Customer service and customer convenience are two vital elements of the changing banking industry in India. These have created a new banking experience in the form of neo banks.

Neo banks are bank-like financial institutions/fintechs that offer exclusive online banking through their apps or websites. They have no physical branch.

In India, with the Reserve Bank of India not giving exclusive license to neo banks, the banks have to collaborate with traditional banks to function. The lack of a physical branches, therefore, has given rise to trust issues and many other myths regarding neo banks.  

Let's get down to busting some myths plaguing the digital bank that functions only online.

Myth 1: Neo banks have poor customer care service

As neo banks have no physical branch, people harbour the perception that these banks have poor customer care service. However, it helps to know that these banks have 24*7 customer care service that offers user-centric solutions.

Apart from conventional channels like phone calls and emails, customers can reach out to the neo bank through other channels. These include social media channels, in-built chatbots, Whatsapp and their exclusive apps. All these platforms make communication very easy.

The banks strive towards offering enhanced customer experience through a simple navigation system of the app or the website that makes contacting the customer care service convenient and user-friendly.

Also Read: Impact of Personal Health Insurance on Your Finance

Myth 2: Neo Banks are not Safe and Secure

Many people are reluctant to share their bank details online or even use the online banking of traditional banks. This is because they are concerned about the safety of the data to be shares. In such a scenario, this category of customers will be more skeptical about banking exclusively online. But it is important to know that all the data shared with traditional and neo banks are safe and secure.

The data is encrypted in such a way that none other than you and your bank can understand and read it. This makes the data safe. As the neo banks collaborate with traditional banks, the customers' money would be secure even if the neo banks land in any trouble.

There is multi-factor authentication, secured processes, technology and infrastructure in place to make the entire banking safe for the user

Myth 3: Neo Banks are Expensive

The exclusive online banking service might create the notion that neo banking is expensive. But the interesting fact is that because the banks do not have a physical branch, they save their operational costs. The saving is usually passed on to the customers by providing better deals on various financial products. At times, they also offer lower fees on certain products. 

The saving makes way for better and efficient technological features that can enhance the banking experience. All this makes banking cost-effective. Even the customers happen to save their transportation costs as all the banking is online.  

Also Read: How is Net Banking Different from Neo Banking?

Myth 4: Neo Banking is Time-consuming

People who are not comfortable with technology might find using neo banking service time consuming as they have to figure out how the online banking system works. However, the reality is that digital banking is less time-consuming. This is so because the online banking journey is created keeping the convenience of the customers in mind. Once the customers get the hang of it, using an app-based bank helps in saving time.     

Also Read: All about Privatization of Banks in India

Myth 5: Neo Banking is Complex

The fact that neo banks offer exclusive digital banking service might be creating anxiety in people who are not tech-savvy. However, the simplicity lies in the technology that makes online banking user-friendly and easier. The banks can also use technology to provide personalised services to customers. Something that is not possible in the case of traditional banks. 

The digital presence of neo banks helps them to read the pulse of their customers better. The feedback can be utilised to make changes in the system accordingly that would help the customers. When needed, neo banks also make an effort to educate their customers regarding the usage and application of their apps or technology. Neo banks are quite popular with the younger generation and college students because they provide easy digital access to their customers.  

College students can get their first-hand experience with banking by opening a savings account at neo bank NuCash. By opening NuCash student account online through nucash.money, students can save time and be a part of the simple and friendly banking experience. The neo bank also offers instant personal loans for students to fulfill various needs, including lifestyle needs, for a reasonable fee with no hidden costs or interest rate.

Also Read: Neobanks for students: The benefits

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FAQs

Q. Do neo banks have the required bank license to operate?

Neo banks in India have yet not received license from the RBI to function as fully licensed online banks. Thus, they partner with licensed traditional bank to function.

Q. Do neo banks lend money?

Yes, neo banks can lend money and the type of loan it offers depends on the size of the neo bank.

Q. What is a personal loan? Do I need a guarantor to avail this loan?

A personal loan is a type of unsecured loan and to avail the loan, you do not need to provide any collateral or security to the financial institution. The borrowed amount can be used for any purpose. You do not need a guarantor to avail a personal loan because it is an unsecured loan.

Q. What is a credit score?

A credit score is a three-digit score ranging between 300 and 900 that decides the borrower's capacity to borrow. It depends on a borrower's credit history - bank accounts, debts and repayment history, etc.

Q.  Is a PAN Card mandatory to open a bank account?

Yes, a PAN is mandatory to open a bank account, in both traditional and neo banks like NuCash.