COMPREHENSIVE PROJECT REPORT

On
“A STUDY ON CUSTOMER AWARENESS AND USAGE OF PAYMENTS BANK
AND NEO BANKS IN AHMEDABAD”
Indu Kaka Ipcowala Institute of Management (IIIM)
Charotar University of Science and Technology (CHARUSAT)
Under the Guidance of
DR. RAJESH SADHWANI
Assistant Professor
SUBMITTED BY
AAKANSHA BHARTIYA
23MBA007
MBA (Semester – IV) Academic Year: 2024 – 2025
1
COMPREHENSIVE PROJECT REPORT
On
“A Study on Customer Awareness and Usage of Payments Bank and Neo banks in
Ahmedabad”
Indu kaka Ipcowala Institute of Management (IIIM)
Charotar University of Science and Technology (CHARUSAT)
Under the Guidance of
Dr. Rajesh Sadhwani
in partial fulfillment of the requirement of the award of the degree of
Masters of Business Administration (MBA)
Offered by
Indu kaka Ipcowala Institute of Management, CHARUSAT
SUBMITTED BY
AAKANSHA BHARTIYA
23MBA007
MBA (Semester – IV) Academic Year: 2023 – 2025
2
STUDENT DECLARATION
I hereby declare that the Comprehensive Project Report entitled “A Study on Customer Awareness and
Usage of Payments Bank and Neo banks in Ahmedabad” undertaken by 23MBA007 AAKANSHA
BHARTIYA is a result of my own work and my indebtedness to other work publications, references, if
any, has/have been duly acknowledged. If I am found guilty of copying from any other report or published
information and showing as my original work, or extending plagiarism limit, I understand that I shall be
liable and punishable by the institute/university, which may include ‘Incomplete Grade’ in examination or
any other punishment that institute/university may decide.
23MBA007
Aakansha
AAKANSHA.A. BHARTIYA
Place:
Date:
3
INSTITUTE CERTIFICATE
This is to certify that Ms. AAKANSHA AJAY BHARTIYA. Student ID 23MBA007 has completed his/her
Comprehensive Project (MB400) titled A Study on Customer Awareness and Usage of Payments Bank
and Neo banks in Ahmedabad as per the University/Institute norms. To the best of our knowledge, the
report is genuine, and the content therein is the original work of the student. We wish Ms. AAKANSHA
AJAY BHARTIYA continued success in their academic and professional endeavor’s.
Faculty Guide Signature
Faculty Guide Name: DR. RAJESH SADHWANI
Assistant Professor
Indu Kaka Ipcowala Institute of Management
Charotar University of Science and Technology
Date
Place
4
PLAGIARISM REPORT
DIGITAL RECEIPT
SIMILARITY PERCENTAGE
5
PREFACE
The banking sector has seen a major shift with the rise of digital transformation, particularly through
Neobanks, which are changing the way financial services are delivered. These digital-only banks provide
innovative and efficient services designed to meet the expectations of modern consumers. However, despite
their growing popularity, concerns regarding security, privacy, and regulatory risks continue to shape
customer perceptions and adoption patterns.
This research explores the dimensions of risk in Neo banking adoption, explores how customer awareness
and knowledge influence their readiness to embrace digital banking services. By integrating theoretical
frameworks such as the Perceived Risk Theory, Diffusion of Innovations Theory, Technology Acceptance
Model (TAM), and Unified Theory of Acceptance and Use of Technology (UTAUT-3), the study provides
a comprehensive analysis of the key factors affecting Neo banking adoption in India.
This study aims to contribute valuable insights to the financial technology sector by highlighting the
opportunities and challenges associated with Neo banking. The findings are expected to aid financial
institutions, policymakers, and fintech companies in developing strategies to enhance customer confidence
and increase adoption rates.
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ACKNOWLEDGMENT
This research would not have been possible without the support and guidance of several individuals and
institutions.
First and foremost, I express my sincere gratitude to Dr. Rajesh Sadhwani for his invaluable guidance and
constructive feedback, which played a crucial role in shaping this study. His expertise and insights have
been instrumental in refining the research objectives and methodology.
