It’s a story of merely a decade, India’s economy has witnessed a rapid transformation, from an archaic paper-based economy to a completely paper-less digital economy. Yes, we are talking about the changes in India’s digital payment landscape. The changes are so rapid that today we are now counted as the leading digital economy in the World in terms of digital adoption. The growing smartphone base coupled with the availability of low-cost high-speed internet in the remotest parts of India, makes these changes take place more quickly. More and more people adopting digital banking today leaving the age-old paper-based traditional banking. The concept of NeoBank or New Age mobile app-based banking system comes here and it’s gaining popularity every single day.
However, the story is something else. As per the financial report in 2020, India has only 99 physical banking outlets per 100,000 people. Although city people might not feel the shortage of bank branches. But in rural areas, there may be only one bank branch for 15 to 20 villages, which makes these branches hugely crowded. Even, in urban areas branches are not accessible always and we spend hours completing our banking requirements. This is the main reason behind the popularity of eWallets today. Banks also know that they can not open new branches everywhere, due to the operational costs involved in running these branches. That’s why they are coming up with several digital alternatives to traditional banking. Several third-party apps partnered with commercial banks, trying to provide the instant solution of banking, where people can open bank accounts from the comfort of their homes. The NeoBank or we may also call Complete Virtual Bank is such a type of bank, that may cater to almost all the banking needs with a smartphone.
Today, in this article, I will try to discuss some best Neobanks in India, which might help you create a complete digital account without stepping out from the comfort of your home and also may fulfill most of the banking requirements.
What is NeoBank?
The majority of us, need a bank account for some simple and basic reason, for depositing our savings or crediting our salary with the purpose of using the same later. To open a traditional bank account, you might have to waste a whole day standing in the queue and verifying all the KYC documents.
A Neobank is a digital & paperless alternative to the traditional bank account. It is an app-based mobile-only bank account that does not have any physical presence. A Neobank can be a commercial Bank or a Fintech company or an NBFC partnered with any commercial bank, providing a banking account facility to its customers. A Neobank may or may not come under the preview of RBI guidelines, however, the linked account fully complies with the RBI guidelines, and the savings bank deposits come under the DICGC insurance claim.
A NeoBank provides you the option of creating a savings bank account digitally with PAN and Adhaar. The app verifies the PAN from NSDL, verifies the address using Adhar OTP, and generates the Bank Account Number with the IFSC code of the partnered bank immediately. However, as per RBI norms, you have to complete the in-person KYC verification within 12 months of opening the bank account. The verification can be done within the NeoBank app itself, where a Bank executive will verify your PAN virtually and confirm the address using your mobile location.
A NeoBank account is actually a modified zero-balance basic savings bank account (BSBDA) for limited purposes only, which banks are converting into regular accounts by Video KYC. However, your deposit is safe, as it is kept in an RBI-regulated commercial bank. If you are a student or tech-savvy individual, who requires a bank account for online uses, then Neobank is a perfect choice for you.
Types of NeoBank
The main job of Neobank is to provide a fully virtual digital bank account (not a wallet) with an account number, IFSC code, and a Virtual Debit card number like any other regular bank account. There are two types of Neobank, one is a full-fledged digital bank, and another is a front-end-focused bank.
The full-fledged NeoBank has its own RBI banking license and can operate independently, whereas the front-end-focused NeoBank does not have its own banking license. They must have to make partnerships with any RBI-licensed traditional bank to provide services to their customers. An example of full-stack NeoBank is Kotak 811 or Axis ASAP account, whereas Jupiter Money or Fi Money is the font-end-focused NeoBank.
A full-stack NeoBank account can provide you branch access for any certain issue, whereas the front-end focussed NeoBank does not provide you any branch access, all transaction has to be completed within the App itself. You can not deposit cash directly into the Neobank account, always you have to deposit money online, either through UPI payment or through IMPS or NEFT. You may request for cheque facility from the Neobank app.
