Do I like dealing with my bank? Not really. But do I want to move my account to another bank? No really. To turn this shared disdain for banks into an opportunity for themselves, fintechs have manifested enough funding. Digital banking startups or neobanks like Niyo, Fi, Freo, Zolve, and others cumulatively picked up close to a billion dollars in funding last year. These startups are not regulated entities, so they partner with a bank on the backend and come up with a product that helps users have a slick digital experience. Naturally, it got us curious to see what was the traction for this type of service. A survey on neobanks, which received over 1,000 responses. Nearly 40% of the respondents said they have a neobank account. However, Indian neobanks’ combined user base is less than 1% of the number of traditional bank account holders. The neobank users are millennials, Gen-Z, or digital natives broadly. Most of the neobank users said it was the superior digital experience that attracted them. But the way they are using these neobank accounts is more like mobile wallets for spending rather than bank accounts. Many neobank users said that their account balance was less than Rs 5,000, and that it wasn't their primary bank account. This is a big thorn for the neobanks. Accounts with tiny deposits are of little use to the banking partners of these neobanks. Current and savings accounts are lifelines for a bank, since they allow it to raise money for cheap and lend it at higher interest rates. Neobanks are trying everything, from offering higher interest rates to innovative rewards, to get people to keep larger deposits. Can that help cross the trust and habit barrier that neobanks face today? Is It a new wave of banking or is it simply an old wallet in a new pocket - A survey
