Top 14 Neobanks that Reinvent Banking Experience in India

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Artboard-1-copy-8-3.webp" alt="M2P Fintech" title="" width="100%" height="358">As technological advancements promote growth in our country, lack of financial literacy still prevails. In a recent incident, a farmer has reportedly lost his savings worth two lakhs to rats. He stored his money as cash in his house. The farmer wouldn’t have lost his savings if he was aware of a financial institution. The eradication of financial illiteracy and improving maximum financial inclusion help us overcome such situations.<h2 class="heading-node" id="45b6" style="text-align: justify">What is Financial Inclusion?</h2>Financial inclusion aims to offer primary financial products and services to all individuals and businesses and makes these services more accessible and affordable.Financial institutions aim to offer basic services that include payments, transactions, savings, credit, and insurance sustainably to drive more financial inclusion. New technological innovations in fintech have caused organizations to offer cost-effective services to their customers.<h2 class="heading-node" id="fb52" style="text-align: justify">Measures to improve Financial Inclusion</h2>The Reserve Bank of India started taking measures in 2005 to improve financial inclusion in our country. The government initiated the National Mission for Financial Inclusion (NMFI), including Pradhan Mantri Jan Dhan Yojana (PMJDY), which provides services to unserved areas.Furthermore, the “Digital India” initiative, which provides accessible digital banking services with simplified formal verifications using unique identification (Aadhaar), is also a bold move towards improving financial inclusion in the country.<h2 class="heading-node" id="6804" style="text-align: justify">Fintechs boosting Financial Inclusion</h2>Indian fintechs are the biggest drivers of achieving financial inclusion, with an adoption rate of over 87%. In the recent decade, fintechs have widened operations to provide personalized services without opting for the traditional route. Also, the rise of the popularity of smartphones around the globe led to the establishment of new financial services. “As of February 2021, there is a record of 2.3 billion digital payment transactions made worth over 4 trillion rupees.” From Demonetization in India to the Covid-19 outbreak, people are now more interested in using financial services such as digital payments, lending solutions, etc. Digital financial services help many small and medium-income businesses to offer cashless payments option to their customers.<blockquote class="block-node" id="wp01kwej7">According to an annual report for FY 2020–2021 by RBI, the volume of digital payments is at 453 crores in India.</blockquote>With increasing ideas and innovations, fintechs ensure more inclusion. With the growth in the industry, a wide range of products and services are set to enter the market to offer customized services. Products such as<a class="link" href="https://m2pfintech.com/blog/the-rise-of-digital-payments/"> digital payments</a>, digital credit, <a class="link" href="https://m2pfintech.com/blog/neo-banking-101-all-you-need-to-know/">neo banking</a>, <a class="link" href="https://m2pfintech.com/blog/api-the-power-that-drives-new-age-banking-ecosystems/">API banking</a>, <a class="link" href="https://m2pfintech.com/blog/prepaid-cards-101-a-definitive-guide-for-growth-and-profitability/">prepaid cards,</a> etc., have established effective financial inclusion.<h2 class="heading-node" id="acff" style="text-align: justify">What challenges do we face?</h2><ul class="list-node" id="30k5oemaa"><li>The excluded sections, such as rural, poor areas, often don’t have access to a financial institution and often approach moneylenders.</li><li>A constant need to improve financial literacy as many rural people have less or no awareness of financial institutions.</li><li>Lack of formal identification documents is also a significant challenge when people reach out to a financial service. Poor sections lack access to financial services, as they lack various documents such as proof of identification, birth certificate, etc.,</li><li>Even though people&nbsp;have a financial account, most users still prefer cash. Lack of trust and reliability prevents a customer from accessing the available financial services.</li><li>Gender inequality to access financial services as women pay higher interest rates than men.</li><li>Low-income levels indulge in a myth that financial institutions only offer services to high and middle-income groups.</li><li>Some people are uncomfortable due to language barriers, formal documents, and the formalities that we go through before a financial transaction occurs.</li></ul><h2 class="heading-node" id="e955" style="text-align: justify">Overcoming the Challenges</h2>To alleviate the challenges faced by consumers, there arose a need to innovate new and simplified products. New technologies, fintech innovations, and the digital finance revolution have now become the constant drivers of financial inclusion. There is a constant growth in the sections of digital finance over traditional finance methods.<blockquote class="block-node" id="zr04eywdz">Digital Financial Inclusion ensures that the excluded and unserved population has digital access to financial services.</blockquote>Digital services focus on affordability, customer satisfaction, and sustainability. New digital platforms run by the institutions now accommodate small levels of cash flow. These services allow the low sections to make transactions, thus preventing the use of informal services. Understanding the potential and risks such as operational risks, financial crime risks, etc., while improving digital services can contribute to the growth of digital financial inclusion. Similarly, technological innovations have increased financial inclusion. These innovations aim to regain customers’ trust, rectify geographic and accessibility issues to bring in new consumers. Information technology, smartphone-enabled services have reduced the need for physical banks. With technological development, we can develop a rural information infrastructure that provides financial services to the underserved. Fintechs have also played a significant developmental role in achieving greater financial inclusion. Fintechs acts as a catalyst for financial inclusion as it creates more opportunities for the unbanked population. The shift of digital transactions from traditional transactions has improved self-employment, rural entrepreneurs, small borrowers, mediums, and enterprises. Lack of financial awareness, high cost of traditional services, and other policy gaps were significant challenges while achieving financial inclusion. Fintech startups play a critical role in overcoming these challenges in the economic landscape. The tremendous growth in fintech has shown a positive shift as a report shows that 99.5% of consumers are now aware that they can transfer money and make payments with fintech platforms.