#5 Neo Banks that are Changing the Way India Does Banking According to a report published by Allied Market Research, the global neo bank market is growing at a CAGR of 50.6 per cent during the period 2017-2020.

Neo Banks have been operating in the international market such as the US and Europe for quite some time now and have catered to an unbanked section of the society.

For those of you who are new to this concept, neo banks are like any other banks, but the only difference is their end to end services are digital. While some banks have started their own neo banking platforms, several startups have collaborated to a banking licensee to launch such digital startups.

According to a report published by Allied Market Research, the global neo bank market is growing at a CAGR of 50.6 per cent during the period 2017-2020. Sheetanshu Upadhyay, BFSI Research at Allied Market Research in the report shares that digital challenger banks are simplifying the financial world, creating a customer-centric approach to services, and transforming the way banking is viewed by the public and the market.

"In return, they endeavour to deliver larger returns on equity as compared to those offered by prominent traditional banks. They strive to offer greater flexibility when it comes to lending through streamlined operations and costs," he added.

With open banking emerging in India, fintech and banks collaborating at a various wavelength and the RBI focusing on digitalization and financial inclusion, neo banks have started to make their presence felt.

Here are five neo banks in India you should know about:

NiYO

NiYO offers digital banking solutions for salaried employees across sectors. Presently, it claims that the fintech startups cater to over five lakh customers and has partnered with 3000 corporates.

Last year, the startup launched a global card cancelling the need to buy a forex card during international trips. Earlier last month, it collaborated with Upwardly, a tech-enabled financial advisory startup, to provide investment solutions for its customers.

During the launch of the service, NiYO Co-founder and CEO Vinay Bagri in a statement said, "Financial inclusion has always been at the core of our business. We believe this will go a long way in helping both our existing and new customers manage their short-term and long-term financial needs."

The neo bank has also raised a little over 14 million from Prime Ventures and other investors.

811 by Kotak

811 is a digital bank account product by Kotak Mahindra Bank.

The product was launched in March 2017 and is named after the day demonetisation was announced in India – November 8, 2016.

It is a zero maintenance bank account, along with a virtual card and one can also earn a 6 per cent interest per annum on their savings.

Within two years of the launch, the bank claims to have doubled its customer base to 16 million users.

Open

Open was founded in 2017 by Anish Achuthan and Mabel Chacko with the idea to serve the underserved within the SME segment. After a year of piloting, the neo-bank launched its services partnering with ICICI Bank and presently has almost 11 banks as partners. Open has also crossed around USD 4 billion of analyzed transactions revenues on the platform.

Commenting on the scope of neo banking, Achuthan said, "Neo- banking is not just about financial inclusion, it's also about bundling banking services with other financial services. So in India, neo banking can work as an extension to solve for the financial inclusion challenges. Secondly, we are seeing fintech start-ups build niche solutions focusing on blue collar jobs and that's the way forward."

The startup has raised $5 million as Series A round led by Beenext, Speedinvest and 3one4 Capital.

Yono by SBI

YONO (You Only Need One) is State Bank of India's digital banking platform which was launched in November 2017. Apart from banking services, the platform also provides lifestyle services like cab booking and online shopping.

Last month, for YONO users, launched a cardless cash withdrawal facility using. The process can be initiated using the mobile app and using a six digit pin. Once the process is initiated from the phone, you can visit any of the SBI's ATM which is marked as YONO Cash and withdraw within 30 minutes of receiving the reference number on your mobile phone.

The country's largest lender is looking to acquire a customer base of up to 250 million using this platform in the next two years

InstantPay

At the beginning of FY20, InstantPay launched its neo banking solutions targeting to the SMEs sector. The platform will help SMEs manage their payments, collections and financial requirements on a single interface.

While launching the service, Shailendra Agarwal, CEO of InstantPay, said in a statement said "Driven by favourable government policies and flexible banking institutions, SMEs are increasingly contributing to the development of our country as well as offering employment. Our banking solution is designed to address the unique requirements of SMEs. It does away with the hassles of traditional banking process & policies and provides a seamless and user-friendly experience."

The fintech startup has raised INR 3.4 crore as seed round from Kaleden Holdings and RB Investments Pte. Ltd.