Kathmandu. After the government announced the establishment of neo bank through the budget of the next fiscal year, there has been an increase in public interest in this regard.
Some believe that it will be freed from the physical branches of traditional banks and the trap of long processes, while others fear that the budget will be limited to announcement as the government has not made the necessary preparations for this bank.
Neo Bank has emerged as a new and attractive option for customers who are fed up with the physical branches of traditional banks and the long process. At present, the development of technology has caused a wave of change in every field. Neo Bank is an important part of this change.
What is Neo Bank?
Simply put, Neo Bank is a financial institution that operates entirely digitally. It has no physical branch or office. It is also known as ‘Digital Bank’. Because it challenges the traditional banking system and provides financial services with state-of-the-art technology and customer-centric services. Bankers say that if Neo Bank comes into operation, customers will be able to do everything from opening an account to transacting money, applying for loans, from home through mobile apps or websites.
Neo banks will be based on the latest technologies such as Artificial Intelligence (AI), Data Analytics and Cloud Computing. Since there is no cost of physical infrastructure, their operating cost is reduced. This will benefit customers with cheap service charges and attractive interest rates.
How does Neo Bank work?
The main basis of Neo Bank is the mobile app or website. This is also its office. Customers open bank accounts, deposit money, withdraw money, pay bills, apply for loans, etc. through this digital platform. According to experts, such a bank also saves time. Experts say that neo bank will create a situation in which the process of opening an account can be completed within a few minutes by reducing the time taken in the paperwork in traditional banks.
Neo banks make full use of AI and data analytics to understand customer needs and behavior. For example, they analyze customer spending habits to give them personalized suggestions for savings or help them set financial goals.
Most neo banks in the world do not have their own banking licenses. They partner with licensed traditional banks. Under this partnership, Neo Bank provides essential banking services such as deposit insurance, compliance with financial regulations using traditional bank licenses, it gives Neo Bank access to financial infrastructure and remains within the purview of regulation. In Nepal, however, the concept of how to operate neo bank has not yet been introduced.
Although the government has already announced to bring digital banking into operation, it has not been able to move forward. In this year’s budget, it has been announced to change the name to Neo Bank.
The concept of Neo Bank is spreading globally, and it is changing the way it provides financial services. India has been at the forefront of neo bank development in South Asia. Many neo banks in India are working in partnership with traditional banks.
In India, FI Money has been working with Neo Bank in partnership with Federal Bank. Features targeted at young and technology-friendly customers, including personalized financial advice, spending tracking, and automated savings devices. Its users or customers can open an account in a few minutes from the mobile app and get a debit card. It also provides tools to help improve credit scores.
Similarly, Neo Bank has been working with various banking partners including Neo and Jupiter.
Now the government and the Rastra Bank will jointly formulate a framework on how Neo Bank works in Nepal. The government, which is in the strategy to organize and take it forward after the suggestions of all sectors, has announced to run neo bank in the budget of the next financial year.
