India's Neo-Banking Boom: 15 Players Transforming Traditional Finance
India's financial landscape is evolving rapidly, with neo-banking gaining significant traction since around 2017. This digital revolution has been further accelerated by the Covid-19 crisis, transforming traditional banking and opening new markets.
Neo-banks aim to provide seamless online banking experiences, attracting significant seed funding in 2019, ranging from $5 to $20 million. They operate cost-efficiently, allowing them to pass on benefits to customers and drive digital and financial inclusion.
Most neo-banks in India follow the Over-The-Top (OTT) model due to local license restrictions. They focus on retail and MSME markets, offering services like accounting, invoicing, and expense management. Popular neo-banks include Paytm Payments Bank, Airtel Payments Bank, and Jio Payments Bank, though their specific operational models may vary.
The pandemic has also seen e-wallet companies and digital payment service providers flourish. In response, the Indian government and regulatory bodies are introducing new frameworks to address cybercrime concerns and align digital transformation strategies.
With approximately fifteen established neo-banks operating on three models - Digital Only Direct banks, Digital Only Challenger banks, and the OTT model - India's neo-banking sector is thriving. As digital transformation continues, so too will the evolution of banking services in the country.
