. The top 30% own 90% of India’s wealth and interestingly, the top 10% own over 72% of India’s total wealth and the top 5% of the population owns nearly 62% of the wealth. Understanding the statistics makes us realize the staggering disparity in income. As per the Reserve Bank of India, only 27% of Indian adults are financially literate. This makes it easier for intermediaries and informal financial systems to defraud the illiterates. However, with educational programs, this issue can be addressed and eliminated. Promoting financial stability – Financial inclusion can help to promote financial stability by reducing the reliance on informal and unregulated financial systems that are often associated with fraud and other illegal activities. Empowering individuals – Financial inclusion can empower individuals by enabling them to make informed financial decisions, access credit, and invest in their future. The future of Financial Inclusion The future of financial inclusion in India looks promising, with significant progress made in recent years. Putting digital transformation at the forefront by the government and financial institutions has accelerated and is further expected to accelerate inclusivity in the coming years. With MSMEs and underserved individuals steadily adopting internet banking, mobile banking, etc., a digital shift can be expected. With Fintechs and NBFCs joining strengths, the collaboration has been beneficial for the financial domain. Better innovation with robust financial products and services that cater to the specific needs of the underserved has been introduced and executed in the market. This customization and personalization only seem to get better with time and adaption. However, it is important to note that financial literacy plays a very critical role in everything we have spoken of thus far. Without basic awareness and literacy to make informed decisions, every other initiative may prove futile. The government, along with several initiatives, has joined forces with financial institutions to convey awareness and literacy to the last mile. In conclusion, the future of financial inclusion in India looks promising, with the potential to improve the lives of 900 million people by providing access to formal financial services, promoting savings and investment, and reducing poverty and inequality.
Indian banks migrating to digital channels; more on the evolution
The evolution of Indian banks migrating to digital channels can be traced back to the early 2000s when the Reserve Bank of India (RBI) started promoting the use of electronic payment systems. The introduction of the National Electronic Fund Transfer (NEFT) in 2005 and the Immediate Payment Service (IMPS) in 2010 were significant steps toward the digitization of payments. However, the real push towards digital banking in India came with the demonetization drive in November 2016. The sudden withdrawal of high-value currency notes led to a surge in digital payments, forcing banks to ramp up their digital infrastructure and services. Since then, there has been a significant increase in the adoption of digital channels by Indian banks. Today, most banks in India offer a range of digital services, including mobile banking, internet banking and digital wallets. Customers can access their accounts, transfer funds, pay bills and even apply for loans online or through mobile apps. Banks also invest heavily in artificial intelligence, chatbots and other digital technologies to enhance customer experience and streamline operations. The COVID-19 pandemic further accelerated the adoption of digital banking in India as customers increasingly relied on online channels to conduct their banking transactions. Banks responded by launching new digital products and services, such as video KYC (Know Your Customer) and virtual credit cards. Examples of Banks that have revamped their offerings approach Indian banks are increasingly adopting digital channels to provide a more convenient and efficient banking experience to their customers. Whether it was Internet banking to reduce touchpoints or mobile banking to bring services to your fingertips, the transformation has been massive. Building on the evolution, Indian banks also proactively introduced altering service designs and encouraged the use of contactless payments through technologies like the NFC, QR codes, mobile wallets, etc. Today, urban India experiences the provision to make payments to street vendors too through digital methods. It is a vision to convert India into a digital-first country from a cash-heavy economy and joining force with the banks to achieve the said vision is Fintechs. Collaborating with Fintechs has accelerated the entire process whether in terms of internal operations of the bank or external aspects. The evolution of Indian banks migrating to digital channels has been rapid and transformative and the trend is expected to continue as more customers shift towards digital banking.
