Neo banks, also referred to as digital financial service providers, are revolutionizing cross-border payments by providing millennials in India and around the world with affordable, effective, and digital solutions. Sending money abroad can be difficult because of the lengthy paperwork requirements, lack of transparency, and high fees associated with traditional public sector banks in India. Freelancers consequently charge exorbitant rates for their services. Additionally, there are only a few options available to travellers for exchanging money, including cash, foreign exchange, and international debit cards, each of which has its own drawbacks and markups. Most of these transfers are carried out by public sector banks. These branch-based banks, which still use outdated technology, have a lot of paperwork.
According to experts in the field, there is a general mistrust of banks and a lack of transparency. Various freelancers are also available, each with a network of between 100 and 150 clients. However, these independent contractors frequently charge as much as 2% to 3% per transaction. Additionally, there are three ways to exchange money for those going abroad: cash, foreign exchange, and an international debit card. According to experts, carrying cash is inherently risky and involves markups of up to 7%. In contrast, international debit cards have a cross-currency markup of 3.5% to 4%, a spread of 1.5% to 1.7%, and are subject to daily FX volatility. On the other hand, the forex card resembles a digital traveller’s check. With forex cards, one must first determine which local vendor offers the best rate. Decide in advance how much cash to carry, and then visit the branch or load it online. There is no system in place to keep track of transactions. It is impossible to reload the card if the funds run out while travelling.
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Mayank Goyal, the founder and CEO of moneyHOP, claims: “Remittance processes that are time-consuming and expensive are finally coming to an end. “Neo banks with full-stack global banking solutions want to revolutionise cross-border banking for millennials in India and around the world by making it smarter, faster, and better.”
How do they provide?
MoneyHop, one of these digital service providers, offers cross-border digital banking through two products—a web portal and a mobile app. While the web portal offers international transfers, the digital banking app enables users to save, invest, borrow, and spend money. Additionally, the application offers no-markup currency exchange services and access to multi-currency wallets. Some of these service providers also provide remittance solutions to the outbound market in India. One such example is moneyHOP’s HOPRemit, which provides a remittance solution and allows users to send money within minutes. MoneyHop also provides a global account, a mobile app-based digital multi-currency bank account, and a global card. It is an INR savings account that is connected to foreign currency pods. Users of the app can perform all day-to-day banking operations, including saving, investing, borrowing, and spending. A contactless physical card can be used to pay at POS, withdraw cash, or conduct online transactions, as well as the virtual card available through the app. The card serves as a debit, credit, and foreign exchange card.
Who will benefit from the services provided by these platforms?
Approximately 30 billion dollars are sent outside of India each year for a variety of uses, including the maintenance of close relatives, the payment of subscription fees for SaaS products, the payment of college fees for international students, and travel (for business, pleasure, and education). Because of this, according to Goyal, “people transacting money for such reasons will be able to send and spend money. Across the globe with the help of these services, be it sending the money abroad, or on-demand currency exchange.”
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While digital payments in India have grown rapidly, cross-border banking and outbound remittances have remained expensive and ineffective. Neo banks are transforming the cross-border payment. Landscape by offering affordable, effective, and digital solutions, making it simpler and more accessible or millennials in India and around the world.
