Thread by @Ravisutanjani

Neobank(s) - Old wine in a new bottle? 🏦🍷

• FI Money
• Jupiter
• NiyoX.

We've 3 Neo-banks in India, They’re basically Fintech companies promising to provide 100% cutting edge digital banking services.

But are they really good? What’s new?

Sunday Special Thread 🧵⬇️

Let’s check the basics first,

Almost similar benefits. Same zero balance account with free debit card etc. I will be pretty straightforward with my review so get your popcorn handy. 🍿💰

First of all the concept of waiting list these Fintech(s) are using is a marketing gimmick to create hype, some introductory offers, and BS. Same as a Flash sale on an e-commerce website for newly launched electronics.

If your product is so good, just open it for everyone. 👎

Second, don’t lure for 7% Interest (NixyoX), it’s actually:

• Savings account balance of up to ₹1 lakh earns an interest of 3.5% p.a.

• Any incremental amount above ₹1 lakh yields an interest of 7% p.a.

For example, for a savings account balance of ₹1,25,000, you will gain 3.5% on ₹1 lakh and 7% on the remaining ₹25,000.

Hope this helps you do the calculations.

The most important point about the safety of your money: ⬇️

In case of bankruptcy, Your money (Bank or Neobank) is safe with up to ₹5 Lakh insurance cover by Deposit Insurance Scheme (Subsidiary of the RBI).

Last week, We discussed many important points at @MidnightMillenn. I’ve been romancing with credit cards and financial products over the last 6-7 years, have experienced banking with leading private and PSBs.

https://twitter.com/Ravisutanjani/status/1408517196825858057?s=20

Well, A bank is supposed to hold my money and let me use it. I don't need to go to the bank in this day and age for anything. So they are new age digital bank that exists without any branches. They are reinventing the practices and processes associated with traditional banking.

But unlike the US, we don’t have any fully digital branchless Neobanks, most of them are just an intermediary, between the customer and the banks (Federal, Equitas in this case).

They do have good tech, helps with door-to-door KYC, nice designs/UX.

Also operating with cross-functional offerings like wealth management, mutual funds, round-off savings, etc

But the question is why you need an intermediary when you can directly open an account with the bank? With many banks becoming digitally oriented, there isn't much value!

Still, I can’t find many use cases yet. For daily general transactions, Credit Card+Paytm Payments Bank is my go-to site. And it’s not something very new here, we already have Digibank by DBS, Kotak 811, RBL Bank, etc providing end-to-end Digital Ac opening, banking since 2016.

Problems with Neobank(s):

You can’t open an account if you are already an existing customer of Federal or Equitas.

Also, The biggest pain is account closing, you’ve to visit the branch which may or may not be operational in your city.

In India🇮🇳 , the relationship and personalization factor plays an important role in banking hence the importance of branches.

In case of any problems/transaction failures, Neobanks will anyway have to loop in the partner bank so it will anyway delay the TAT for your queries.

When we maintain our banking or salary relationship, we also expect more products and services from the bank, Like Personal loans, Home loans, Credit Cards, etc.

I’m not seeing this in the case of Neobank(s) unless they get full ownership. Yes, BharatPe development is (+).

Long story short, you are not missing anything by not joining a Neobank. IMHO, some traditional banks are good enough to not use any Neobank. For me, it’s HDFC, SBI, and IDFC First Bank.

Except for HDFC, I find their Digital Offerings, Mobile Banking, etc are really good.

Hope you enjoyed reading the thread,

Appreciate your RT on the first tweet for more reach and awareness. 🙏

Happy Investing. 💰

https://twitter.com/Ravisutanjani/status/1411660575453581322?s=20