<h2 class="heading-node" id="b97f" style="text-align: justify">Fintech products driving inclusion</h2> New fintech products have helped consistently in driving the financial inclusion of the country. As discussed earlier, these products allow the work of financial services and offer a streamlined process. These fintech products applied to reality are the main drivers of financial inclusion.<h3 class="heading-node" id="e38e" style="text-align: justify">Embedded Credit</h3><a class="link" href="https://m2pfintech.com/blog/beginners-guide-to-embedded-lending/">Embedded credit</a> focuses upon integrating ‘lending as a feature’ in digital platforms. Customers receive their credit with the involvement of a familiar interface and eradicate the need for a third-party site. Micro, small and medium enterprises (MSMEs) face difficulty offering small credits, increasing demand here. The B2B e-commerce marketplaces provide the ultimate <a class="link" href="https://m2pfintech.com/blog/factors-and-psychology-behind-the-great-bnpl-allure/">BNPL (Buy Now, Pay Later)</a> option for the retailers while they checkout. BNPL offers these MSMEs to purchase on credit and pay later. BNPL is one of the fast-growing payment options which also helps MSMEs to expand their business. The BNPL would account for 3% of the global e-commerce spend by 2023. Thus, this system provides a convenient platform for consumers to experience new market products.<h3 class="heading-node" id="f250" style="text-align: justify">Digital Payments</h3><a class="link" href="https://m2pfintech.com/blog/the-rise-of-digital-payments/">Digital payments</a> (also called electronic payments) are the method we transfer one point value from one account to another using a digital device. Digital payments are end-to-end digital transactions, and also, they don’t require the usage of physical cards, thus reducing costs.For example, the latest introduction of <a class="link" href="https://m2pfintech.com/blog/e-rupi-indias-digital-upgrade-for-the-underbanked/">e-RUPI</a> which is a digital payment solution created by the Government of India to allow cashless payments. e-RUPI is powered by the National Payments Corporation of India (NPCI), and the one-time payment mechanism is easy, highly secure, and entirely confidential. The distributions are also made easy, safe, and contactless.<h3 class="heading-node" id="7d7d" style="text-align: justify">Neobanking</h3>Neobanking is an innovative method of approach in which financial institutions offer services without physical presence. <a class="link" href="https://m2pfintech.com/blog/top-14-neo-banks-that-reinvent-banking-experience-in-india/">Neo banks in India</a> operate on a low-cost model with minimal to zero monthly fees on deposits and withdrawals, and rock-bottom balance requirements. These drivers bring consumers and businesses across income levels into the fintech fold, fostering financial inclusion. Neo banking is highly famous among the millennials and Gen Z as they no longer use outdated processes. Neo banks use Artificial intelligence and machine learning to create a customer-centric Banking experience, with the aim to reduce human dependence.&nbsp;Neo banks provide millennials and Gen Z their own customized product set, making the process fuss-free. Millennials and Gen Z prefer simplified and easy- manageable finances, thus proving neo banks are a blessing in disguise.<a class="link" href="https://m2pfintech.com/blog/7-steps-to-start-a-neo-bank-from-scratch/"> Curious to know how you can start a neo bank? Check out these 7 steps.&nbsp;</a><h3 class="heading-node" id="3aa0" style="text-align: justify">API Banking</h3><a class="link" href="https://m2pfintech.com/blog/api-the-power-that-drives-new-age-banking-ecosystems/">API Banking</a> provides better means to share data, helps in integrating systems, and makes services more personalized. In API banking, tailor-made products improve the overall customer experience.With the help of API banking, new fintech innovated products offer features and services aligned to provide flexible services. Innovations in API banking have reduced costs and now made it economical for the unbanked and underserved as they can now experience better products and services.<h3 class="heading-node" id="921d" style="text-align: justify">Open Banking</h3>To offer better services, open banking offers third-party financial service providers access to financial data with the help of APIs. <a class="link" href="https://m2pfintech.com/blog/open-banking-a-primer-2/">Open banking</a> is highly prevalent in Europe. Open banks help achieve more financial inclusion as it allows small, medium businesses access particular tools and services that target the needs of their consumers. Innovations in open banking and the experimentation of products can foster higher financial inclusion in the long run.<h3 class="heading-node" id="9d8d" style="text-align: justify">Prepaid Cards</h3><a class="link" href="https://m2pfintech.com/blog/prepaid-cards-101-a-definitive-guide-for-growth-and-profitability/">Prepaid cards</a> help us process payments quickly as we have better cash flow management, easy reimbursements, and more security than cash or cheques. They are a super alternative to carrying cash around. They are available as gift cards, meal cards, and also as travel cards. Prepaid cards are a great way to control business expenses, improve efficiencies and generate revenue streams.&nbsp; However, the time, cost and effort involved in card issuance in-house are huge.The best way to manage card issuance is by <a class="link" href="https://m2pfintech.com/blog/why-should-apis-be-your-holy-grail-for-prepaid-card-issuance/">deploying the right APIs.</a><h3 class="heading-node" id="ee0a" style="text-align: justify">Mobile Wallets</h3><a class="link" href="https://m2pfintech.com/blog/how-to-implement-the-best-prepaid-payment-instrument-ppi-for-your-business/">Mobile wallets</a> are famous and convenient due to their accessibility. Transactions are made easy as we can send, receive and store money easily with the help of our smartphones. In reality, right from a vegetable vendor to corporate and digital firms, every one of us can easily transact if we have a mobile wallet.Mobile wallets ensure that every person can participate in a financial transaction with its cashless and contactless technologies. The whole process boosts the economy while achieving more financial inclusion.The future ideas of the fintech industry will result in product innovations while improving existing ones, thereby offering more affordable and accessible services to both the unbanked and underbanked. Furthermore, the coupling of fintech and financial institutions will help eradicate financial illiteracy and promote financial inclusion. With the acceleration of fintech and its budding ideas, the future of financial inclusion is bright and holds many opportunities that come with new beginnings.Need more info on how fintech can help you? Write to us at <a class="link au mg" href="mailto:business@m2pfintech.com" target="_blank" rel="noopener ugc nofollow">business@m2pfintech.com</a>.<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox. Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

