Ø Neobanks are disrupting traditional banking by offering customer-centric, AI-powered services that are operationally efficient and profitable at scale. Successful neobanks leverage AI to deepen customer relationships, personalize services, automate processes, and manage risk.

Ø The past 18 months have been the best period for global banking overall since at least 2007, as rising interest rates boosted profits and lifted return on equity (ROE) to 12% in 2022 and an expected 13% in 2023.

Ø Between 2015 and 2022, more than 70% of the net increase in financial funds ended up off traditional banking balance sheets, held by insurance and pension funds, sovereign wealth funds, private capital, alternative investments, and retail and institutional investors.

Ø Consumer digital payment processing conducted by payments specialists grew by more than 50% between 2015 and 2022.

Ø Neobanks are gaining popularity among retail customers and SMEs by offering features like free debit cards, digitized account opening, personal finance advisory, instant payments, and GST-compliant invoicing.

Ø The Asia Pacific region is expected to be the fastest-growing neo-banking market, driven by increasing internet and smartphone adoption, easy and convenient banking services, and the rise of digital-only banks in Japan, India, and China.

Ø Venture capitalists are investing heavily in neobanks. For instance, India's neobank startups raised over USD 200 million in 2020 alone.

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According to a new report by Univdatos, the Neo Banking Market is expected to reach USD 832.7 Billion in 2030 by growing at a CAGR of 35.8%. One of the primary reasons for the rapid growth of neo-banks is the convenience they offer. With 24/7 access to services through mobile apps, customers can manage their finances anytime, anywhere. Furthermore, Neo banks often have lower operating costs compared to traditional banks due to their lack of physical branches. This cost-efficiency allows them to offer competitive interest rates, low fees, and attractive rewards to customers.

The report suggests that furthermore, leveraging AI and Machine Learning into the banking system is one of the major factors driving the Neo Banking Market during the forthcoming years. Neo banks leverage cutting-edge technology such as AI and machine learning to provide personalized financial solutions tailored to individual needs. This customization has appealed to tech-savvy consumers seeking a more personalized banking experience. Additionally, by targeting niche markets or underserved demographics, neo-banks have managed to carve out a significant market share. For instance, companies like Chime in the U.S. and Revolut in Europe have gained traction by offering services tailored to millennials and frequent travelers.

The expanding use of mobile banking is Generating Maximum Traction for Neo Banking in the Market.

With the increasing adoption of smartphones and the growing importance of digital transactions, mobile banking has become an indispensable tool for customers seeking convenience and accessibility in managing their finances. Neo banks have capitalized on this trend by delivering seamless and user-friendly mobile banking experiences that cater to modern-day financial needs. Furthermore, several factors have contributed to consumers' high acceptability of the new mobile banking services, such as a user-friendly interface. For instance, Neo banks prioritize user experience, offering intuitive interfaces that make it easy for customers to navigate various banking services. The simplicity and convenience of mobile banking applications enhance customer satisfaction and loyalty. Moreover, the accessibility and the security features that the neo banking provides to their consumers build trust among the consumers, and the level of accessibility, allowing consumers to access their accounts anytime and anywhere is a key driver of consumer retention for the neo banks.

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Conclusion

The article highlights the growing demand for Neo Banking in the Banking and Financial Industry, with a projected growth rate of 35.8% and an expected market value of USD 832.7 billion by 2030. Factors driving this demand include a growing preference for the convenience of using banking services that neo-banking provides. The integration of advanced technology such as artificial intelligence and machine learning has made these banking systems more secure and user-friendly, making them a popular choice among consumers for their banking needs. Features like personalized user experience, easy access, and instant payments have expanded their application beyond simple banking transactions, allowing consumers to budget, and keep track of their expenditures and investments, and providing consumers with easy financing options for their day-to-day purchasing. Factors such as these are significantly influencing the expansion of the neo-banking sector, with several favorable headwinds supporting its growth trajectory throughout the forecast period.

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