I extend my appreciation to Indukaka Ipcowala Institute of Management for providing the necessary
resources and academic environment to conduct this research. I also acknowledge the support and
collaboration of my colleagues, whose discussions and insights have enriched this study.
Finally, I am deeply grateful to my family and friends for their unwavering encouragement and belief in
my work. Their support has been a constant source of motivation in completing this research successfully.
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ABSTRACT
Payments Banks and Neobanks are changing the way people manage money by offering digital and easy
to-use banking services. However, their adoption depends on customer awareness, trust, and perceived risks
like security and privacy concerns. This study explores how people in Ahmedabad understand and use these
banks, focusing on different payment methods and digital transactions. It highlights that better awareness
reduces fear and increases usage, however challenges such as security issues and lack of physical branches
remain. The study suggests ways to build trust and improve digital banking adoption.
Keywords: Payments Banks, Neobanks, Digital Banking, Customer Awareness, Online Payments.
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TABLE OF CONTENT
Title Page
Student Declaration 3
Guide Declaration/ Institute Certificate 4
Plagiarism Report 5
Preface 6
Acknowledgement 7
Abstract 8
Particulars Page No.
Chapter 1 – Introduction and Background of the Topic/Study
1.1 Overview of the Topic
1.2 Background of the Study
1.3 Research Objectives
1.4 Research Questions
1.5 Significance of the Study

11-18
Chapter 2 – Literature Review
2.1 Theoretical Framework
2.2 Review of Previous Studies
2.3 Research Gaps
2.4 Hypotheses Development

19-33
Chapter 3 – Problem Identification
3.1 Problem Statement
3.2 Objectives and Alignment
3.3 Study Variables or Constructs
34-37

Chapter 4 – Research Methodology
4.1 Research Design
4.2 Data Sources
4.3 Sampling Technique
4.4 Data Collection Methods

38-40
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Chapter 5 – Data Analysis & Interpretation
5.1 Reliability and Validity of Scale
5.2 Data Analysis and Interpretation

41-62
Chapter: 6 Findings & Conclusions 63-66
Chapter:7 Suggestions, Limitations of the study, Contribution of the study
& Future Scope of the study
67-70
Bibliography & References –
• In APA Format
71

CHAPTER 1 – INTRODUCTION
1.1 OVERVIEW OF THE TOPIC
The banking sector has transformed a lot over the past couple of years due to the rapid rate of advancement
in digital technology. Payments Banks and Neo Banks have been the most prominent innovations in the
sector, both leveraging technologies to make banking services available to customers in an easy and
convenient manner.
Approved by RBI in 2015, Payments Banks have been initiated with a vision to drive financial inclusion,
targeting particularly the unbanked or the partially included customers in banking networks. Payments
banks can accept deposits but cannot extend loans or credit cards. Payments banks focus majorly on
supporting digital payments, fund transfer, and developing small savings of the customers. Fino Payments
Bank and India Post Payments Bank are the top Payments Banks in India.
Neo Banks have no physical presence, but they only exist in the virtual world.
They partner with conventional banks to offer services but wish to deliver end-to-end digital banking. Neo
Banks such as Niyo, Fi Money, Jupiter, and RazorpayX have been popular in India by delivering end-to
end digital banking. Through the passage of time, the wider adoption of mobile phones and expanding
internet penetration have also driven online banking, mobile wallets, and other such similar fintech
offerings.
This paper will explore the extent to which such online offerings, Payments Banks and Neo Banks, are
impacting customer behaviour and uptake, and specifically how extensively consumers are conscious of
and availing themselves. It will consider the awareness level, usage rate, and drivers of adoption of such
new banking systems, especially in urban settings like Ahmedabad, where adoption of such online banking
services is gradually picking up.
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RELEVANCE OF THE STUDY

Relevance to Academic: The digital banking sector is changing fast, and therefore it is
a prominent topic for academic research, especially concerning customer behavior, financial literacy,
and technological uptake.
Industrial Relevance: Traditional banking institutions are facing increasing competition from digital first
financial services. This research will help them understand customer awareness and usage patterns, which
could inform their strategies.
