Neobank’s are completely online-based, digital banking services. Simply put, they do not have physical branches like conventional system of banking. Transactions in traditional banks could take a lot of the clients' time and efforts. Neobank’s, which add an immersive, digital layer on top of conventional banking, guarantee a flawless online experience. Customers can independently create accounts and use their services without problem thanks to their tech-driven character.

Since the Reserve Bank of India (RBI) does not yet enable wholly digital banking establishments, some of the country's major services are provided by partnerships between Neobank’s and conventional banks.


As they provide numerous advantages to fulfil the changing needs of new-age consumers, Neobank’s are increasingly becoming a preferred option for many customers. They concentrate on making banking more user-friendly and quickly meeting their needs.

India is currently developing faster than many other nations in terms of internet usage and smartphone penetration. Neobank’s have seized this opportunity and offer services that are driven by technology. Numerous millennials and tech-savvy people have been drawn to this. Neobank’s differ from conventional banks in the following ways:

Savings account Users may find long wait times in conventional brick-and-mortar banks to be interminable. Neobank’s' internet presence makes it simple for users to open savings accounts, complete with an actual debit card.

Credit cards Neobank’s provide fantastic credit card deals. Neobank’s are quickly rising to prominence as a potential alternative to traditional banks, which are reluctant to provide financial services to specific companies and sectors (such as startups). Based on company performance, some Neobank’s even provide high-limit, unsecured credit cards.

Personal or business loans:  Neobank’s strive to assist some of the underbanked communities while providing a wide range of services, such as startup and individual loans. Neobank’s are doing this to address and close the gap between traditional banks, people, and expanding enterprises across the nation.


FRONT-END NEOBANK Neobank’s that are front-end-focused lack an operating banking license. It typically depends on the support of a conventional financial institution and works in collaboration with them to offer services to its clients. Such a Neobank’s frequently operates by using the regular bank's balance sheets as a backstop.

DIGITAL BANKING UNITS The online branches of a traditional bank are known as standalone or independent digital banks. One well-known example is YONO from SBI. To operate a stand-alone digital bank, a virtual banking license is required. Once these banks have enough capital to guarantee the deposits of their investors, they can obtain their banking license.

How exactly does a neo-bank bank operate?

First of all, it must be made clear that neo banking should not be confused with online banking. Both of them employ technological solutions to cut fixed overhead expenses and function as banking services via mobile and other devices. The similarities stop there, though. Neo banks are different from traditional banks in that they provide a user experience that is easier to use, more intuitive, and pleasant.

Neo banks may employ one of three operating model strategies:

  • Non-licensed fintech companies that work with traditional banks to create a mobile or online interface and wrapper for their partner institutions' products
  • With their own digital initiatives, traditional banks
  • Neo banks with a license that operates independently of traditional banks. In nations that permit it, this is typically the case with licenses for digital banking.

While some Neobank’s have their own banking licenses, the bulk partner with established banks rather than applying for their own license. In this operating model, the banking partner offers the whole platform for controlling customer accounts, keeping client cash, and setting up the channels for interbank payments and settlements. The distribution of products and administration of the entire customer journey, from client acquisition to service, are within the purview of the Neobank’s.


  1. Banking as a service Working with current banking products is the key to fulfilling neo banks' goal of streamlining the financial management process for their users in the digital banking environment. On top of the fundamental banking products and payment infrastructure offered by banking partners, they essentially develop the application layer for the products and services. Neo banks have agreements with third parties to cross-sell value-added products. This enables them to concentrate on the element of their products' user experience.

New age, flexible and scalable tech platforms Neo banks are far more technologically oriented than your usual bank, typically referring to themselves as tech businesses first and banks second. The front and back ends of a neo bank's system are both entirely digital and aren't constrained by heavier traditional tech platforms, as can be seen by looking beneath the hood. They are also mostly app-driven, so you can probably complete the majority of typical operations like account opening, fund transfers, or customer assistance with a few finger taps. Neo banks make it simple and paperless to open a virtual bank account and manage your finances from the comfort of your couch.

Marketing as a strategic differentiator Neo banking places a lot of emphasis on marketing strategies. Neo banks more than make up for any inherent lack of client trust and legacy (because many of them are essentially startups) with a variety of customer engagement initiatives. Neo banking entirely diverges from digital banking at this point. Neo banks frequently use digital and social media to promote their campaigns, with a focus on community development, influencer marketing, and releasing uplifting testimonies. A key benefit for any Neobank’s is customer referral, which is frequently designed after the likes of successful platform economy behemoths like Uber and Netflix.


Neobanks are rapidly transforming the banking landscape in India by leveraging advanced technology to offer seamless, efficient, and user-friendly financial services. With the country's increasing internet penetration and smartphone usage, Neobanks are well-positioned to cater to the evolving needs of tech-savvy consumers and underbanked communities. By partnering with traditional banks and complying with regulations set by the Reserve Bank of India (RBI) and the National Payments Corporation of India (NPCI), Neobanks ensure secure and reliable banking solutions.

At CorpZo, we understand the dynamic nature of the financial industry and the critical role Neobanks play in driving innovation. Our expertise in regulatory compliance, fintech advisory, and strategic partnerships can help Neobanks navigate the complex regulatory environment, optimize their operations, and scale their services effectively. With our support, Neobanks can focus on what they do best – providing exceptional digital banking experiences to their customers.