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NEO Banking - A Future Digital Banking, Development Scope, Threat and Challenges

What is Neo Banking? NEO banks are the banks which has no physical branches. NEO Banks are digital only financial institutions that operate exclusively online through websites and mobile apps.  The financial services industry has undergone massive transformations from manual to Core Banking and now digital without any physical branch. the evolution of banking has been marked by innovations aimed at making financial services more accessible, convenient, and efficient.   NEO Banks offers services like below: Account Management: Account Opening, Checking, Savings, and Money Transfers Loan Services: Quick and seamless loan approvals Low Fees: Minimal or no fees due to lower operational costs Tech Features: Budget tools, instant payments, and real-time alerts Why Are Neo Banks becoming popular now? Convenience : 24/7 mobile banking—no waiting in lines. Lower Fees : No hidden charges, free international transfers, and zero maintenance fees. User-Friendly Apps : Seamless, f...
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Risk Categorization of Customers


For effective maintenance of Anti Money Laundering (AML), Customers in bank has been categorized in three types based on risk associated with them-

1) Low Risk Customer
2) Medium Risk Customer
3) High Risk Customer

Frequency of Updating Customer Identification Data i.e Photographs and Address Proof

1) Low Risk Customer - 10 Years
2) Medium Risk Customer - 8 Years
3) High Risk Customer - 2 Years


Frequency of Activities of Updating Customer Identification Data - Quarterly (April, July, October and January)

Examples

1) Low Risk Customer - Salaried Employees whose salary structures are well defined, People belonging to lower Economic strata of the society whose accounts show small balances and low turnover, Government Departments and Government owned companies, regulators and statutory bodies

2) Medium Risk Customer - Customers that are likely to pose a higher than average risk depending on customer’s background, nature and location of activity, country of origin, sources of funds etc like

a) Persons who is indulged in such business or industry or trading activities where the area of his residence or place of business has a scope or history of unlawful trading or business activities.

b) Where the client profile of the person who is opening an account, according to the perception of
the branch is doubtful.

3) High Risk Customer - Non-Resident Indian (NRI), High Networth Individual (HNI), Political Exposed Person (PEP), NGOs, Trusts, Hindu Undivided Family (HUF), Exporters, Importers, Co-operative Societies , Unclaimed Deposits, Dealers of Jewelries (Gold, Silver, Diamonds etc)


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