Since its genesis, banking has depended on legacy physical infrastructure, but the last decade saw the shift to digital-first models. As per the report, the Banking Matrix - Emergence of open and integrated neobanks released by Grant Thornton Bharat, neobanks cater to the millennials, MSMEs, unbanked population and thin-file customers who are looking for easy accessibility and instant turn-around.
The growth prospects of the Indian neobanking market and provides a forecast at a three-year compounded annual growth rate (CAGR.) of 50.5% to reach USD 11.65 billion by FY2025. Neobanks are branchless banks interacting directly with customers to provide a seamless banking experience. The Indian growth story is counting heavily on its young population, with more than 50% of the population being below the age of 28. The report assesses that future consumer trends will be dictated by the first generation of truly digital natives. The India stack has played a central role in India’s digital banking growth allowing banks, non-banking financial companies (NBFCs), fintechs, governmental agencies and other financial services players to enable the digital, paperless and cashless delivery of services.
Indian neobanks are transforming the traditional banking experience for MSMEs by offering them a seamless digital experience, low-cost structures and several value-added services in addition to banking products such as bookkeeping, invoicing and reconciliation among others.