Neobanks will process about 120 million business income accounts: Redseer

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Professionals’ main bank accounts (salaries or business income) are expected to drive the growth of neobanks in India and provide an addressable market of 120 million, according to consultancy Redseer.

In addition, it would be possible to process approximately 25 million additional new professional accounts each year. The roughly 120 million professionals (people with stable incomes) currently account for around 80% of addressable bank ARPU or average revenue per user.

Growth Opportunities

The results further suggest that a majority of the professional’s banking ARPU is driven by primary income accounts. Thus, the interest of neobanks is to become the first banker for employees and professionals.

Kanishka Mohan, Associate Partner at Redseer, said: “Neobank product offerings are still at a nascent stage, so the immediate game for neobanks is to target accounts with stable income, thereby differentiating themselves from savings accounts. traditional. A big step towards success for neobanks is to become the main banker of the target group; this has the potential to generate 10 times the lifetime value (LTV) of secondary accounts. »

Currently, salaried professionals rarely choose their preferred salary account provider because companies/employers choose a default provider for their employees. However, according to the results, salaried professionals prefer banks that offer better service.

Different models

Neobanks are working on three models globally, two of which are relevant in the Indian context. The first model involves pure virtual banks, where digital platforms partner with licensed incumbent banks to deliver niche, technology-driven offerings. The second model includes the neobanking operations of traditional banks that operate autonomously and compete with autonomous neobanks by repackaging existing offerings.

The third model involves digital-only banks that have a fully operational banking license, offer independent financial services, raise capital and lend on their own; this model has not yet caught on in the Indian context.

Published on

March 23, 2022

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