I'm not surprised the neo bank idea was shut down. The profit margins are really low and moving forward, capital is going to be expensive.
In India, most neobank startups are bleeding money through rewards and incentives funded by VCs and they are all shutting down one by one.
There is no moat. Support is expensive. They are still tied up with a traditional bank because getting bank license is not an option for startups. This is the case almost everywhere, not confined to India. You would be working with a legacy bank and inherit all the limitations.
Banking is free for most people. UPI and rupay run by government agencies result in 0% charge for merchant and consumers. So you can forget about any transaction related fees.
This might not be common across the world but there is no lock in when investing in funds in India. You cannot lock in customers for mutual funds and related investment legally anymore as of last year, I believe. So not possible to make profit on investment management side.
I agree with you around the analysis, but how do you explain the success of Ramp in the US then? Re India, will RazorPay win on the neobank side as well? As they have the critical size?
In India, most neobank startups are bleeding money through rewards and incentives funded by VCs and they are all shutting down one by one.
There is no moat. Support is expensive. They are still tied up with a traditional bank because getting bank license is not an option for startups. This is the case almost everywhere, not confined to India. You would be working with a legacy bank and inherit all the limitations.
Banking is free for most people. UPI and rupay run by government agencies result in 0% charge for merchant and consumers. So you can forget about any transaction related fees.
This might not be common across the world but there is no lock in when investing in funds in India. You cannot lock in customers for mutual funds and related investment legally anymore as of last year, I believe. So not possible to make profit on investment management side.
It's really tough for a neobank.