Fintech- A Catalyst for Financial Inclusion

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/04/banner-1251.webp" alt="M2P Fintech" title="" id="pwxzxj8z1" width="100%" height="661">A few years ago, banking was always considered an arduous task with its complexity. But now, when we think of banking, ‘digital transaction’ springs up to our minds immediately, which makes our job simpler. Thanks to Neo banks, it redefines banking in the most user-friendly way and makes it more popular in recent years. Ergo, many customers now prefer using fingers for banking rather than their feet to visit the brick-and-mortar banks.Why such hype for Neo banks?What makes it stand out in the banking sector?We have unraveled everything you need to know about Neo banks in this blog. So, let’s get started right away.<h2 class="heading-node" id="299c" style="text-align: justify">What is a Neo Bank?</h2>Neo Bank is a type of digital bank that works entirely online without a physical branch. It is a customer-focused banking sector that attracts present-day tech-savvy users. They are also recognized as fintech that is demystifying the financial ecosystem actively. With Neo banks’ advanced features, the users can manage money wisely by using only their mobile phones. Moreover, compared to traditional banks, neo banks offer cheaper and faster banking services that include money transfers, lending, mobile-first financial solutions, and many more.<h2 class="heading-node" id="8b98" style="text-align: justify">Three working modes of Neo Banks</h2>Though Neo banks appear to be an app that controls financial services, the working is differentiated into three modes.<h3 class="heading-node" id="c677" style="text-align: justify">(i) Partners with Traditional banks</h3>It is a&nbsp;front-end focused&nbsp;neo bank which does not carry a banking license on its own and partners with a traditional bank to offer a wide range of core banking services. These types of neo banks include non-licensed fintech companies affiliated with existing licensed banks that offer seamless services and products for the bank’s customers. This collaboration ensures banks as their partner and not their opponent.<h3 class="heading-node" id="b6a7" style="text-align: justify">(ii) Bank’s Digital Avatar</h3>Here, the traditional banks develop their own digital-only initiative like neo banks to offer their services more digitally to their customers. They also go on par with the technology advancements to launch neo banking services. The banks that offer digital services through online portal comes under this category of neo banks.<h3 class="heading-node" id="c67b" style="text-align: justify">(iii) Neo Banks with a digital banking license</h3>They are called a&nbsp;Full-Stack&nbsp;neo bank that works only in countries that approve stand-alone digital entities and acquire a license from the Central Bank or the corresponding authority.<h2 class="heading-node" id="8e50" style="text-align: justify">Neo Banks Vs. Digital Banks Vs. Traditional Banks</h2>Banking is now a field where people are offered a lot of options to choose from. There are different kinds of banks that offer different services and qualities. The below image brings out the characteristics between three popular banks — <a class="link" href="https://m2pfintech.com/blog/neo-banking-the-rise-of-new-age-banking/">Neo Banks</a>, Digital Banks, and Traditional Banks.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/04/int.webp" alt="M2P Fintech" title="" id="69y0499an" width="100%" height="529">As the name says, traditional banks are the oldest of all with the most trustworthy customer relationship. They also specialize in a wide range of services and products but with tons of paperwork and, at times, online data, which demands extremely long wait times. But nowadays, traditional banks have also adopted digital tools like e-mail, SMS, application, website, etc.The next entrant is the digital banks, which are similar to Neo banks since they also offer banking services online. To simply put, they are traditional banking with a digital touch that allows users to manage finance 24/7 via an electronic/online platform. Digital banks eliminate customers’ visits to physical bank branches and automate traditional banking services with no paperwork. They uplift traditional services with a simple equation —&nbsp;Online Banking + Mobile Banking = Digital Banking.As you can see, Neo bank is an upgraded version that suits the present-day banking needs digitally and is user-friendly. Neo banks stand out with their simplified customer-centric banking approach with wise financial management. Users are satisfied with their 100% quick and easy digitized services with anywhere anytime accessibility, making them the most profitable business model.<h2 class="heading-node" id="9b30" style="text-align: justify">What makes Neo banks a lucrative fintech offering?</h2>Neo banks are one of the profitable business models that emerged in the recent few years. With their ingenious services, these financial institutions are hitting the jackpot in ways that benefit themselves and their users. The below-listed features substantiate neo banks’ success:<ul class="list-node" id="kzvx0pa02"><li>Fewer fees and faster banking services make it more popular and cost-effective even among underbanked sectors.</li><li>Neo bank is a customer-centric banking avatar as they automate services according to their users’ preferences.</li><li>They blend emerging technologies like Artificial Intelligence and Machine Learning to end the tedious banking process.</li><li>Customers enjoy various financial services like account creation, international transactions, or any services, quicker at any time and any place.</li><li>AI and data insights-driven app that tracks every transaction and generates reports as per user’s requirements.</li><li>Smart saving and Investment options are now possible with just a smartphone.</li><li>Neo banks act as a digital crust, making the core banking services crisper and accessible for their users.</li><li>They fill the digital gap and enable traditional banking services to Gen Z.</li><li>Collecting and analyzing data to give their users highly personalized and customized services.</li></ul>As a result, banking turned smarter with neo banks and easily reached out to unbanked and underbanked sectors. It also impacts banking today and tomorrow with its unmatchable digitized financial services.<h2 class="heading-node" id="smmjd1o8d" style="text-align: justify">Neo bank and its rising popularity</h2>The Covid-19 pandemic was the main reason which triggered its popularity when people were concerned about physical cash for safety reasons. People were more exposed to digital banking, which made brick and mortar banks have a healthy collaboration with neo banks. Their out-of-the-box strategies gave sudden popularity for neo banks.Starting from targeting the Gen-Z audience with product marketing, neo banks focus on the end-user experience by tailoring their User Interface to give the best possible user experience. Also, the customer gets to enjoy a better interest rate minus the need for lengthy paperwork.Furthermore, neo-banks have the ability to offer services based on popular customer opinion, and they further improve the stickiness by tailoring the services individually. When customers feel their opinions are being heard and fulfilled, they stick with the service provider. Neo banks now deploy this strategy to target specific audiences.These digital-only banks are ruling the banking space since 2017 with their innovative strategies and methods. We have&nbsp;Finin&nbsp;India’s first consumer-facing neo bank, fueled by our own <a class="link" href="https://m2pfintech.com/">M2P’s</a> API, which gives users a better track of their finances. Finin offers features like a detailed break-up of user spending and completely digital services with high bank-level security.Backed by banking licenses of the traditional banks, neo banks are adding increasing value by the day to the financial ecosystem; in fact, they can be termed as the new-age banks of today.