Neobanks to continue relying on partnership model

With the arrival of technology, several banking transactions can now be done just with a click of comfort of the home without the requirement to visit any bank branch.

A lot of fintech companies such as neo banks have also emerged to provide seamless client experience with respect to banking transactions. Neobanks partner with regulated banks/NBFCs and offer financial services without any physical branches. But absence of direct regulatory licensing for these platforms was considered as one of the challenges to the growth of this industry.

Shruti Rajan, partner, Trilegal law firm said, “The time has arrived for neobanks to fit in the differentiated banking licenses framework”.

The discussion resolved around the services being provided by neo banks, challenges and regulations for the industry. Other panellists included Virender Bisht, co-founder and chief technology officer, Niyo, Sumit Gwalani. Despite calls for regulations, neobanking players emphasized that they will continue to rely on collaboration with conventional banks to conduct their business.

There are currently three types of neobanks savings led credit led and payments led. In terms of savings led, on asking why a customer must open an account with a neo bank and not directly with the bank, Gwalani from Fi said, “Most of the millennials with GenZ don’t even understand their finances”.