Social Relevance: Indian government introduced schemes like Digital India and UPI (Unified Payments
Interface)to encourage digitaltransactions. Consumer adoption of services like these provides important in
sights to understand the effectiveness of such campaigns.
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1.2 BACKGROUND OF THE STUDY
Evolution of Banking in India
Over the decades, the Indian banking landscape has evolved significantly, adapting to new economic and
technological changes. Initially, banking services were primarily offered by large commercial banks,
requiring customers to visit physical branches for their banking needs. However, with the rise of mobile
phones and internet access, online banking, digital wallets, and fintech innovations began to emerge.
The need for alternative banking solutions, such as Payments Banks and Neo Banks, became apparent due
to some challenges faced by traditional banking, including:
Rural regions in India often suffer from inadequate access to banking facilities due to a lack of physical
bank branches.
Complex banking procedures, which can be difficult for low-income individuals to navigate and
understand.
The demand for faster and more convenient financial transactions that are not reliant on traditional banking
infrastructure.
The introduction of Payments Banks in 2015 by the Reserve Bank of India (RBI) focused on addressing
financial inclusion by providing basic banking services to underserved populations. Meanwhile, Neo Banks
emerged as a more customer-centric, tech-driven solution to banking, providing users with an entirely
digital experience.
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KEY TRENDS AND MILESTONES IN THE EVOLUTION
2015 – Introduction of Payments Banks:
The RBI approved Payments Banks to cater
to
small savers and promote digital
transactions.
2016 – Demonetization: The government’s
move to demonetize high-value currency
accelerated digital payment adoption.
2017–2018 – Digital and Mobile Penetration: Smartphone usage and internet access expanded
significantly, especially in urban hubs like Ahmedabad.
2018–2020 – Rise of Neo Banks: Targeting millennials, startups, and gig workers, Neo Banks offered low
cost, user-friendly banking solutions.
2020 – COVID-19 Pandemic: The pandemic further pushed the need for contactless, online financial
services.
2021–2023 – UPI Growth and Market Trust: The surge in UPI-based payments reinforced confidence in
app-based banking platforms.
2024 and Beyond – Personalization Focus: Neo and Payments Banks are now prioritizing AI-based
support, data-driven insights, and user-specific financial planning.
CHALLENGES AND CONCERNS
While digital banking, including Payments Banks and Neo Banks, has rapidly grown in India, especially in
urban centres like Ahmedabad, there are several challenges that still need attention:
1. Lack of Awareness:
Despite the rise of digital banking, many customers in Ahmedabad remain unaware of the specific
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advantages and operational features of Payments Banks and Neo Banks. A significant portion of
the population still relies on traditional banking methods, which affects the adoption rate of these
modern financial platforms.
2. Cybersecurity Risks:
With an increase in digital banking comes a rise in cybersecurity threats. In cities like Ahmedabad,
where mobile and internet usage is growing, digital banking platforms face risks such as fraud,
hacking, and data breaches. Customers might hesitate to trust these platforms with their financial
data due to concerns about privacy and security vulnerabilities.
3. Regulatory Issues:
Neo Banks face particular challenges due to their lack of direct RBI approval, which raises
questions about their long-term stability and regulatory framework. In Ahmedabad, where
financial inclusion is a priority, the absence of clear regulations for Neo Banks could potentially
undermine their growth and customer trust.
4. Digital Divide:
Although Ahmedabad is rapidly adopting digital platforms, a segment of the population still faces
issues with internet connectivity or smartphone accessibility, particularly in some suburban or
rural pockets. This limits the reach and adoption of Payments Banks and Neo Banks in the region,
restricting the full potential of digital financial inclusion.
5. Trust and Customer Support:
A major concern with digital-only platforms is the lack of human interaction in case of issues or
complaints. Customers in Ahmedabad, particularly from older generations or rural areas, may
prefer traditional banking with in-person assistance. This can create a barrier to the widespread
use of Neo Banks and Payments Banks, where automated support systems often replace
personalized customer service.
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1.3 RESEARCH OBJECTIVES
1. To assess the level of customer awareness regarding Payments Banks and Neo Banks in
Ahmedabad.
2. To analyse the factors influencing customer adoption and usage of Payments Banks and Neo Banks,
including trust, security, and regulatory concerns.