<h2 class="heading-node" id="1101" style="text-align: justify">Turning stumbling blocks into stepping stones</h2>Even though it is one of the profitable business models in the industry, challenges are to everyone. Neo banks have limited banking services and products, unlike traditional banks, since they are relatively new. Indeed, we could see this challenger bank with a wide range of products and services in few years.Traditional banks being a string participant for decades with unbeatable trust relationships with their customers, neo banks find it difficult to gain trust. But, with collaboration with traditional banks, they are definitely coming up with great strategies and services to establish as a trustable one among customers.Neo banks are withstanding in this ambitious field with many robust financial institutions around. Every entrant, including traditional banks, would have faced their stumbling blocks and crisis, which led to the products and services we enjoy now. So, neo banks being an active player is turning every stumbling block into a stepping stone in its way.<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox. Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

Neo Banking 101: All you need to know

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Artboard-1-copy-8-4.webp" alt="M2P Fintech" title="" width="100%" height="529">The past few days, we have been hearing, seeing or reading the word e-RUPI everywhere. And it has ignited a plethora of questions amongst both consumers, corporates and fintech alike. But, while the initial impression was that it was the precursor of Central Bank Digital Currency (CBDC), it was not so. Launched on August 2nd, 2021, at 4.30 pm, e-RUPI was developed by the National Payments Corporation of India on its UPI platform. It is a contactless and <a class="link" href="https://m2pfintech.com/blog/ready-to-sneak-peek-into-global-cashless-societies/">cashless</a> instrument for digital payment. The Department of National Health Authority, Ministry of Health &amp; Family Welfare and the Department of Financial Services have also collaborated with NPCI in formulating and launching this solution.<blockquote class="block-node" id="bta04v1ef">E-RUPI signifies how 21st century India is moving ahead with the help of modern technology and connecting technology with people’s lives,” says prime minister Narendra Modi</blockquote>The primary application of e-RUPI is to disperse welfare payments to the right beneficiaries using a one-time payment mechanism. It eliminates the need for middlemen and connects the program sponsors and beneficiaries directly. It is similar to a digital gift card and requires no bank account, smartphone or <a class="link" href="https://m2pfintech.com/blog/the-rise-of-digital-payments/">digital payment</a> app. It is a person and purpose-specific payment initiative.<h2 class="heading-node" id="76de" style="text-align: justify">How e-RUPI works?</h2>e-RUPI is a one-time payment mechanism delivered as a QR code or an SMS string to the beneficiary’s mobile number. It works more like a prepaid gift card that can be redeemed only at specific service provider touchpoints.Also, the system ensures that the service provider is paid only after the beneficiary completes the transaction. Being <a class="link" href="https://m2pfintech.com/blog/how-to-implement-the-best-prepaid-payment-instrument-ppi-for-your-business/">a prepaid payment instrument (PPI), t</a>he service provider is also assured of the payment. There is no need to follow any intermediary for payment transfer.It doesn’t require any debit or <a class="link" href="https://m2pfintech.com/blog/credit-card-processing-a-definitive-guide/">credit card</a> for its function. In short, e-RUPI is all set to connect beneficiaries and sponsors digitally, minus the need for a physical interface.Built on NPCI’s UPI platform, e-RUPI has onboarded banks as issuing entities. As a result, any corporate or government agency can approach these issuing entities and deploy an e-RUPI program for their target beneficiaries.At present, 11 banks support this initiative, and they are split into two categories:Banks that can issue and accept e-RUPI vouchers:<ul class="list-node" id="bdxkjcpgv"><li>The State Bank of India</li><li>ICICI Bank</li><li>HDFC Bank</li><li>The Punjab National Bank</li><li>Axis Bank</li><li>Bank of Baroda</li></ul>Banks who can only issue e-RUPI:<ul class="list-node" id="15mucjjom"><li>Canara Bank</li><li>IndusInd Bank</li><li>Indian Bank</li><li>Kotak Bank</li><li>Union Bank of India</li></ul><h2 class="heading-node" id="451a" style="text-align: justify">Are e-RUPI and Central Bank Digital Currency one and the same?</h2>Incidentally, e-RUPI’s announcement came a few days after announcing the phased implementation strategy of Central Bank Digital Currency (CBDC). So, it sparked speculation that e-RUPI might be a trail leading to CBDC.But there exists a rudimentary difference between the two. e-RUPI is an e-voucher based system that disburses money as it is still supported by the existing Indian rupee. Whereas CBDC deals with money creation. Click here to know more about <a class="link" href="https://m2pfintech.com/blog/central-bank-digital-currency-cbdc-101-a-primer/">CBDC</a>.<h2 class="heading-node" id="acab" style="text-align: justify">Why the e-RUPI system and its use cases?</h2>For a long time, there have been many instances of people not receiving the subsidies intended for them. Sometimes there also have been instances where the beneficiary in question doesn’t exist at all. And the Indian government had lost many millions in welfare payments alone.But, then, the introduction of Aadhar-linked subsidy let the government transfer directly to the beneficiary’s bank account. This was termed as Direct Benefit Transfer. But this also resulted in a roadblock as there are millions of underbanked and unbanked population in India.However, the percentage of mobile penetration has been impressive, so this voucher-based system will help the government reach the right beneficiary without any deviations in the system.e-RUPI will plug leakages in the welfare delivery system and can be adapted to other welfare schemes such as Mother and Child welfare schemes, drugs and diagnostics under schemes like Ayushman Bharat Pradhan Mantri Jan Arogya Yojana, fertilizer subsidies and so on.Given e-RUPI’s mission to plug in the leakages of the welfare system, the use cases can be expanded to many situations. Also, with the people rapidly adopting digital payments, e-RUPI can help bring financial inclusion even to the unbanked. The future and developments of e-RUPI look bright with many miles to go.<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox. Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