Pros and Cons of NeoBank Account
A Neobank is a complete virtual bank account and does not require maintaining any minimum balance similar to a BSBDA account, Moreover, you may avail of all the basic banking facilities including the digital loans as a normal bank account. It uses an AI-based customer segregation model to deliver more personalized offerings to its customers. However, the Neobank account has some restrictions. Let’s see what are the advantages and disadvantages of the Neobank.
| PROS | CONS |
|---|---|
| 1. Can be opened digitally using PAN & Adhar from mobile, without visiting branch. | 1. No physical presence of branch, customer grievance can be made only through online mode, like Call Centre or Chatbot. |
| 2. No minimum balance requirement. | 2. No physical cash deposit option available. |
| 3. Virtual Visa/Rupay debit card with an option of getting physical debit card. | 3. No physical loan except digital pre-approved loan. |
| 4. Normal zero balance bank account with account number, IFSC code, can be used for all types of purpose. | 4. Front-end-focused Neobanks does not have RBI License, can not provide banking service. |
| 5. Bank account can be linked for VPA id creation and UPI. | |
| 6. Digital pre-aproaved loan for selected customers. | |
| 7. Investment for Mutual Fund or Bank FDs can be made within the App. | |
| 8. Physical cheque book can be ordered from the Neobank App. | |
| 9. Neobank account money comes under DICGC insurance claim. |
Neobank Vs. Traditional Bank, What’s perfect for you?
Neobank is the future of Fintech, In coming years all financial transactions including all types of loans and the documentation process of sanctioning loans will be digitalized, i.e. no physical or paper-based documents will required to be signed manually. Therefore, the so-called Neobank will have a vital role to play in the digitization of the banking industry.
Neobank is a kind of Virtual online-only bank and does not have any physical presence, whereas the traditional banks have bank branches. Therefore, the trust factor is the major issue and differentiating factor between Neobanks and traditional banks. Customer grievances will only be sorted out virtually or via AI Chatbot in the case of Neobank account holders. Although Neobank accounts are actually from any RBI-licensed traditional banks, still I doubt bank executives from the physical branches will entertain the Neobank account holders.
Here in this infographic, you can check the major differences between a Neobank and a Traditional Bank account
Neobank Vs. Digital Bank
Neobank is a kind of Digital Bank, which enables the customer to open an online bank account from the mobile app or website. The main difference in banking Licenses. Both Neobank more specifically front-end-based Neobank and digital banks operate virtually, but Neobank does not have any banking license, they have to partner with RBI-licensed commercial banks, to provide digital banking services, whereas Digital Bank, full-stack Neobank or sometimes we also call it Challenger Bank, provides banking services on its own banking platform.
If you wish to get more insight into digital banking, then you can check my earlier article here on digital banking
Now, let’s see what are the major differences and similarities between Neobanks and Digital Banks
| Parameters | NEOBANKS | DIGITAL BANKS |
|---|---|---|
| Banking License | None/Partial | Full |
| Banking Platform | Partnership with RBI Licensed Banks | Own Bank |
| Account Opening | Online | Online |
| Customer Support | Online | Online |
| Debit Card | Virtual/Physical | Virtual/Physical |
| DICGC Insurance | Available | Available |
| Minimum Balance Requirements | Zero | Zero |
| UPI Payments | Yes with Partnered Bank | Handled by own bank |
KYC Process of Neobank
The account opening and KYC verification process is completely digital and App-based. The Neobank mobile app fetches the Adhaar address through eSign and confirms the PAN with NSDL, whether your name matches with PAN or not. You only need a Paper, Pen, and the original PAN card during the Video KYC process. The App verifies your mobile location and matches it with your current Adhaar address, The partnered bank’s executive will verify the Original PAN and capture your signature on a white paper through the mobile camera. Thats all.
Please remember to complete the Video KYC within 12 months, otherwise account will be deactivated.
The account opening process of a digital bank or full-stack Neobank and front-end-stack Neobank is the same. You can check my earlier article on digital banking here.
Top 8 Best Neobanks in India
The concept of Neobank is not new in India, however, it was in a nascent stage till the pandemic period which fueled the growth of digital banking in India. The Video KYC process with Adhaar OTP address verification makes the digital account opening process much easier.
