Definition
Neobank
A neobank is a digital-first financial brand that offers banking-like services through an app, partnering with a licensed bank rather than holding a banking licence itself in India.
A neobank delivers a slick mobile experience — instant account opening, spend analytics, budgeting, cards and payments — but in India it does not have its own banking licence. It rides on a partner bank that holds the deposits and provides regulated products.
Because the RBI has not licensed standalone digital-only banks, Indian neobanks operate as a technology and distribution layer on top of established banks and NBFCs. Customer deposits sit with the partner bank and enjoy that bank's protections.
Neobanks compete on user experience, niche segments (such as startups, gig workers or teenagers) and integrated tools, while the underlying regulated services come from their banking partners.
Related terms
- Account Aggregator (AA)The Account Aggregator framework is an RBI-regulated, consent-based system that lets you securely share your financial data from one institution with another through a licensed intermediary.
- Embedded FinanceEmbedded finance is the integration of financial services — payments, credit, insurance — directly inside non-financial apps and platforms, at the point of need.
- API BankingAPI banking lets businesses and fintechs connect to a bank's services programmatically through application programming interfaces to enable payments, account opening and data flows.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.