e-RUPI-India’s Digital Upgrade for the Underbanked

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/Artboard-1-copy-8-3-2.webp" alt="M2P Fintech" title="" width="100%" height="529">Fintechs worldwide bring innovative ideas, green financial products, and services for their customers to reduce their carbon footprints.Climate change has evolved throughout the earth’s history and is considered a constant threat. Humankind has always wished to put an end to this threat and save their home:&nbsp;The Earth&nbsp;and now the fintech sector has also joined hands in combating climate change with its innovative methods. Even though it is an unusual coalition, but there is a lot to explore.<h2 class="heading-node" id="a277" style="text-align: justify">Climate Fintech — A Prelude</h2>Climate fintech is referred to as&nbsp;the digital financial technology catalyzing decarbonization,&nbsp;which simply means to make the financial sector greener and eco-friendly by reducing the carbon footprint and carbon emission.<blockquote class="block-node" id="v3d0ooa0f">Also known as Green Fintech or Sustainable fintech, a combination of climate, finance, and technology.</blockquote>Green Tech is rapidly growing and has been getting the spotlight as climate activists have been very vocal in advocating a climate-conscious lifestyle with green habits. This has led many fintechs to integrate and build climate-focused products and services in recent years.<h2 class="heading-node" id="f889" style="text-align: justify">Combating climate change in action</h2>Fintech is actively doing its part by providing consumers with paperless and digital financial experiences. They are also driving many innovations and creating opportunities to treat climate-related data and services.Simultaneously, other financial companies are rethinking their strategies to reduce carbon footprint and convince their users to adapt the same. New entrants now focus on financial products that offer value to all stakeholders and achieve zero carbon emission.If you noticed, the years 2020 &amp; 2021 had numerous climatic-based financial investments in decarbonization. Cutting-edge technologies like Artificial Intelligence (AI), Big Data, <a class="link" href="https://m2pfintech.com/blog/blockchain-and-fintech-use-cases-and-applications/">Blockchain</a> help fintech provide transparent financial services and bring forth unique use cases for their users.It further helps companies track and offset their climatic impact by reducing greenhouse gases in the atmosphere. Moreover, by monitoring carbon emissions and energy consumption, fintechs are working towards persuading consumers to combat climate change. As a result, people are now expecting great financial inclusion that covers the banking ecosystem as well.<h2 class="heading-node" id="f33c" style="text-align: justify">How is Climate Fintech taking a step further?</h2>As fintechs are an integral part of combating climate change, several innovations are now being introduced to mitigate the global threat.<h2 class="heading-node" id="a5a7" style="text-align: justify">Climate-focused digital point-of-sale</h2>Fintechs allow consumers and businesses to transfer a part of their proceeds to reduce carbon footprints and focus on clean energy through online investment apps. Consumers are also now given clear visibility on what they spend their money on to lead a climate-conscious lifestyle.<h2 class="heading-node" id="4052" style="text-align: justify">Digital banking</h2>Wooden and plant-based payment cards have entered the market that automatically tracks the carbon footprint based on the transaction data. In addition, many fintechs are now working with <a class="link" href="https://m2pfintech.com/blog/top-14-neo-banks-that-reinvent-banking-experience-in-india/">digital banks</a> to create new technology that provides transaction-level analysis and tips to lead a greener life. Based on this tracked data, fintech nudges consumers to follow climate-conscious lifestyles.<h2 class="heading-node" id="cc7d" style="text-align: justify">Emission APIs</h2>Fintechs have now developed <a class="link" href="https://m2pfintech.com/blog/api-the-power-that-drives-new-age-banking-ecosystems/">APIs</a> that help businesses launch carbon-neutral products and services that offset carbon emissions with sustainability tracking.<h2 class="heading-node" id="4656" style="text-align: justify">Climate-focused Investments</h2>The wealth and investment platforms offer transparency and optimize their portfolio for greenhouse gas emission reductions, deforestation, fossil fuel divestment, etc.<h2 class="heading-node" id="88b3" style="text-align: justify">Blockchain for carbon markets</h2>Carbon markets bring transparency by offering tokens through blockchain technology to reduce the impact of carbon emissions by purchasing carbon credits.In a nutshell, climate change can be controlled with these technologies driving the financial services to build a sustainable future. Also, the pandemic has further fueled digital inclusion in everyday financial requirements, pushing consumers to continue the same in the future. It is exciting to watch out for a climate-focused lifestyle, and we should turn the tide by prioritizing and making it a green planet for future generations to relish. Also, let us think through and bring more innovative ways to put an end to the ongoing climate threat.<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox. Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

