2025, Vol. 7, Issue 2, Part C

Neo banking in India signifies a substantial transformation in the financial services sector, marked by the increasing integration of digital technologies. This study offers a comprehensive overview of the current state of Neo banking in India, concentrating on its evolution, growth drivers, challenges, and future prospects of the industry. Neobanks operate exclusively online without physical branches and provide a range of banking services through partnerships with licensed banks. They play a pivotal role in enhancing financial inclusion, particularly among underbanked and unbanked populations. The rise of neo banking is propelled by advancements in digital technologies, widespread smartphone adoption, supportive government initiatives, and changing consumer preferences. Key participants in the Indian neo banking sector include retail-focused platforms such as Jupiter, Fi Money, and Niyo, and SME-focused platforms such as Open, Razorpay X, and ZikZuk. Neobanks offer advantages such as reduced costs, personalized services, expedited account opening, and user-friendly interfaces, leveraging technologies such as AI, machine learning, and data analytics. However, they encounter challenges such as regulatory uncertainties, data privacy concerns, building customer trust, and achieving profitability. The future outlook suggests potential regulatory evolution, market consolidation, expansion of product portfolios, and strategic partnerships. The sustainable growth of neo banking will necessitate navigating a competitive landscape, adapting to evolving regulations, focusing on customer-centric innovation, and promoting financial inclusion. This study concludes that neo banking represents a significant transformation of India's banking sector, driven by digital innovation and aimed at enhancing customer experience and promoting financial inclusion. However, ongoing efforts are essential to address existing gaps and challenges.