3. To examine the key challenges and barriers faced by customers in using these digital banking
services.
4. To investigate the association between customer awareness of Payments Banks and Neo Banks and
their usage patterns or preference for different types of banking platforms.
1.4 RESEARCH QUESTIONS
This study is guided by the following research questions:
What is the level of customer awareness regarding Payments Banks and Neo Banks in Ahmedabad?
What factors drive the adoption of these banking models?
How satisfied are customers with the services provided by Payments Banks and Neo Banks?
What demographic characteristics influence the usage of digital banking services?
What challenges do customers face in adopting Payments Banks and Neo Banks
1.5 SIGNIFICANCE OF THE STUDY
Academic Contribution
This study will enhance understanding of digital banking and customer adoption behaviour, especially in
the context of urban areas like Ahmedabad.
It will help researchers gain insights into the factors driving digital banking usage in evolving markets.
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Industry Relevance
The findings will provide Payments Banks and Neo Banks with valuable information to improve customer
engagement and service delivery.
The research will support fintech companies in developing more effective and user-friendly financial
products.
Policy Implications
The study’s results will assist regulators, including the Reserve Bank of India (RBI), in shaping future
digital banking policies and improving the regulatory framework.
It will also help policymakers understand the challenges to financial inclusion and guide efforts to overcome
these barriers.
Consumer Benefits
The research will identify customer concerns and pain points, helping financial institutions to enhance their
service offerings.
It will contribute to financial literacy, providing consumers with a better understanding of both the
advantages and risks associated with digital banking.
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CHAPTER 2: LITERATURE REVIEW
Nitin Bansal (2023): This uses the Financial Inclusion Theory, which aims at rendering affordable
financial services to every category of society, with especial focus on poor sections. The theory considers
that extending access to financial services can possibly trigger economic empowerment and poverty
alleviation. For the case of Payment Banks, the method is utilized to understand how Payment Banks will
help with financial inclusion through delivering basic banking facilities to the excluded segment. The
author discusses evidence demonstrating that Payment Banks aim at enhancing financial inclusion by way
of digital payment systems, especially for unbanked regions. Past studies have established ease of use,
accessibility, and trustworthiness as key drivers to the uptake of digital banking services. While previous
studies have examined the general determinants of the uptake of online banking, limited studies have
explored customer perception and awareness of Payment Banks in targeted geographical areas like
Ludhiana.
Somnath Sardar and Kavit Anjaria (2023): This employs the Technology Acceptance Model (TAM) to
quantify how perceived ease of use and perceived usefulness influence the adoption of Neo Banks. TAM
postulates that these two variables are the most important determinants of technology acceptance by
users. The authors cite literature that indicates that Neo Banks or digital or challenger banks employ new
technologies to offer customer-centric and user-friendly banking services. It has been proven through
research that convenience, innovation, and customized services are drivers of the adoption of Neo Banks.
Although worldwide Neo Banks are on the rise, there has been extremely little empirical research on the
basis of their contribution to the banking sector in India, particularly concerning customer acceptance and
satisfaction.
C. Bhargava (2023): This employs the Diffusion of Innovations Theory to explain the way in which
technologies and innovation are spread through a particular society. Relative advantage, compatibility,
complexity, trialability, and observability have been seen to influence the extent to which there is
innovation as a rate, in the present case, applicable to Neo Banks and Payments Banks. Through the use
of this framework, this is understood when these digital banking products are accepted by consumers of
Chennai. The writer examines literature that indicates Payments Banks were introduced by the Reserve
Bank of India as a move to promote digital, paperless, and cashless banking, with special emphasis on
unbanked and underbanked individuals. Neo Banks, with their existence purely in the virtual space,
leverage fintech innovations to deliver customer-oriented services. Convenience, accessibility, and
technological savvy have been highlighted as driving factors for the adoption of such banking models by
earlier studies. Although previous studies have explored adoption of digital banking services, minimal
research has addressed customer usage and awareness of Payments Banks and Neo Banks solely within
Chennai.
