The global financial landscape is being irreversibly altered by the expansion of a transformative new entity—neobanks or direct financial service institutions that operate exclusively online without traditional physical branches. Based on a low-fee structure with fewer services, neobanks usually provide customers with higher-than-average interest rates and are garnering significant traction. Easy to use with almost zero paperwork, customers can easily download neobank apps and sign in to their accounts. Some neobanks allow customers to link their traditional bank accounts with the app for speedy and seamless transactions.
Currently, neobanks offer limited yet efficient services in savings accounts, payment and money transfer services, and financial education solutions, among other segments. Some neobanks offer money lending services through partner banks and credit union services. While their functions may vary, there’s no denying the fact that neobanks are booming on a global scale. According to reports, the global neobank market is expanding at a CAGR of nearly 46.5% between 2019 and 2026; it is estimated to touch a market value of $394.6 billion by 2026. This incredible growth potential is driven by the low-cost model and increased adoption by micro, small, and medium enterprises (MSMEs), millennials, and startups. Consequently, the neobanking sector has tapped the interest of potential investors, venture capitalists, and corporates, enhancing funding and investmen …