Climate Fintech: Fintech’s leading the Green Tech

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/banner1251-3-1.webp" alt="M2P Fintech" title="" id="ilmzze2wy" width="100%" height="317">The world has been churning the Open Banking mill for years, and India recently joined the bandwagon. The Indian government set the scene for the Open Banking system with the advent of UPI in 2016. However, in the last two years (post-pandemic period), the nation witnessed an extensive acceptance and adoption of Open Banking in the BFSI sector, fast-tracking fintech innovations. This feat is directly proportional to the government's nationwide campaigns that include the roll-out of IndiaStack, the launch of scalable Open Banking initiatives by banks, and improved funding to Banking-as-a-Service platforms. Today, India is at the forefront of Open Banking with a market size of around 3 to 4 million customers and is expected to grow by 46% by 2026.<h2 class="heading-node" id="h3j68aay1" style="text-align: justify">What is Open Banking?</h2>Open banking is a new-age banking practice that provides Third-party Service Providers (TSPs) open access to consumer and financial data from banks and Non-Banking Financial Companies (NBFCs). It uses <a class="link" href="https://m2pfintech.com/blog/api-the-power-that-drives-new-age-banking-ecosystems/">Application Programming Interfaces</a> (APIs) to converge data from the banking world with the rest of the financial universe.It is imperative to note that financial data is made accessible to TSPs only after explicit customer consent. Thus, customer data is transparent yet secure and accessible anytime.Expected to hit $48 billion in 2026, open banking has accelerated technology innovation and adoption. It has facilitated a level-playing ecosystem via data portability and interoperability across the country. As trailblazers in enabling open banking ecosystems, fintech firms are aggregating data from various financial institutions and giving people and businesses more freedom in leveraging financial information.Open banking helps personal finance businesses analyze spending habits and offer personalized product recommendations. Lenders can comprehensively view customer’s financial situation, assess risk levels and offer optimal account terms. Customers can also leverage open banking to understand their financial situation before making financial decisions. By providing a window into customer behavior and expectations, open banking helps reshape customer experience and frictionless commerce.Before we go further, let’s explore the roots of open banking.<h2 class="heading-node" id="a0b5" style="text-align: justify">Origin of Open Banking</h2>The concept of Open Banking dates back to the 80s in Europe. Fast-forward to 2007, the arrival of a Payment Service Directive 1 (PSD1), harmonized payment services regulation and increased competition among financial service providers in the EU.The primary aim of PSD was to harmonize consumer protection with the rights and obligations of payment service providers and users. It established an integrated payments market that offered best-in-class security and infrastructure to the end users.&nbsp;PSD also allowed countries to include sections that are explicitly valid for their payment industry. It was released as legislation on November 1st, 2009, and accepted by all EU and EEA member states.However, even though PSD offered a comprehensive framework, it was not inclusive when considering international payments outside the European Union (EU). Furthermore, it was not designed for TSPs in its scope.These bottlenecks led the EU to build a more robust framework for this directive, which resulted in Payment Service Directive 2 (PSD2). It came into force on January 13th, 2018 with new rights for certain third-party providers (TPPs) to directly access online payment accounts with explicit customer consent through the bank's dedicated interface (built on APIs).Customer authentication is the main element of PSD2, and it encompasses the following points:<ul class="list-node" id="4wrs9fhmn"><li>Strengthen customer trust by deploying the highest standards of security</li><li>Offer a better pricing model to the consumers</li><li>Make transactions safe and secure</li><li>Level the playing field for payment service providers for both current upcoming players</li><li>Transparency in payment services</li></ul>Since this legislation has been out and about, many fintech, merchants, and tech players have been vigorously channeling their resources in becoming TPPs. PSD2 categorizes the TPPs into two categories.1. Payment Initiation Service Providers (PISPs): Regulated TPPs can initiate payments directly from the customer’s accounts based on their explicit consent.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/Artboard-1-copy-9-3.webp" alt="M2P Fintech" title="" width="100%" height="253">2. Account Information Service Provider (AISP): Regulated TPPs who access customer data and provide them a single view of all their accounts for better financial management. Even this action requires the customer’s explicit consent.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/Artboard-1-copy-10-2-1.webp" alt="M2P Fintech" title="" width="100%" height="253">PSD2 laid the groundwork for open banking, a practice that is very relevant, safe, quick, and easy to use.<h2 class="heading-node" id="29wqtnyhx" style="text-align: justify">Need for Open Banking</h2>The world of financial services is a dynamic environment. It can be primarily ascribed to the rise of new technologies in the digital banking ecosystem, heightened regulation scrutiny, and constant change in customer behavior and expectations. Besides these, the relentless search for a sustainable service model for underserved markets and additional revenue streams also define the landscape of financial services. &nbsp;In addition, FIs are obliged to stay compliant, manage costs, and maintain security and trust, and governments look for ways to boost innovation and competition across the banking sector. &nbsp;To manage complex customer needs and drive innovation and opportunity far beyond banking, the financial services industry needed to break through the conservative wall around the customer's financial data. Thanks to PSD2, banks and fintechs can now make the data useful and relevant. It now serves as the key to enhancing collaboration between financial services providers, rendering superior products and services for customers, reducing risk, pursuing strategic growth opportunities, and adapting to the new-age banking ecosystem.<h2 class="heading-node" id="i8q4vgmvm" style="text-align: justify">Closed Banking Vs. Open Banking</h2><img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/Artboard-1-copy-11-4.webp" alt="M2P Fintech" title="" width="100%" height="253"><h2 class="heading-node" id="dc6a" style="text-align: justify">How do APIs work in Open Banking?</h2>APIs are the backbone of Open Banking infrastructure for two reasons.<ol class="list-node" id="6ipr9y3o8"><li>It facilitates the exchange of information between two financial parties</li><li>It offers secure interoperability that is compliant with region-specific laws and regulations</li></ol>The world of finance sees it as an open source platform that allows legacy financial institutions to collaborate with modern age fintech platforms.&nbsp;With APIs at the forefront, customers will get a consolidated view, and financial providers such as lenders will get the required data to make the right decisions. This empowered banks and FIs to revamp their products and services to meet ever-changing customer needs.&nbsp;The APIs can be classified into three categories:&nbsp;<ul class="list-node" id="z7d94jny8"><li>Public APIs are the most popular connectors for open banking. They give TPPs access to customer information from the bank, but they don't store or save that information for later use.&nbsp;</li><li>Partner APIs are specific APIs designed to allow the exchange of data between two companies or businesses. They facilitate vendor-to-vendor communication channels.&nbsp;</li><li>Internal APIs are proprietary APIs used by an organization to secure and manage its own database.</li></ul><h2 class="heading-node" id="6a44" style="text-align: justify">Use Cases in Open Banking</h2>Financial ServicesOpen banking is all set to reinvent the way financial services are now perceived. The highlight of this reinvention is that they do not intend to eliminate the players but give them a new avatar. In simple terms, there is no customer data without banks.A bank’s responsibility is to provide the necessary platform for its customers to have their pick of the services. As fintechs are now offering that choice, banks are pressed to reinvent and partner with these new age fintechs to retain the competitor status. Today, several leading banks have formed successful partnerships with fintechs to offer the following services.<ul class="list-node" id="ypujhtj6f"><li>A comprehensive view of core banking accounts</li><li>Payment services and choice of networks</li><li>Commercial and personal loan histories</li><li>Tailored investment portfolios</li><li>Native bank apps and enriched experiences</li></ul>Small businessesAkin to individual customers, small business owners can use open banking to gain insightful visibility into their financial management. They will be able to understand the realities and ripple effects of their financial decisions such as loans, mortgages, and expansions. Small business owners can leverage the understanding to improve their cash flow. Likewise, lenders can devise practical loan offerings with an expedited delivery timeline to meet business needs.InsuranceInsurance providers can access a complete, dynamic, and current portfolio of the applicant’s finances. They can use the data to draw sound insurance decisions that matches the client’s best interest and business profitability. The customers also get an unparalleled view into spending behavior resulting in diligent financial decisions.CustomersOpen banking is all set to provide customers with a supermarket aisle experience where they can pick and choose the financial products they want. This tailored experience offers several advantages to new-age customers as listed below.<ul class="list-node" id="a66wr4nq7"><li>Augmented account visibility and security</li><li>In-depth visibility into spending habits and behaviors</li><li>Instantaneous access to market investments</li><li>Interoperable online and physical payment options</li></ul><h2 class="heading-node" id="uv1rt4xby" style="text-align: justify">Challenges in Open Banking</h2>Open banking removes interpersonal relationships between the customer and the bank. As everything is handled digitally, the human connection takes a dive.Customers might not be willing to share their details, and there could be a lack of apathy/credibility from the customer. Convincing them about the benefits and converting them into leads might take a while.Security concerns play a huge role in this field as it is a relatively new field, and it is filled with many trial and error situations that are yet to happen.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/Artboard-1-copy-12-1.webp" alt="M2P Fintech" title="" width="100%" height="253"><h2 class="heading-node" id="47f6" style="text-align: justify">Opportunities in Open Banking</h2>The open data philosophy will improve the transparency and democratization of the banking platform. It will provide access to the credit deprived and also facilitate entry into foreign markets. The most important benefit of all would be the ideation and creation of apps that will be fielded in the market by upcoming fintech players. Tools like Artificial Intelligence and Machine Learning will be able to predict solutions based on customer spending habits. Automation will be a game changer for many services.Intrigued about the forthcomings of open banking and financing?Reach out to us at <a class="link" href="mailto:business@m2pfintech.com">business@m2pfintech.com</a> to know more.<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox.Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

