Neobanks want to take fintech to the next level, says Razorpay co-founder
The time has come to move beyond pure digital payments, and 2021 could well be the marker for a new financial world in which the the boundaries between banking and technology are becoming increasingly blurred, said Shashank Kumar, co-founder of, on the verge of Future of work event, the largest design and product diaspora in the country.
While digital payments have solved a very big problem for the financial sector and removed several barriers to the entry of financial technology into all aspects of human life – personal, professional, business, still only scratches the surface of problems in financial processes and systems.
“For example, a small business has to take care of its earnings, what it pays to employees, corporate taxes, comply with various regulations and file those regulations … all of these things taken together are a significant amount of time,” Shashank said, adding: Most of these manual processes in India, business owners spend between 15 and 20 percent of their time on these back office tasks, although they could focus on building the business instead.
This is where neobanks can make a difference. You just can’t digitize these offline processes but also offer specialized and personalized services for solving specific pain points compared to a cross-section of consumers.
Neobanks imagine the world of a consumer much more Specific than traditional banks. Shashank compares traditional banks to one Railway network – Helping customers get from A to B and committed to serving everyone who is there.
But neobanks are much more personal – they can provide users with more personalized travel, stop where they need it and use whatever means of transport they want.
“This personalization aspect results from the hyperfocusing on one segment and enables Neobanken to take up the problems of this specific segment and find out how they can be solved with fintech solutions and using the extensive financial infrastructure already in place in the country. This is where neobanking comes in, ”explains Shashank.
There is one especially in business banking or the provision of holistic banking solutions for companies defect of software that can bring together the various aspects of a company’s financial management on one platform, such as: B. Tracking sales, getting a feel for what works and what doesn’t for a business, automating repetitive tasks, gaining insights to help optimize operations, etc.
“Imagine the efficiency and the size of millions of companies in the country that a platform like this can bring. I think that will give companies in the country a huge boost in productivity, ”Shashank joked.
“This is where this whole neo-banking idea comes into play for us – how can we combine extremely great financial software with the very strong financial and banking infrastructure we have and bring in a layer of personalization, machine learning and AI? beyond and help companies serve the best possible “he added.
Solution for small loans
One area where neo banking can make a huge difference is in SME lending sector, which is severely undersupplied today by fintechs and traditional banks alike. The lack of a public database, consistency in compliance filings and papers, and verified cash flow statements make it difficult for companies to serve the SME and MSME sector – but neobanks can do a good job here.
By simply providing a platform on which SMEs can record their cash inflows and outflows, submit taxes and other compliance documents and precisely record their claims and liabilities, a neobank does not have to search outside of one’s own ecosystem to check the company’s creditworthiness.
“Even during the pandemic, when most of the lenders withdrew from the market, we expanded our portfolio and made more loans because we could very clearly see and separate which companies were still doing well, which could show some downward recovery and which could sustain the panic caused by the pandemic. And all because of new banking products and digital payment products that we were able to offer, ”said Shashank.
The future of neo banking
Shashank says that traditional banks are pretty enthusiastic about digitization themselvesand are increasingly looking for partnerships with start-ups and fintech companies.
“There are many future-oriented banks that recognize that it is not about competition, but about partnership, cooperation and joint market launch. Big banks are the basic building blocks of our country, and they’ve operated this space for decades, so they understand banking more than fintechs. I think partnership is extremely important. “
He adds that we can definitely see some kind of in the next three years political framework for neobanks to help them penetrate even deeper into the country.
“You can’t make a sector mainstream without proper regulatory support,” Shashank said.
Kudos to our Future of Work 2021 co-presenting sponsors Hewlett Packard Enterprise and Unique Solutions; Digital Excellence Partner, Google Cloud; Associate Sponsor HP and Intel; and sponsors: Atlassian, Freight Tiger, Archon I Cohesity, TeamViewer and Pocket Aces.