Fintechs designing the ‘One Platform’ Concept
With thousands of Fintechs in the market constantly experimenting with newer products and services, the idea of bringing it all to a single platform was quite anticipated. However, Fintechs are now expected to do much more. Fintechs began by designing a virtual universe where customers could choose from a range of products and services; however today, they are allowing customers to avail of all the services on a single platform. For instance, providing insurance with credit, payment gateways on investment platforms, credit on shopping apps, etc. Although Fintechs face an array of challenges pertaining to their strategic directions, they emerge with better services across financial needs. The purpose of designing the ‘One Platform’ concept Fintechs are creating single platforms for multiple services for several reasons: Convenience – Having multiple services available in one platform makes it more convenient for customers to manage their financial needs without having to switch between different applications or websites. Cost Savings – Developing and maintaining multiple platforms for different financial services can be costly for fintech companies. By offering multiple services on a single platform, they can save on development and maintenance costs. Cross-selling – Fintechs can use the multiple services offered on a single platform to cross-sell their other services to existing customers, thereby increasing their revenue streams. Data Analytics – Fintechs can leverage the data generated by the various services on their platform to gain insights into their customers’ financial behaviour, which can inform future product development and marketing efforts. Competitive Advantage – Fintechs that offer multiple services on a single platform may have a competitive advantage over traditional financial institutions that offer separate platforms for different services. This can help fintechs attract and retain customers who prefer a more streamlined and integrated financial experience. The benefits of having multiple solutions on a single platform There are several benefits that users can enjoy when multiple financial products are available on a single platform – How are Fintechs designing the ‘One Platform’ concept? Fintechs are creating single platforms for multiple services by leveraging technology and partnerships with other companies. Here are some ways in which fintechs are creating these platforms: API Integration – Fintechs can integrate different financial services, such as banking, lending, investment, and insurance, using Application Programming Interfaces (APIs). APIs enable different software systems to communicate and exchange data with each other, allowing fintechs to combine services from multiple providers into a single platform. Partnerships – Fintechs can partner with other companies that offer complementary financial services to expand their offerings on a single platform. For example, a fintech company that provides investment services can partner with a bank to offer banking services to its customers, all through a single platform. In-house Development – Fintechs can also develop their own in-house financial services and integrate them into a single platform. This can include building their own payment processing systems, digital wallets, or investment platforms. Acquisitions – Fintechs can acquire other companies that provide different financial services and integrate them into their existing platform. This can help fintechs quickly expand their offerings and gain access to new customer bases. Overall, fintechs are using a combination of strategies to create single platforms for multiple financial services, enabling customers to easily manage their financial needs from a single point of location. They are ensuring that their focal point is the users, their journey, experience and benefits.
Micro-lending changing the Rural landscape
The origination of the micro-lending industry in India dates back to the 1980s when India took inspiration from Bangladesh’s successful reforms where they benefitted from distributing loans to the underprivileged women of their region. What began as an experiment, quickly turned into something substantial for India. Today, India’s micro-lending portfolio stands at Rs 2.93 Lakh crore with 6 crore unique borrowers and shows a further growth of 23.5% yearly. With a loan portfolio worth Rs 2.93 lakh crore, the microfinance industry grew by over 16 times in the last 10 years. Majorly served by 202 businesses, roughly over 130 million Indian households, i.e., one-third of the population have access to microfinance as per NABARD’s Status of Microfinance in India report for 2020-2021. Over the years, the success of micro-financing has witnessed a visible shift from banks to NBFCs. According to Sa-Dhan – an association of the Micro-Finance Institutions (MFIs), the NBFC sector is currently dominating with a usage share of 37.53% while banks take a 36.18% slice of the pie, giving away the remainder to other institutions. The total portfolio size of NBFC- MFIs has grown nearly by 7% quarter-on-quarter and amounted to Rs 1,01,678 crore as on September 2022. Inquiring deeper, as per Microfinance Institutions Network, NBFC-MFIs have 22% of their portfolio in urban India and 78% in rural. What has been the micro-lending threat in Rural India Small business owners and merchants, especially ones residing in rural India were often left underserved by the mainstream financial institutions given the high-risk quotient they bring with them. High operational costs coupled with the threat of fraud, defaults and NPAs often left banks in a grey area on how to service the said market. Moreover, Regional Rural Banks (RRBs) that service the rural market often face trouble with inadequate finance since they depend on NABARD to collect finance for their further operation. Given that rural households often have low capital income and hence, collecting deposits to raise funds has been the root cause of this entire fiasco. Rural households largely depend on natural resources like agriculture and other rural economic activities for their survival therefore, natural calamities and other natural menaces play a big role in the success of their business cycle. However, reimagining