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Neobanks: A Catalysts for Global Financial Transformation

The future of Neobanking looks promising, here is how the blockchain can help accelerate it's growth.

Rebecca lalav
Rebecca lalavMay 05, 2023
Neobanks: A Catalysts for Global Financial Transformation

Growth of NeoBanks in Africa, India, and Latin America

“Neobanks” also known as challenger banks are online-only banks that offer lower fees and more convenient services than traditional banks. They have become increasingly popular in emerging economies, where many people are underserved by traditional banks. Latin America, Africa, and Asia are expected to experience the most growth in the Neo banking space over the next decade.

In Africa, Neobanks are also being used to improve financial access.

According to Statista, the sector in Africa is expected to experience significant growth in the coming years. The transaction value of Neobanking in Africa is projected to reach US$30.97 billion by 2027, up from US$5.02 billion in 2020. This growth can be attributed to several factors, including the increasing adoption of digital technology, rising smartphone penetration, and changing consumer behavior and preferences toward more accessible and convenient banking services.

Neobanks in Africa have been able to cater to populations underserved by traditional banks, providing lower costs and greater flexibility. The rise of digital banking solutions, such as mobile banking and online account opening, has allowed Neobanks to offer accessible and convenient banking services to these populations. Additionally, Neobanks have expanded into new markets, including SME lending and investment services, and are increasingly partnering with traditional financial institutions to offer white-label banking services.

In Latin America, Neobanks have emerged as a way to provide financial services to low-income earners who have historically been excluded from the traditional banking system. Expensive banking licenses and a bureaucratic process for setting up accounts have limited access to the financial system. However, recent regulatory changes in Brazil and Mexico have lowered the regulatory hurdle and created large Neobanking sectors in these two countries.

In India, the number of Neobank users is projected to reach 135.2 million in 2023, up from 42.5 million in 2019. This growth is also being fueled by factors such as a large unbanked population, a high level of smartphone penetration, and the government’s push for digitalization and financial inclusion.

In recent years, several Neobanks have entered the Indian market, including Paytm Payments Bank, Airtel Payments Bank, and DBS Bank India. These Neobanks are leveraging digital technologies such as mobile apps and digital wallets to offer customers a range of banking services, including account opening, money transfers, bill payments, and investment options.

One of the major advantages of Neobanks in India is their ability to serve underserved and unserved segments of the population. For example, many Neobanks are partnering with microfinance institutions and other financial intermediaries to reach customers in rural and remote areas. This is helping to promote financial inclusion and reduce the number of unbanked individuals in the country.

As the Neobanking market in Africa and across the globe continues to grow, the development of fintech infrastructure is expected to play a crucial role.

Bitpowr offers the necessary infrastructure to seamlessly integrate blockchain solutions into your primary banking operations, enabling you to provide advanced and secure financial services

This infrastructure will enable Neobanks to offer more sophisticated services and solutions, further driving the adoption of Neobanking services in the region. Overall, the future of Neobanking in Africa looks promising, with increasing smartphone penetration and changing consumer preferences expected to drive continued growth and expansion in the market.

How Stablecoins can help Neobanks improve operations

Making cross-border payments through Neobanks comes with a lot of challenges and Stablecoins are helping to ease that whole process. These digital currencies, which are pegged to other assets like the US dollar or euro, offer less volatility than traditional cryptocurrencies, making them an attractive option for those looking to protect their savings. Stablecoins also offer a solution for small and medium-sized enterprises (SMEs) in Africa, who struggle to access dollars or other major currencies for cross-border trades.

Neobanks can also benefit from stablecoins, as they provide a faster, more efficient way to transfer funds across borders. Neobanks can leverage stablecoins to offer their customers low-cost, instant cross-border payments, making it easier for them to transact with customers and suppliers in different countries. Additionally, stablecoins can help Neobanks reduce the risk of currency fluctuations, as the value of stablecoins is tied to a stable asset, which can provide greater stability compared to traditional fiat currencies. Overall, stablecoins have the potential to revolutionize cross-border payments, and Neobanks that embrace this technology will be better equipped to operate in the global economy.

Bitpowr provides Neobanks with the infrastructure to thrive.

Bitpowr is providing range of services that allow financial institutions, including Neobanks, to utilize blockchain technology for enhancing their operations, ultimately leading to business growth.

  • With Bitpowr, financial institutions can manage customers’ assets securely with a wallet infrastructure that provides flexible control. Bitpowr also leverages a multi-party computation (MPC)-based vault for secure custody and initiates automated anti-money laundering (AML) and know-your-transaction (KYT) procedures.
  • Bitpowr’s smart contract technology enables financial institutions to automate key processes and transactions while guarding against human error, ensuring error-free transaction processing and transparent auditing.
  • Bitpowr enables financial institutions to tokenize assets, making it easier to manage, transfer, and sell assets. Financial institutions can also create and deploy security tokens.

In summary, Bitpowr provides ready-to-deploy blockchain infrastructure to financial institutions, including Neobanks, to simplify asset management and international payments while increasing customer base and revenue. Reach out to learn more.

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