Changing The Face Of Finance In Singapore With Neo Banks

Fintech firms in Singapore witnessed an era of financial revolution with the emergence of many digital-only banking platforms, known as Neo banks and challenger banks in Singapore. With the proliferation of mobile banking applications and new-age entrepreneurs relying more on technology for their business activities, traditional banking infrastructure was lacking in some aspects, and to bridge this gap, the concept of Neo banks was introduced.

They are mostly digital-first or digital-only banking platforms that provide standard banking services for SMEs, such as payment gateways, invoicing software, diverse perspective on expense management tools, automated accounting systems, etc. Many prominent players in Singapore are tapping into this need of businesses and leveraging technology to change the game for SMEs.

Some of these payment service providers available in Singapore are:

• Aspire Singapore– provides digital business accounts and other financial services through its online platforms.
• GT Pay- providing its services across the borders in country like China, GT Pay deals with several payment solutions such as, real-time bank transfer, local payment processing (Union Pay), card payments, etc.
• DBS Merchant Payment Services- being one of the largest banking network in Singapore, this financial institution provides card payment services in the E-commerce sector. And enables merchants to accept card payments via E-commerce.
• PayPal- it is a globally recognized payment platform having a significant presence in Singapore. Apart from providing a secure online transactions and international money transfer services, it has a seamless integration with the local banks to facilitate cross-border trade and online shopping.

Although these payment providers and neo-banks seem to be interchangeable because of  a few similar financial services they provide, but they are different entities as labeled by the government of the country.

Let us unravel some of the significant advantages these neo-banks offer to their customers:

Smooth account acquisition:

1. With just a few clicks and taps on your device, a business account is created without the hassle of going to a physical branch.
2. And it is possible because neo-banks use algorithms and cloud-based tools to provide accurate financial solutions.
3. Time-consuming documentation and verification processes are accomplished with few clicks only; that is the power of digital banking.

Intuitive interface eliminates the complexities:

1. For some business owners and start-up founders, a lot of raw financial data can be overwhelming to process at once to benefit them in the future.
2. However, the simple dashboard and seamless navigation of digital banking platforms allow them to learn things at their own pace, and they can decipher them in a better manner by using them in their daily activities, such as online payment modes, digital loan application process, virtual trading, and investing, etc.

Reduced operational costs:

1. What is causing the neo banks to grow in popularity is the low or no fees policy they implement on the array of banking services they provide.
2. Since they don’t incur costs in maintaining their physical branches, clients benefit from these reduced operating costs in the form of low account maintenance fees, account opening charges, program fees, etc.
3. For businesses trying to get off the ground, such reduced banking expenses can be a boost in establishing themselves financially.

International payments are made easy:

1. It is not just about growing the domestic base; businesses can expand globally without draining their bank accounts in pay-for-currency conversion.
2. As neo-banks provide lower foreign exchange rates and less cost on international funds transfers, companies find this as the best alternative for handling their global banking operations.

Customized services:

1. Flexibility is something that organizations crave in this ever-evolving dynamics of modern business.
2. While traditional banks provide a list of generalized financial services for a wide range of demographics, on the other hand, neo-banks have a tailored approach to focus on specific specializations.
3. They also provide added assistance on typical issues faced by business organizations.

Comparative analysis between neo banks & traditional banks;

The prime point of difference lies in the manner these banking institutions obtain SDIC (Singapore Deposit Insurance Corporation) insurance and who is the parent company. Traditional banks avail SDIC insurance for all their digital platforms and online-only bank divisions. In contrast, for neo-banks to obtain SDIC insurance, they must form a partnership with a traditional bank participating in the existing program. So that in case any of the banking firms go bankrupt, consumers get their due amount refunded.

Another remarkable difference is that the traditional banking system provides excellent banking services and a well-regulated financial infrastructure. Still, they do sometimes struggle to fit into the rigid processes of changing customer needs because of the outdated operating system adopted within the organization. In this case, Neo-banks get the brownie points for delivering innovative financial services to the emerging markets of businesses and entrepreneurs.

Ready to make a switch?

It can be a complex decision to consider the required banking framework to prefer before starting a business. To simplify it, a traditional banking model with digital banking facilities can be ideal for companies that need a wide range of banking services to manage complex financial activities.

Suppose you want to start with a banking model that prioritizes your organization’s specific needs while you value agility, superior customer experience, and sustainability. In that case, neo-banks will be the right choice.