With the Indian growth story counting heavily on its young population and more than 50 per cent of the population below the age of 28, the report assesses future consumer trends will be dictated by the first generation of truly digital natives in the banking sector
Neobanks are curating customised financial services products delivering them completely online either through strategic partnerships or creating their own products after approvals from concerned regulators.
Mumbai:
The country’s neobanking market is expected to witness over three-fold jump to reach USD 11.65 billion (about Rs 92,000 crore) by FY25, a report said on Thursday.
Due to the sheer scale of the Indian market, there is a substantial opportunity for neobanking to create value for a large segment of customers, all while leveraging the large talent pool available to create high quality technology driven banking products, Grant Thornton Bharat said in a report.
The neobanking market is well positioned to capitalise on the growing digital economics and achieve rapid growth due to the very dynamic local market with significant upside in terms of the revenue generation potential, it said.
The Indian neobanking market was valued at USD 3.42 billion as of FY22 and is expected to grow at a three-year Compound Annual Growth Rate (CAGR) of 50.5 per cent to reach USD 11.65 billion by FY25.
Neobanks can be defined as branchless digital banks interacting directly with customers and providing them a seamless banking experience.
Neobanks are curating customised financial services products delivering them completely online either through strategic partnerships or creating their own products after approvals from concerned regulators.
Currently, RBI neither recognises purely virtual banks nor regulate them.
The report suggests that the regulator must ensure that there is a regulatory clarity, consistent monitoring and oversight.
With the Indian growth story counting heavily on its young population and more than 50 per cent of the population below the age of 28, the report assesses future consumer trends will be dictated by the first generation of truly digital natives in the banking sector.
This generation rarely visits branches for transactions and has very different expectations from their banks on products, service delivery and the transaction experience.
According to Jaikrishnan G, Partner, Financial Services Consulting, Grant Thornton Bharat, the neobanking industry may face challenges from the entrenched players, their dependency on banks, security concerns, regulatory ambiguity, increased competition from fintechs and super-apps that combine elements of e-commerce, payments and financial services into the same platform.