Existing Banks Vs Neobanks – Personal Finance as a Strategy

Existing Banks Vs Neobanks – Personal Finance as a Strategy

With a lot of new banking options suddenly available to the Indian consumer, the battle of the banks is hotter than ever. Involving users with better experiences and personal financial tools is increasingly becoming a key factor in deciding which bank the Indian consumer will choose.

$ 230 million in funding has been raised by Niyo, FamPay, Jupiter and Fi in 202 alone. (designed).

The Indian consumer is now surrounded by a variety of banking options, from current players to the new neobanking experience. The payment page of every consumer application in India is flooded with discounts and rewards from every new and old bank in India. This is happening at a time when the average consumer is looking for a personalized and holistic management of personal finances to improve their financial habits and health.

We believe that capacity building around personal finance will be key to market share as traditional operators and non-banks struggle. Neobankers, with technology as a core competency, are slowly building personal financial experiences that drive growth from acquisition to involvement and revenue.

But operators with a majority market share cannot move quickly to personal finance as a strategy due to weak technological capabilities. But the cost of this will be the loss of customers, at a time when retention is essential for traditional operators.

Personal finance is becoming a priority

With the socio-political landscape supporting financial inclusion and awareness among millennials and Generation Z, financial literacy is evolving faster than ever. Indian consumers, aggressively making digital banking a choice, are now more aware than ever of personal finance.

Consumers seek to understand and control their spending, savings and investment tools and keep abreast of their overall financial health. All of this was inaccessible to consumers until recently, when the aggregation of accounts framework made possible a number of personal finance experiences.

Since then, there has been an increase in risk finance for personal finance mandates and then a further increase in the number of personal finance applications and their downloads in India. The modern Indian consumer has made personal finance a priority.

Personal finance as a strategy

Neobanking uses technology to build captivating personal finance features such as summary and analysis of expenses, budgets and savings, recommendations for investment options, etc. This is in line with the basic principle of neobanking – customer delight.

These experiences affect the entire life cycle of non-bank customers:

● Acquisition by offering new personal financial functions, such as limiting expenses, following the budget.
● Involvement throughout financial travel, offering features such as rounded savings at home.
● Monetizing by tracking cash flow and financial behavior and recommending savings and investment instruments.

Neobank has created rich experiences based on several technologies, such as machine learning, where users can search for information such as “How much money did I spend on food last month?”

Technology – Achilles’ heel of existing banks

In a world where most app store ratings are full of complaints about a poor user experience, existing banks have a lot to recover from in this bank battle. Banks are traditionally slow-moving organizations and are far behind neo-banks in terms of digital experiences and offerings.

● The long time to market with any new digital experience poses a massive threat to traditional operators.
● Weak fintech skills prevent banks from implementing advanced technologies and uninterrupted experiences.

Existing banks, however, have a massive trench in the form of historical data that is close to digital experiences. But if they do not overcome the Achilles heel of technology, they will not be able to extract value from their data.

Building incorporable personal finances

Backed by the industry’s leading fintech players and some of India’s largest venture capitalists, Fego, a Chennai-based startup, is building a solution for traditional banks. By packing most of the engineering and technology overhead involved in providing personal finance experiences, they can significantly reduce the time to market for traditional banks.

While addressing technology addiction, Fego experiences can simply be incorporated by traditional banks into their existing digital presence. With a range of modular personal finance experiences that are optimized to please customers, these experiences can help them replicate the growth along the channel, which is currently limited to non-banks.

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