Here is the list of some best Neobanks in India, the list contains both full-stack Neobank and front-end-stack Neobank.
| Neobank | Neobank Type | Banking Partner | Minimum Balance | Interest Rate | In-built Wealth Management |
|---|---|---|---|---|---|
| Jupiter Money | Front-End-Based | Federal Bank | Zero | 3.05% | Yes |
| Fi Money | Front-End-Based | Federal Bank | Zero | 3.05% | Yes |
| NiyoX | Front-End-Based | Equitus Small Finance Bank | Zero | 7% | Yes |
| Freo Save | Front-End-Based | Equitus Small Finance Bank | Zero | 7% | Yes |
| Kotak 811 | Full-Stack | Kotak Mahindra Bank | Zero | 3.50- 4% | Yes |
| INDIE | Full-Stack | IndusInd Bank | Zero | 6.75% | Yes |
| Instantpay | Front-End-Based | ICICI Bank | Zero | NA | Yes |
| Axis ASAP | Full-Stack | Axis Bank Limited | Zero* | 3-3.50% | Yes |
1. Jupiter Money
Founded in the year 2019, Jupiter Money is one of the fastest-growing Neobank in India. Jupiter Money, partnered with Federal Bank, provides an online savings bank account to its customers. You can open a Jupiter Money Federal Bank account just by installing the app from the Play Store or App Store. You will also get a free international transaction-enabled Visa Virtual Debit card.
The Jupiter Money app provides complete savings cum Wealth Management options for the users. This Neobank app has numerous payment and investment features with a portfolio tracker and expense manager option. You might also get a digital loan and co-branded Edge CSB RuPay Credit Card if you are eligible. The app has an international money transfer option for sending or receiving money from abroad. All in one, Jupiter Money is a completely feature-rich one of the best Neobanks in India with all the banking services that you might get from a traditional bank.
Open Jupiter Money Neobank Account
2. Fi Money
Founded in 2019, this Bengaluru-based Fintech app, partnered with Federal Banks, offered the zero balance Neobanking savings account service in India. Created by Google Pay co-founders Sujith Narayanan and Sunit Gawalani, the FI Money app is also getting very popular in India, for its numerous offers, cashback programs, and customized banking products. The FI Money App offers very similar features as the Jupiter Money app, with in-built UPI payments and investment options. The app also provides Federal Bank FI Money co-branded credit cards to its customers.
FI Money Neobank account is an excellent banking solution for the salaried class or students, as the accounts do not require maintaining any minimum balance. However, you might get some extra benefits if you maintain an NRV (Net Relationship Value) of more than Rs. 10,000. The Fi Money debit card offers zero forex charges for international payments.
3. NiyoX
Founded by Virender Bisht and Binay Bagri in the year 2015, NiyoX is one of the leading front-facing digital banking fintech startups in India. This Bangaluru-based start-up, partnered with Equitas Small Finance Bank, provides the mobile-first Neobanking platform for the tech-savvy GenX without any compulsion of minimum balance requirement. The NiyoX digital savings account provides a complete platform for savings as well as Wealth management with digital lending. You can also earn up to 7% interest rate on your savings deposits of up to 5 lacs.
NiyoX digital savings account can be most suitable for students who are studying abroad as the Debit card provided by the bank has zero forex markup fees. The NiyoX banking app has numerous bill payments as well as investment options, if you are looking for a best Neobank Account, then NiyoX can be a good choice, particularly if you are a student.
4. Freo Money
Founded in 2015 as MoneyTap, this Bankgaluru-based startup is the first digital credit-led Neobank in India, is also offering digital savings accounts with Video KYC and the bank’s user base already crossed 1M in 2022. This consumer-faced Neobank started to provide online savings account services in the year 2020, in partnership with Equitus Small Finance Bank. The name of Freo Money’s digital account services is Freo Save.
Freo Save is a complete zero-balance digital savings account, that can be opened from a mobile phone by downloading the Freo Money App. You can earn up to 7% interest on your savings bank deposit without any maintenance fee. You also get a Virtual debit card for shopping or online uses, however, they do not provide a physical debit card.
Freo Money has an exclusive shop now pay later option, Freo Pay integrated with the Freo Save app for digital instant personal credit based on customers’ Credit Scores.