Open Banking- A primer

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/04/banner1251-12.webp" alt="M2P Fintech" title="" width="100%" height="662"><a class="link" href="https://m2pfintech.com/blog/neo-banking-101-all-you-need-to-know/">Neo banks</a> deliver digital banking services on steroids. The digital empowerment and financial possibilities they offer the underbanked and unbanked population are phenomenal. Their ability to foster <a class="link" href="https://m2pfintech.com/blog/fintech-a-catalyst-for-financial-inclusion/">financial inclusion</a> with digitized convenience, lower cost, and personalized customer experiences are a few of the primary reasons for the success of <a class="link" href="https://m2pfintech.com/blog/top-14-neo-banks-that-reinvent-banking-experience-in-india/">neo banks in India</a>.Competing heavily on customer-centricity and deep tech, neo banks bridge the experiential gap between traditional banking services and evolving customer expectations. Free from legacy infrastructure hurdles, complex value chains, and stringent regulatory requirements, neo banks deliver super-fast, mobile-first services by leveraging advanced, agile, and lean business models.In the next five years, the global neo bank market is slated to grow at 47.1% and hit $333.4 billion market size. In India too, neo banks are a thriving industry with a huge market potential of over 190 million unbanked/underbanked people who still need access to basic financial services.So, if you are looking to set foot in the <a class="link" href="https://m2pfintech.com/blog/neo-banking-the-rise-of-new-age-banking/">neo banking</a> industry, this is the opportune time for you.We are here to help you with step-by-step guidance.Now, this is not unqualified guidance. We have immense experience and expertise in enabling neo banking services for leading players like Zenpay, Niyo, and Finin.Let’s get started!<ul class="list-node" id="4te59z1wy"><li>Step 1:&nbsp;Define target audience &amp; value proposition</li><li>Step 2:&nbsp;Identify and analyze audience pain points</li><li>Step 3:&nbsp;Work on innovative, customer-centric strategies</li><li>Step 4:&nbsp;Build a strong core and backend infrastructure</li><li>Step 5:&nbsp;Focus on experience design</li><li>Step 6:&nbsp;Manage compliance and security</li><li>Step 7:&nbsp;Ease onboarding, engagement, and marketing</li></ul>Fasten your seat belts!<h2 class="heading-node" id="958f" style="text-align: justify">Step 1: Define target audience &amp; value proposition</h2><a class="link" href="https://m2pfintech.com/blog/top-14-neo-banks-that-reinvent-banking-experience-in-india/">Neo banks</a> challenge the status quo of banking and payments for niche audiences. Hence defining that target audience is imperative to set up a neo bank.For example, neo banks like FamPay&nbsp;cater to teenagers, and&nbsp;Zenpay&nbsp;caters to blue-collared workers. FamPay’s proposition comprises cards and bank accounts that teenagers can use under parental supervision. Whereas Zenpay offers payroll cards that provide blue-collared workers instant access to salary and incentives.So, you need a crystal-clear understanding of your audience demographic and pain points to develop a value proposition accordingly. This will help you come up with a definitive reason why your customers should choose you.<h2 class="heading-node" id="9b55" style="text-align: justify">Step 2: Identify and analyze audience pain points</h2>Once your target audience is clearly defined, identify and analyze your target audience’s needs and pain points. This knowledge will help you include features that resolve audience issues, build trust and attract the right customer to your service. For example, Zenpay came at a time when the blue-collared workers were underbanked and were not able to access salaries and track their spending. The lack of access to salary accounts and other financial exclusion was the pain point for Zenpay’s audience. And their value proposition and services sought to resolve the challenge.Looking at your target audience’s pain points and working to close the gaps is a key step while setting up a neo bank. This knowledge will help you differentiate and stand apart from other players in the industry.<h2 class="heading-node" id="9050" style="text-align: justify">Step 3: Work on innovative, customer-centric strategies</h2>Neo banks stand apart because of their agile, innovative, customer-centric business strategy. Leverage technology to make your business model and strategy as convenient and user-centric as possible. Pack in unique features that will get your customers coming back to you.When it comes to features, some are must-have, and others are nice-to-have types. Must-have features are a necessity, without which the product or service will surely fail. Nice-to-have features are those that will add greater value and aid greater customer acquisition and retention.Here are some examples for more clarity.<h2 class="heading-node" id="7961" style="text-align: justify">Must-have features</h2><ul class="list-node" id="rcccmzkkk"><li>Low-cost structure</li><li>Easy money flow across borders</li><li>Quick account creation</li><li>User-friendly Interface</li><li>Real-time banking solution</li><li>High yield savings</li><li>Personalized card issuance (Physical/Virtual)</li></ul><h2 class="heading-node" id="b571" style="text-align: justify">Nice-to-have features</h2><ul class="list-node" id="zqdexn79o"><li>Zero joining fee</li><li>Zero annual Fee</li><li>Zero hidden Charges</li><li>Zero documentation</li><li>No-cost EMI</li><li>Personalized banking services</li><li>Educational loans/investments</li><li>Seamless budgeting</li><li>Tangible rewards</li></ul>With advanced technologies such as Artificial Intelligence and Machine Learning ruling the neo banking industry, you can include new features, upgrades, and everything your target audience expects without any hassles.<h2 class="heading-node" id="b472" style="text-align: justify">Step 4: Build a strong core and back-end infrastructure</h2>A robust neo banking app demands the best suite of core and back-end applications. As it has to deftly manage multiple applications and transactions without lags, the core and back-end infrastructure must be powerful enough. To build a strong neo banking app, you need <a class="link" href="https://m2pfintech.com/blog/api-the-power-that-drives-new-age-banking-ecosystems/">APIs</a>, a card processing app, and back-office tools.<ul class="list-node" id="fg87tfapd"><li>API:&nbsp;To connect your neo bank app with other services like payment gateway or authentication segment.</li><li><a class="link" href="https://m2pfintech.com/blog/credit-card-processing-a-definitive-guide/">Card Processing App</a>:&nbsp;This&nbsp;app is responsible for all the transactions or anything related to cards.</li><li>Back-office Tools:&nbsp;Manages the neo bank in the whole perspective.</li></ul><img src="https://miro.medium.com/max/1400/1*hYBMUudyKsAoH36Za4l89Q.png" alt="Backend infrastructure framework to create Neobanks" title="" width="100%" height="529">The back-end infrastructure can be built in three different ways.<h3 class="heading-node" id="e1a9" style="text-align: justify">1. Developing from scratch</h3>You require a banking license and a huge investment of time, effort, and money, as you are developing infrastructure, design, implementation, tech stack, and also the future sketch by yourself.<h3 class="heading-node" id="822d" style="text-align: justify">2. Partnering with banks</h3>To minimize the time and effort, you can integrate with established banks and get your neo banking model started. It also does not require much work in terms of customer acquisition as you can leverage the bank’s trusted customers, to begin with.<h3 class="heading-node" id="94bc" style="text-align: justify">3. Partnering with <a class="link" href="https://blog.m2pfintech.com/wp-admin/post.php?post=2422&amp;action=edit">BaaS</a>/API Provider</h3>You can partner with fintech companies to provide <a class="link" href="https://m2pfintech.com/blog/api-the-power-that-drives-new-age-banking-ecosystems/">APIs</a> to develop the core and bank end infrastructure for your neo bank. This decision with catapult your go-to-market speed to the next level with lower investment in terms of time and effort.For example, fintech firms like&nbsp;<a class="link au mu" href="https://m2pfintech.com/" target="_blank" rel="noopener ugc nofollow">M2P</a> power neo banking apps by delivering tech stacks and best-in-class infrastructure to build customized products with seamless integration. We serve as an account aggregator of multiple banks and help neo banks leverage our partnerships and compliance to its best potential.When it comes to card transactions, we take care of webhook notifications, reconciliation settlement, and even customer reports. For some of our neo banking customers, we also created co-branded debit cards with banks. We help them design their own debit card with features like multiple controls (PIN), lock/unlock cards, security measures, setting preferences, virtual cards, and more.In India, neo banks do not work independently. Hence partnering with the right banks and API providers is critical to increase go-to-market speed and achieve growth and profitability.<h2 class="heading-node" id="fbc3" style="text-align: justify">Step 5: Focus on experience design</h2>Humanizing transactions and enabling personalized experiences is key for the success of a neo banking app. To that end, you need to prioritize experience design for visually appealing app design and easy-to-understand interfaces and clear call-to-action.Experience design enables frictionless navigation and improves customer experience by focusing on speed, convenience, security, and seamlessness. Ensure your neo banking apps are aesthetically designed for a smooth customer journey and satisfaction.<h3 class="heading-node" id="a249" style="text-align: justify">Step 6: Manage compliance and security</h3>Better the security, better the trust!Regulatory compliance and security infrastructure design play a significant role in neo banks, as customer data and money are at stake here. Managing <a class="link" href="https://m2pfintech.com/blog/pci-dss-the-payments-armour/">PCI DSS compliance</a>, <a class="link" href="https://m2pfintech.com/blog/how-does-payment-tokenization-work/">tokenization</a>, the generation and issuance of payment tokens, and the operation and maintenance of a token vault is a laborious yet critical process.Hence, start with setting up the Security Office Center (SOC), which will function as a command center for your neo bank app. This helps you in analyzing every crumb of information in your infrastructure. You can even implement Security Information and Event Management (SIEM) software solution to secure and analyze every activity in your neo bank.You can even go the extra mile by building your own security tools and solution to protect customer data. It is highly advisable to maintain access logs or anything happening in your neo bank platform to have a record for your security team to look into any time in the future.Before stepping onto the deployment stage of your neo bank, run a series of checks and automated tests to identify and get rid of the issues. Think of every possibility your user may utilize your app for. Here’s a series of tests you can opt for:<ul class="list-node" id="yk7tuv0ut"><li>Unit-testing</li><li>Integration testing</li><li>Security testing</li><li>User acceptance testing</li><li>Regression testing</li></ul>Ensure your team runs the tests even after the app goes live because this lowers the chance of your app facing security issues later. Automating the tests by implementing a custom infrastructure helps in this case.Fuse security onto DevOps — <a class="link" href="https://m2pfintech.com/blog/devsecops-the-future-of-financial-software-development/">DevSecOps</a> to develop your neo bank application. At the time of upgrades and new releases, you can go to market quickly and seamlessly.<h2 class="heading-node" id="ecd2" style="text-align: justify">Step 7: Ease onboarding, engagement, and marketing</h2>Don’t just sit back after launching your neo bank. Your journey has only begun.Ensure onboarding is simple, smooth, and effortless for customers. Focus on marketing efforts to acquire and retain customers. Ensure you engage your customer throughout their journey with your neo bank.Remember, the profitability of your neo bank can be determined by the customer Life-Time Value (LTV)/ Customer Acquisition Cost (CAC) ratio. The higher the LTV/CAC ratio, the greater will be the income generated per new customer. So, the key is to keep your customers happy.All set to start your own Neo bank? Got more questions in your mind?Ping us at&nbsp;business@m2pfintech.com.<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox. Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

