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Millennials to drive accelerated growth for Neobanks in India

July 29, 2022

Millennials to drive accelerated growth for Neobanks in India
The Indian growth story is counting heavily on its young population, with more than 50% of the population being below the age of 28. Banking will soon see the first generation of truly digital natives who rarely visit branches for transactions and may not relate to a time before digital banking, said the latest report by Grant Thornton Bharat on emergence of open and integrated Neobanks.

According to the report, India’s neobanking market is expected to grow at a three-year compounded annual growth rate (CAGR) of 50.5% to reach USD 11.65 billion by FY2025.

Technology is driving a fundamental shift in banking with automation, predictive analytics and machine learning finding beneficial applications in multiple functional areas within the retail banking sector.

While neobanks focus on enhancing many of its customer-facing, front-end operations with digital solutions, the reality is that many processes at traditional banks still rely heavily on people and paper to process customer requests which is costly, slow and can lead to inconsistent results and a high error rate, it added.

“Traditional banking services are being transformed and customers are today deeply accustomed to hyper-personalised digital banking services. The Indian neobank market is set for rapid expansion driven by the outreach to customers from the New to bank (NTB), SME and salaried segments,” said Jaikrishnan G, Partner, Financial Services Consulting, Grant Thornton Bharat.

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