Neobank a new fintech revolution is taking on the modern financial markets like storm. What is Neobank? Well Neobanks are those financial technology firms that offer digital or mobile-only financial services normally through an official mobile app, they offer direct banking services to its customers without using traditional branch-banking system.
Yes you do not have branches, no ques, no extra waits.
These digital bank accounts are mostly operated through mobile phones or thier installed apps. You can transfer funds, open close single or joint saving accounts and even receive your saleries if supported by payment network.
This technology and its usage has cut down the ‘transaction finalizing’ time dramatically in how the money flows around the market now days. Therefore most of these neobank offerings come from existing banks and financial institutions who are aware of lags in business processes and use these financial technology firms to enhance their existing business flows. To appeal the tech-savvy masses and unbanked populations, established banks in partnership with these fintech companies develop new products with new names.
But the most interesting these neobanks also known as mobile banks, app banks or simply digital banks — fintech startups try to improve your banking experience and make you feel more connected and involved in your money management.
Pakistan,has one of the most least developed e-commerce landscapes. Around 90% of online shopping still gets paid using Cash on delivery payment methods. There are mobile-payment based platforms already in market, who have started branching out to offer sim operated bank accounts to Pakistani customers, how ever 90% transactions of these bank accounts can not be completed without visiting the retailers or company agents. This goes against the basic principle of “ improvement “ — where newer system should be better and then old one, how ever we see these new roll outs also carry the same problems inherited to them by traditional Banking system.
Pakistan’s banking sector desperately needs and overhaul and there are demands for several features of neobanks that come with this new fintech technology. Their low costs of business operations is one thing which can make the dream of real ‘free-banking’ a possibility as digital products are typically inexpensive, with no monthly maintenance fees. Transparency is an other integral part of this system and there will be less surprise charges and exorbitant overspend penalties. Neobanks often only let you spend what you have in your account.
Neobanks can help customers in Pakistan do more. In addition to basic banking tasks, they can help to manage finances, predict activity in accounts and even prevent problems.They can create a faster b2b and b2c payment network which is secure, robust and real time. It is easier to get loans and credit approval as they take out the rigid and time-consuming loan application processes, neobanks use innovative ways to evaluate credit history and speed up the process.
Neobanks always tend to be more popular with SMEs. Banks have traditionally focused on large businesses and have been less interested in funding small businesses but with neobanks their small business market can increase.
However we can not overlook the challenges in setting up and implementation of this technology. Deposit insurance aspect of business is a major issue in this. Funds at a neobank may or may not be insured by the Government and regulators.
Consumer protection is something which has always been priority in traditional banking sector and it holds the same value and importance today in all fintech innovations. The current laws and regulations of Pakistan may not be ready for neobanks.
They current crypto currency ban by State Bank Of Pakistan on crypto exchangers does not make working in emerging fintech sectors any easier in Pakistan. However , the big question is that If there’s a problem with these new online banking apps, new services, or non-regulated service providers, who takes the blame?. In some cases, a consumer may not even have any legal recourse or well-defined processes to follow.
Then finally Branchless Banking may not appeal every one.Some people like bank branches, and they can definitely get a lot done in person. That said, it’s becoming increasingly easier to do everything online. Plus, some neobanks allow you to deposit cash at retail stores and use a vast network of ATMs at no charge.
As Paypal has decided recently not to offer its services in Pakistan for some time, we at BTCPk believe that there is a huge market gap and there should be an out of box solution to kick start the real digital economy in Pakistan. As an advancing economy we can not grow a lot just on CODs and 2 weeks of average merchant payment clearing process.
Neobanks are still evolving, and there’s a lot we still don’t know about this technology. You can read more about NeoBank Market news and check this top and best Neobanks list for more information about neoBanking markets. Generally, It is expected that, they will have a positive impact on financial management and Worldwide banking.