7 steps to start a Neo bank from scratch

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/banner1251.webp" alt="M2P Fintech" title="" id="pzkn5bsd" width="100%" height="356">A crowded building with people spending a lot of hours in a queue to get their service done – this is almost everyone’s idea about the term “Bank.” But now, it looks suave after an upgrade with a fresh look.Gone are the days when people spent a day getting their banking service done. After the great technological innovation, traditional banking is no longer considered a troubling word. Several advancements acted as a trigger for the players like fintech companies and other third-party service providers (TPSP) to cause a paradigm shift that posed a challenge to traditional banks.<h2 class="heading-node" id="kqq3yw2uf">What does Banking as a Service mean?</h2>Simply put, Banking as a Service (BaaS) is an end-to-end process that involves FinTechs and other third-party service providers(TPSP) to access the bank’s financial services through <a class="link" href="https://m2pfintech.com/blog/api-the-power-that-drives-new-age-banking-ecosystems/">APIs</a> for offering a different and personalized financial approach to their customers.<h2 class="heading-node" id="83d7">Banking as a Service - The Bonanza</h2>Over the years, banks provided financial services to their customers using rudimentary infrastructure. But now, many tech-savvy banks evolving around have pushed every bank to upgrade their services to maintain their lifetime value. To meet this rising demand, FinTech comes into play by integrating their white-labeled services by accessing the bank’s APIs.Looks like banks were on a ride of a lifetime to the technological planet with many advancements at fore. One such advancement is Banking as a Service. It is a business model which plays a crucial role in strengthening the customer base with the help of fintechs that provide innovative financial assistance to the bank. Banking as a Service pioneers a huge window of opportunities for digital banking and rockets the revenue.As<a class="link" href="https://m2pfintech.com/blog/embedded-finance-101-the-bridge-connecting-tech-and-financial-services/"> embedded finance</a> is treasured and demanded by many NBFCs, software companies, and logistic firms, BaaS has gained popularity and is now ubiquitous for bringing promising financial features for their customers and even escalates their revenue growth.Predominantly, fintech start-ups have come up in large numbers. They target banks to promote and promulgate their business by offering innovative products and services. The fintech sector collaborates with banks to gain rapid acceptance by the customers to provide loans, cards, deposits, insurance, make payments, and many trusted financial services.<h2 class="heading-node" id="e682">The Working Mechanism of BaaS</h2>Banking as a Service works on providing trendier products than ever to customers with a more qualified user experience. The pandemic skyrocketed the demand for payment digital apps. Amidst the chaos, these contactless payments created a brighter picture by providing ease of use while staying indoors.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Artboard-1-copy-7-9.webp" alt="M2P Fintech" title="" id="49t76cu8b" width="100%" height="284">There are two ways to carry Banking as a Service seamlessly.<h3 class="heading-node" id="6785">API- based stack</h3>With API’s intervention, FinTechs and other third-party service providers (TPSP) can help banks offer customers a transparent, smooth, and customized financial service along with the existing banking services. Customers feel a better user experience when providers synchronize and connect with the bank’s tools and services. Simplified money flows are now possible with very few clicks for the customer.The fintechs are given secured access to banking services followed by integrating bank’s APIs with the provider’s products to further execute seamless white-label banking services using upgraded technology. They strictly abide by the rules and regulations in carrying out the bank’s data safely using top-notch security systems like PCA.<h3 class="heading-node" id="b6e9">Cloud-based stack</h3>Here, the licensed tech companies operate as regulated banks to offer the services by pushing the traditional banks to the inoperative section in this play by redefining their stacks to cloud sections.<h2 class="heading-node" id="0ecf">The Three-Layered Structure of BaaS</h2><ol class="list-node" id="1ye58bqfe"><li>Infrastructure as a Service (IaaS) includes the basic financial services provided by the traditional banks through an IaaS provider.</li><li>Banking as a Platform (BaaP) is placed above IaaS, which includes the customized services offered for fintech start-ups and companies. The data carried out between the banks and fintechs are monitored securely as data security is concerned.</li><li>FinTech SaaS — Here, the fintech companies which offer financial services interact with the end-users to carry out the data or requests and sends it back to BaaP securely.</li></ol><img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Artboard-1-copy-10-3.webp" alt="M2P Fintech" title="" id="k6nerr46b" width="100%" height="284"><h2 class="heading-node" id="80d9">Evolution of Banking</h2>This era has witnessed the massive emergence of tech-savvy banks. One such popular emergence is the&nbsp;<a class="link au js" href="https://m2pfintech.com/blog/neo-banking-the-rise-of-new-age-banking/" rel="noopener">Neo Banks</a>. They are digital banks that operate only online with the help of artificial intelligence, machine learning technologies, and <a class="link" href="https://m2pfintech.com/blog/the-world-of-apis-how-they-power-fintech/">APIs</a>. Cost-efficient, convenient, and user-friendly interface are what makes them stand out. Neo banks partner with traditional banks to digitally offer services from opening a bank account to money transfers/bill payments 24x7.FinTechs play a crucial role by building their innovative infrastructure on top of it, making the Neo Banks more popular. Banking as a Service is the backbone of Neo Banks as they are dependent on APIs and other crucial financial services they offer.We take pride in the fact that <a class="link" href="https://m2pfintech.com/">M2P</a> powers&nbsp;Finin, India’s first neo bank with our APIs that enables instant provision of user’s bank account and prepaid cards.<h2 class="heading-node" id="ka11sfo39">Types of BaaS Providers</h2>BaaS providers can be classified into three models based on their purpose.<ul class="list-node" id="knjzk1ypi"><li>API Stores&nbsp;— Traditional banks open their API for fintechs and other TPSPs to incorporate their innovative bank services for customers.</li></ul>Services offered: eKYC, beneficiary validation, remittance, inquiry, etc.<ul class="list-node" id="dcdqfn7c5"><li>White-Label Platform&nbsp;— Companies that don’t carry a license can also approach fintechs and other TPSPs to offer their white-labeled service. But, in India, a license is a must to carry out this model.</li></ul>Services offered: Digital banking &amp; cards, lending, blockchain, payments, etc.<ul class="list-node" id="ikgg6uif1"><li>BaaS as Co-branding&nbsp;— The fintechs or neo banks carry their appearance in the forefront for the traditional banks to offer their effective services.</li></ul>Services offered: Banking &amp; Cards, Integrated payment gateway, etc.<h2 class="heading-node" id="b3e1">Open Banking vs. Banking as a Service</h2>Let us elucidate the long-haul confusion between <a class="link" href="https://m2pfintech.com/blog/open-banking-a-primer-2/">Open Banking</a> and Banking as a Service. In a nutshell, the usage of APIs by fintechs determines the difference between these two.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/1_PMHIFWMQVSCmoFwYkpGQkg.webp" alt="M2P Fintech" title="" id="fcg7dxzxw" width="100%" height="181"><img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Artboard-1-copy-11-2.webp" alt="M2P Fintech" title="" id="9n9mxbvuv" width="100%" height="284"><h2 class="heading-node" id="c3d7">Benefits of Banking as a Service</h2>Nowadays, fintech start-ups shine with their innovative ideas and serve any financial need, making banks powerful. The mobile-first approach and everyday emerging digital advancements made Banking as a Platform a successful one in the industry. Also, the transparency and ease of use foster the growth of open banking by quickly nearing the go-to-market reach.Banking as a Service is the new evolution for both traditional banks and fintech sectors. The traditional banks who are smarter enough in adapting to the digital era can attain profitable accomplishments. They are forced to attract more young clients with their newer technologies and methodologies in financial services. For instance, the traditional banks can now collaborate with third-party service providers to expand their services like vehicle insurance, lending, <a class="link" href="https://m2pfintech.com/blog/remittance-with-upi-a-giant-leap-for-cross-border-payments/">remittance</a>, rewards, currency exchange, and many more.Many banks’ go-to option is now BaaS since they cannot remodel their infrastructure for back-end, front-end development and give a more product-centric approach as fintechs do. Banks prefer it is better to approach fintechs and TPSPs rather than making a huge investment building in-house.With banking service as a platform, it is simpler to launch and integrate banking features with the magic wand called <a class="link" href="https://m2pfintech.com/blog/the-world-of-apis-how-they-power-fintech/">API</a>.To make the long story short, BaaS is the savior for many banks, non-financial companies, and customers.Yes! We all have the same thought. The future holds more for banking.We can conclude that it will always be a money-spinning venture as fintechs and banks follow the collaborative way of doing business to produce more innovative services to their customers. Without a shadow of a doubt, the journey of Banking as a Service had just started, and we have a lot more to witness together.<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox. Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

Banking as a Service - Redefining Financial Services

<blockquote class="block-node" id="l59nir9cq">How Covid-19 Pandemic shaped the Remittance sector in the year 2020?</blockquote><img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com//m2p-website-file/marekting-cms/m2p-blog/2025/05/Upward-spiral.webp" alt="Upward Spiral" title="" id="agehfg19l" width="100%" height="358">When the ongoing Pandemic hit in 2020, the World Bank and other agencies predicted a substantial fall in the <a class="link" href="https://m2pfintech.com/blog/remittance-with-upi-a-giant-leap-for-cross-border-payments/">global remittance</a>. This fall would have done sufficient damages to the domestic finances of South Asian nations like India, Pakistan, Sri Lanka, Bangladesh, and Nepal. The first four countries observe maximum outward remittance from the GCC region, and as we were present in the region (HQ at Abu Dhabi), we thought of doing an analysis.We collected data from various sources and what we found was an extraordinary Story of the Upward Spiral in Remittance in the year 2020. The facts and figures we collected, pointed towards growth in outward remittance from the UAE and Saudi Arabia. Further, as brick-and-mortar stores saw closure due to the pandemic, growing remittance gave a level playing field for the rising Fintechs in the region. Read on to know more.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/Artboard-1-copy-3.webp" alt="M2P Fintech" title="" id="t2yql5oox" width="100%" height="1466"><img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/Artboard-1.webp" alt="M2P Fintech" title="" id="hc3yiy8pk" width="100%" height="1212"><img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/Artboard-1-copy-2.webp" alt="M2P Fintech" title="" id="kszqc4ge3" width="100%" height="2066"><a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox.Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

Tag: "Digital Banking (34)"

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