a way with lower operating and market costs by financial institutions has ensured an improved lifestyle for many rural households. It has further led to the growth of the said sector. Micro-lending changing the landscape Micro-loans are distributed by a range of institutional channels– Scheduled commercial banks (including small finance banks and regional rural banks) Cooperative banks Non-banking financial companies Microfinance institutions However, NBFCs hold a major chunk of this market followed by banks and other micro-finance institutions. A combined amount of Rs 45,830 crore in the form of micro-loans was disbursed in the quarter ending December 2022. Micro-lending institutions are expanding their services by introducing other financial services like insurance, remittance, AePS, etc. while providing training and assistance to the unversed. As for the market leaders; NBFCs have introduced a new technology that enables borrowers to make daily repayments against their loans called Equated Daily Instalments. They have also introduced PoS devices, apps, etc. to allow small businesses to benefit from digital payment methods. Despite a myriad of services already designed for small businesses, financial institutions still have a great scope of work in the said segment. With the MSME sector offering 111 million job opportunities and contributing to close to 30% of the nation’s GDP, there’s still a credit gap of $397 billion; a sizeable opportunity for financial institutions. With the RBI’s new guideline published on March 14, 2022, where they have notched up their support, micro-loans have been defined as collateral-free loans to a household comprising husband, wife and unmarried children and with a yearly income of up to Rs 3 lakh (revised from Rs 2 lakh for urban areas and Rs 1.6 lakh for rural areas earlier). The new rules also lift the price cap on interest rates to ensure that all microlenders are brought on common ground. Where rural households with small businesses struggled to avail basic amenities are today given access to a range of financial services allowing them to attain financial freedom. Micro-lending is changing the rural landscape by offering households the finance they require to build themselves. Although the service is still in its embryonic stage with a wide gap to fill, it can widen its audience range and promote inclusivity in the long run.
Tech Trends in 2023
The Information Age, alternatively known as the Computer Age, Digital Age, Silicon Age or New Media Age, is a mid-20th century period that is characterized by a shift from traditional industries to an economy being built on information technology. As of the current date of 2023, information technology has become an invaluable part of every industry we know of. It has reimagined entire business designs, models and processes therein. Let’s have a look at some compelling tech trends that have engulfed our interest. Extended Reality (XR) XR is a combination of virtual and augmented reality to create immersive experiences. It is being used in several fields such as education, gaming, healthcare, etc. However, it is re-envisioning the financial sector. XR is being used for purposes such as training, visualization, customer engagement, risk management, etc. For instance, XR can be used to visualize financial models in 3D allowing analysts to gauge relationships between different variables. Or, banks can use ER to create virtual tellers and access financial information and services. To list down, XR has several usages in the financial sector, transforming its functionality. Quantum Computing The development of quantum computers, which use quantum bits (qubits) instead of classical bits, has the potential to revolutionize industries such as finance, healthcare, and transportation. Speaking about the financial sector, quantum computing can enable financial institutions to perform complex organization calculations which can lead to better portfolio management and risk diversification for investment companies. It is also swift in undermining risk factors in real-time which allows companies to develop a better risk-averse model. Internet of Behaviours (IoB) The IoB is a concept that refers to the collection and analysis of data from various sources such as social media, mobile devices, and wearable technology to gain insights into people’s behaviours and preferences. This technology is a big gain for the financial sector as it contributes heavily to predictive analysis and consumer insights. Given that the financial sector is reimagining its approach and turning customer-centric, IoB ensures its vision meets reality. Autonomous Systems Autonomous systems such as AI and ML have a significant impact in several fields, especially the financial sector. Ranging from fraud detection, consumer insights and experience, trading and risk assessment to compliance, AI and ML contribute to every bit. For instance, the development of chatbots with the help of AI has allowed financial institutions to understand and resolve consumer grievances/preferences almost in real-time. This ensures an enhanced customer experience (CX). Blockchain As we know, blockchain is a decentralized, distributed ledger technology that provides a secure and transparent way of storing and sharing information. Means, it benefits the finance industry in numerous ways, especially in handling critical functions like payments, settlements, asset management, etc. With the help of blockchain, financial institutions can structure and implement better, more secure and quicker services with much lower costs. Edge Computing Edge computing refers to the processing and analyzing of data at or near the source, rather than sending it to a centralized data center. In the financial sector, edge computing can help to improve operational efficiency, reduce costs, and enhance customer experience. For example, edge computing enables financial institutions to process and analyze their data real-time leading them to make quicker and better-informed decisions thereby reducing their risk quotient. We understand that technology is ever-evolving and with each passing phase, we will experience a new revolution however today, these trends are making a visible mark in several domains, especially the financial sector.
