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Sujith Narayanan, co-founder and CEO, Fi.

There’s no denying that millennials have everything at their fingertips today. Technological waves have taken almost all products and services by storm. As a result, everything from groceries to cabs is being delivered more conveniently to the consumers.

But one industry that took a little extra time than others to bring customer friendliness into its services was banking. While financial services like payments had seen some breakthroughs like UPI, the banking industry as a whole showed little signs of using technology to solve customer needs.

This is where neobanks came in.

The lack of technology in traditional banking doesn’t allow for it to be customer-centric. This means things like opening a bank account, tracking your spending and even closing a bank account, all become tasks which require a considerable amount of time and effort. Neobanks eliminate all of this by bringing a digital layer on top of a traditional bank. Since it has no physical presence it has essentially brought banking to millennials’ fingertips as well. The idea is to push beyond the traditional meaning of banking – where it isn’t only a means to deposit and borrow funds. Neobanks expand the scope of banking by helping you track your expenses easily, get insights into them, automate recurring payments, and in general get control of your finances.

How are millennials making use of digital banking?

There are several studies that deem millennials the most financially underprepared generation. While there may be many reasons for this, one of the more prominent ones is that the financial needs of the millennials have not been met in a digital-first world. When every other service around them is so frictionless, they come to demand the same out of financial services as well.

A prospect like neobanking helps fulfil this demand. It packages banking in a technologically savvy way that is more palatable to millennials. They get agency over their finances while getting assistance as to how best to handle their money.

Now, since banking is as simple as, say ordering food online, millennials can use it to their advantage. This can be in the form of putting curbs on online spends, staying on top of monthly expenses, identifying spending trends or saving and investing more.

Being completely digital has monetary perks for users as well. Meaning, neobanks pass on the benefit of no physical infrastructure cost, leaner business models and more efficient IT spends directly to users. This is in the form of lower or no monthly fees on banking services and other reduced charges.

Generally speaking, the fees that are levied by neobanks are also completely transparent. Added to this, most of the neobanks also cater to the need for currency fluency. Meaning, you can use them to make payments abroad as well with minimal forex charges.

Compared to traditional banking neobanks have 1/3rd of the customer charges. There’s no question that when it comes to giving monetary relief to customers, neobanking takes the lead.

Shifting from a traditional banking experience

While there are the functional benefits of neobanks, another distinguishing factor in them is the fundamentally different experience they offer customers.

Most neobanks have created an intuitive and straightforward user experience. They make banking as user friendly and approachable as possible. They nudge users into getting to know and grow their finances and consequently develop better money habits. While spending is one aspect of banking, neobanks can help customers set reminders for recurring payments, automate transactions, and track their spends. All of this is done in an unintimidating, uncomplicated, intuitive way. The more they know about their finances, the less likely they are to make hasty financial decisions or overspend.

Since millennials are the most connected generation, they take technology and its perks for granted. Neobanks comply with this standard. They take a service like banking and mould it around the customer using technology.

This wave of digital banking has just about picked pace, and as time passes, more people will warm up to the idea of banking online. Additionally, neobanks would also add more services to their platter to help make users more financially savvy.

Millennials with their technological savvy will be the biggest beneficiaries of this trend.

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Views expressed above are the author's own.

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