The neo-banking trends and innovations that will shape India’s D2C ecosystem – Times of India
Globally, neo-banks are gaining traction with more and more banks either launching their digital-only version or tieing up with fintechs merging and increasing customer bases. This leads to more engagement with the customer and thus helps the banks to digitally tailor products to each customer’s need which was impossible to do earlier considering the effort needed to manually manage customers.
These advancements in banking have led to the evolution of the so-called Neo-banks or Challenger Banks which are terms used for fintech using technology to offer easy-to-consume financial solutions to the end user. Internationally these fintechs have been granted licenses to operate and cater to the consumer.
From never heard interest rates for savings, flexible and low-cost investing platforms to cards that can be used anywhere in the world the services which these challengers offer to the customer are unparalleled.
In a country like India where the problem with banks is not of convenience but of non-existence and a massive population, unfortunately, we as a country are one of the largest underbanked populations. Can this be made into an opportunity? This is where the newly formed Neo-Banks will likely help bridge the gap between a traditional bank and its customers.
What is a D2C ecosystem?
D2C is the abbreviation for direct-to-consumer. This ecosystem refers to the supply chain directly from the producer of the service to the end-user. This gives the company total control of their business from supply chain to distribution to marketing.
The most famous and used D2C option is online sales, and e-commerce is cost-effective and customer oriented. Instead of having multiple hops with distributors retailers and then the actual customer, the brands focus on directly acquiring the customer thus creating value for the Brand as well as the customer. A simple example of this is how D2C brands have a much better quality of products at a much more affordable price point.
How will neo-banking trends and innovation shape this D2C ecosystem in India?
Neobanks in India are very different from the ones in the Americas or EU markets. In India, Neo-Banks operate on top of an existing bank and/or aggregate services from multiple financial institutions and present it in a very easy-to-consume form to the customer.
Thus, Neo-Banks are direct-to-customer versions of existing products for existing banking and financial needs. The internet penetration and smartphone usage growing faster in India than in any other country. Taking advantage of this trend, these Neo-Banks will cater to a population with their easy-to-access apps and services. A lesser-known fact is that s a few years back, this segment was unknown to the financial or D2C ecosystem and consisted of more than 50% of India’s population.
Keeping the customer-centric approach at the center the Neobanks have several benefits over a traditional bank. Neobanks are quite cost-effective when compared to traditional banks. They provide ease of setup. Traditional banks require you to physically do all the needful work whereas with neobank all your operations are online which saves a lot of your money. Also, since a Neobank operates fully online, it saves a ton on setup and lowers the cost. Overall, Neobanks support and build on the direct-to-customer methods of providing services.
In today’s age, we know that technology is king. In this case, it has the potential to completely change the scenario of the D2C ecosystem. By integrating the latest technology, data, AI, voice interfaces and local networks to provide Neobanks can provide the best user experience. Additionally, they can help boost the customer experience as they provide round-the-clock services with faster resolution times hence removing the difficulties to acquire the right financial services as compared to the traditional bank’s customer services that consist of a long process chain.
Thus, coupled with the hunger and adaptability of the new age D2C brands, the customer is presented with options to pay or use a service that was previously unavailable. With services like UPI, Pay later, On-tap loans, easy EMI options, etc. the consumer will be in a much easier state to consume the various D2C business. So, the new technological and Neo-Banking trends will help these D2C brands tap a market with huge potential and thus will be the next phase of growth for our country.
Views expressed above are the author’s own.
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