There is a shift taking place in the way people do banking, with a majority adopting digital and other channels to reduce their dependence on brick-and-mortar banks, thanks to the pandemic. However, this does not imply that banks close their branches. Instead, they cut the size of branches and most transactions move outside, leaving only the bigger ones to take place inside branches. With the impact of the pandemic being visible on traditional bank branches, the situation has proved to be very positive for fintech companies.

It is believed that this shift will be permanent due to its convenience. We are moving into a scenario where the paperwork reduces and all data is instantly stored in an organized manner, making it easy for fintech companies, banks, and non-banking financial companies (NBFCs) can provide their services easily. As the world moves forward digitally, it's high time banking got digital too!

What does going digital entail for traditional banks?

The digital, technology-led platform includes an intuitive, AI-driven customer experience and increased responsiveness. 'Digital' happens to be an umbrella term for banking that utilizes various smart technologies. There are various types of banking such as API banking, open banking, and Neobanking.

Neobanking is emerging to be very successful by offering a host of benefits for a tech-savvy audience. This is a change wrought by mutual dependence banks who want to get a foothold in the digital revolution taking place and customers who are going digital at a rapid pace for all their needs and wants.

We have seen great efforts taken by traditional banks to add new features, even come up with a mobile app and services, however, they have constantly been lackadaisical in their responses to the evolution in customer preferences. The app acts as a mere digital extension of their monolithic physical branches, unable to keep up with the outsmarting technology and internet connectivity offers.

How does this personalized and intelligent banking impact traditional branch banking?

It is a known fact that intuitive and hyper-personalized features and recommendations tailored and customized to each individual can take any product or feature to a whole new level. Neobanks are utilizing this strategy to offer financial products and services for customers based on their lifestyle. This is a very holistic approach toward improving customers' financial wellbeing.

Neobanks have played a momentous role in bringing about this digital revolution to banking by introducing branchless banking. From unchallenging account openings to investments, neobanks provide various offerings that have created seamless and hyper-personalized banking experience without the need to establish a physical presence.

While well-reputed banks aim to own as many pieces of a customer’s financial portfolio, neobanks understand that ‘choice’ seems to be the future of finance. By making the customers prone to choose from a multitude of creative banking solutions, neobanks act as a catalyst for disrupting the banking space in a positive light. With the combination of services such as microlending, commission-free-stock-trading, saving, and investing, with services such as FDIC-insured savings accounts, debit cards, ATM access, credit cards, card management functions and mobile-first features, they have nearly every banking service in one place.

Making banking accessible for the younger, tech-savvy generation

India's millennials account for 36 per cent of the Indian population, which happens to be the largest in the world. This population is known for being tech-savvy, digitally literate, young professionals. They are also known to be technology evangelists who heavily rely on various apps for fulfilling most of their requirements including banking.

Especially since 90 per cent of the population are smartphone users, it has facilitated access to a rapidly expanding range of digitally delivered services through apps. Digital-first banks or neobanks are services that target the entirety of this mobile-first generation as well as wide consumer bases by incorporating AI and intelligent, personalized recommendation.

The future of the banking industry completely dwells on consumer awareness. Finance is a topic people don’t generally think about unless they are in the industry or have some work pertaining to the same. While neobanking aims to disrupt consumers’ monetary habits, they bring about a breaking dawn in the banking landscape. As consumers get more aware of such a platform, traditional banking would become a term swindled to oblivion, though this may take a while.

A new beginning has already arrived in the banking foolscap and it will only change for the better.

The author is Founder & CEO, Finin