Open Freo Money Neobank Account
5. Kotak 811
Kotak 811 is the best full-stack Neobank or digital bank in India, till now, from the Kotak Mahindra Bank. You can open an online zero-balance digital bank by downloading the Kotak 811 app. You will get a free international transaction-enabled virtual Visa debit card, which can be converted into a physical debit card by paying some charges.
Kotak 811 is probably the first digital bank account in India, that offers video KYC-based account opening. Unlike the other front-end-stack Neobanking apps, Kotak Mahindra Bank itself provides a savings bank account on its own digital banking platform. If you want to get the complete banking service from one of the leading private banks in India, then Kotak 811 Digital Bank is highly recommended. Kotak Mahindra Bank offers four variants of Kotak 811 digital banking, You may convert the account to Kotak 811 Edge to get the premium digital banking service from the bank.
There are countless banking features, you can have from the Kotak 811 digital banking app with an in-built Wealth Management option. Although you may not open the Kotak 811 from anywhere in India, Kotak 811 digital bank provides account opening options from some specific locations, where it has a physical branch.
Open Kotak 811 digital Account
6. INDIE by IndusInd Bank
Indie is one of the latest app-based digital savings accounts, offered by IndusInd Bank. INDIE is a full-stack neobank from IndusInd Bank, that can be opened only by downloading the INDIE mobile app. It’s a complete zero-balance savings account, with IndusInd Bank, IFSC code, and Account Number. You can avail of all types of banking facilities including digital loans from the INDIE neo banking app.
As the INDIE digital account is completely online and mobile app-based, the bank can offer higher interest rates of up to 6.75% on your savings deposits. You will get a virtual Visa debit card enabled with international transaction rights, an in-app rewards and loyalty program called INDIE Youniverse, an account aggregator, a spend analyzer, a budget tracker, and many more. The Indie Neobank app also provides a direct share trading platform in partnership with Paytm Money. You can also apply for the IndusInd Bank exclusive credit card if you are eligible. All in one, INDIE Neobank from IndusInd Bank is an excellent feature-rich digital bank account with more than a 4.5-star rating, both in the iOS and Android Play Store.
Sign Up for the INDIE Neobank Account
7. Instantpay
Instantpay is a front-end-based Neobank for business entities to open an instant current account without any compulsion to maintain the minimum balance. Instantpay, in partnership with ICICI Bank, provides a digital current account opening with an option to create a Virtual Visa Debit Card. If you require a current account for your online business, Instantpay current account is an excellent option.
You can open Instantpay digital business account from their mobile or website and get access from anywhere. The Instantpay dashboard provides you the account aggregator option, to monitor multiple bank accounts from a single place. The banking API provides smooth integration with the bank account and auto-categorizes all the transactions with analytics.
Open Instantpay Neobank Account
8. Axis ASAP
Axis ASAP is another full-stack Neobank in India, offered by Axis Bank. You can open an Axis ASAP digital savings bank account completely online using the bank’s official website or mobile app. Axis Bank, one of India’s largest Private sector banks, completely digitalized their account opening process. You can open any variants of Axis Bank’s savings account using the Video KYC process. The INFINITY variant of savings accounts does not require maintaining any minimum balance (you have to deposit 150/month to avail of the facility of zero balance), although you might have to minimum balance for the other variants of savings accounts.
You will get a free Visa virtual debit card instantly after opening the Axis ASAP digital account, you might also request a physical debit card if you wish with unlimited ATM access. You can experience complete digital branchless banking with an Axis ASAP account. The Axis ASAP account can be an excellent choice for students.
Final Verdict
Digital Banking is the future of India, paper-based banking will be obsoleted within the coming few years. From account opening to loan processing will be fully digitalised within the next few years. All the Neobanks and Digital Banks as discussed in the article are best right now in India. In the future, many Fintech startups may introduce Neobanking in India with all the banking features, that we get from a conventional bank today.
The money in your Neobank or Digital bank is completely safe and covered by up to 5 lacs under DICGC Insurance. Therefore, you can open a Neobank Account without any hesitance.
Have knowledge of any other Neobank, that might be included in the article? , then please share your thoughts below. If you like the article, then don’t hesitate to share it with your friends and like our Facebook Page.
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