What are Neobanks and how do they change the FinTech market?
From the years 2021 to 2025, the global fintech market is expected to grow at a CAGR of 23.58%. Contributing to this growth is the concept of Neobanks. With the advent of new technologies and automation taking every industry by storm, the Neobanks industry is expected to grow at a compound annual growth rate (CAGR) of 53.4% from 2022 to 2030. The Fintech industry has come a long way from the traditional means of banking; now, with the advent of state-of-the-art technologies, the sector has seen a significant amount of transformations. People have become habitual to the 10-minute grocery deliveries and expect the same with their transactions. The traditional methods of banking, i.e., standing in long queues, and filling up a huge pile of paperwork, was a tiresome and monotonous task. However, with the incorporation of Neobanks, these tasks have been eliminated. Let’s understand in detail how these technologically advanced Neobanks have transformed the Fintech market. How has Neobanks changed the Fintech market? Ever since their implementation, Neobanks have made banking operations easier and focused on giving customers an overall efficient experience. In recent years, venture capital firms have paid significant attention to neobanks and invested heavily in them. Furthermore, with the various segments available on the Neobanks applications, the segment of a savings account by the year 2028 is expected to grow at a sizeable market share. Over the course of time, the Neobank platform has upgraded and launched new products as a means to alter the course of the entire fintech market. Much like the savings account service of the Neobank platform, the segment of personal application is estimated to grow rapidly till the year 2028. With the state-of-the-art technological concept and ease in banking operations, Neobanks have changed the Fintech market. However, before the advent of the Neobanks, the banking sector was disrupted due to the pandemic and other external factors. Source: https://www.finextra.com/blogposting/21843/how-neobanks-are-defining-the-future-of-banking Further, Neobanks have a significant amount of impact on rural areas. Neobanks, or digital banks, have the potential to greatly benefit rural markets that traditional brick-and-mortar banks have underserved. People living in rural areas who have to travel long distances to carry out their banking operations can reap the benefits of a Neobank. Neobanks have further transformed the whole Customer experience by implementing convenience, a user-friendly interface and an element of personalisation. Neobanks are often more agile than traditional banks and able to introduce new features and services more quickly. They also tend to focus on using technology to improve the customer experience. The increased competition among neobanks is transforming traditional banks through digital transformation. There has been an improvement in traditional banks’ apps, seamless integration of digital and in-person experiences, more services offered, and the elimination of overdraft fees. There are benefits to consumers on all levels as a result of this shift. The more competition in banking, the more exciting innovations that will emerge, the more online features and access consumers will have, and the greater financial inclusion they will experience. Financial services like budgeting apps and savings tools are becoming more accessible to traditionally underserved consumers. These tools assist customers in improving their financial health and building real wealth. Conclusion From automated services to enhanced customer experience, Neobanks have greatly impacted the Fintech market. Moreover, they can act as a key to becoming profitable entities by convincing traditional banks to invest in new-age technology and streamline processes so customers can experience seamless and swift services. In the digital age, customers have different expectations from banks, which is why neo-banks are filling the gap between traditional banks and the digital era. In the near future, they may surpass conventional banks in terms of efficiency and profitability.