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Kayva Shabu and Vasanthagopal Ramankutty (2022): The study explores the extent to which the
UTAUT model elucidates how the variables of performance expectations, ease of use, social influence,
and support systems affect people’s choices to employ technology. It posits that Neo Banks are becoming
popular because they offer innovative financial services, which are technology-based and highly
personalized. They emphasize the ways in which easy-to-use interfaces, 24/7 access, and effortless
integration with other financial systems contribute to the uptake of Neo Banks. Nevertheless, in spite of
the worldwide popularity of Neo Banks, the study identifies a lacuna in empirical studies that investigate
the opportunities and challenges for Neo Banks in India. Authors believe that the key to manage obstacles
such as trust, security concerns, and e-literacy is to understand customer perception and these can
influence the adoption process in India.
Sharma Dimple (2022): The study employs the SERVQUAL model to quantify the service quality in
terms of features such as tangibles, reliability, responsiveness, assurance, and empathy. For Payment
Banks, the model assists in measuring levels of customer satisfaction with the services provided. The
author consolidates literature which indicates that Payment Banks aim to provide basic banking services
to the unbanked segments, thus enhancing financial inclusion. Previous studies have established that
service quality dimensions directly influence customer satisfaction and repeated usage of banking
services. Although extensive research is available on customer satisfaction in traditional banking, few
highlight customer awareness and satisfaction with Payment Banks in a specific region like the Malwa
belt of Punjab.
A.V. Komarov and V.M. Martyukova (2020): This study deploys the theory of Disruptive Innovation to
explain how emergent technologies shake up existing markets by offering better, cheaper, and more
accessible alternatives. To Neo banking, this framework assists in understanding the disruption of the
traditional banking framework by digital banks. The authors offer literature revealing that Neobanks
leverage the fintech breakthroughs to enable simplified, user-centric services liberated from the
inefficiencies of historic banks. Studies have confirmed cost reduction, technology innovation, and
tailored services as the drivers of Neobank adoption. Though Neo banking is increasingly popular across
the globe, there is limited research on the development trajectory and impact of Neo banking in the
Russian financial system.
Pooja Sharma (2025): The Technology Acceptance Model (TAM), in this paper, relies on the notion of
perceived usefulness and perceived ease of use as the foundation for assessing technology adoption. The
model is beneficial in describing how customers perceive the ease of use and usefulness of online-only
banking products and services in Neo-Banking. The author synthesizes literature to show that Neo-Banks
utilize cutting-edge technology to provide banking services that are seamless and bespoke. Earlier
research has emphasized factors like convenience, 24/7 access, and innovative tools as powerful drivers
of Neo-Bank adoption. Although there has been international research on Neo-Banking adoption, with
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minimal studies in India concentrating on consumer attitude from an awareness and acceptance
perspective.
R. Kumar and S. Singh (2024): This employs the theory of Diffusion of Innovations to analyse what
factors drive the adoption of Neo Banks in India. The theory identifies key factors such as relative
advantage, compatibility, complexity, trialability, and observability that influence the rate at which
innovations such as Neo Banks are adopted within society. The study discovers that Neo Banks have
benefits such as low cost of transactions, access to financial services, and compatibility with pre-existing
banking infrastructures, which render them extremely desirable. But although they have become popular,
the research finds that Indian consumers are still not ready to adopt Neo Banks completely, due to fear of
security problems, trust gaps, and fewer branches available. The authors believe that overcoming these
barriers will involve closing the technology, regulation, and consumer awareness gaps to drive increased
adoption rates.
A. Verma and M. Gupta (2023): This study employs the Unified Theory of Acceptance and Use of
Technology (UTAUT), which identifies performance expectancy, effort expectancy, social influence, and
facilitating conditions as robust predictors of technology acceptance and use behaviour. For Neo Banks,
the model is useful in quantifying how such conditions facilitate the adoption of customers in India. The
authors reference literature indicating that Neo Banks which operate exclusively online leverage fintech
innovations to provide customer-centric services. It has been established from earlier research that
convenience, accessibility, and technologically know-how is determining factors in the adoption of these
models of banking. While there has been earlier research on the adoption of digital banking services,
studies on customer awareness and usage of Neo Banks in India are limited.
S. Patel and R. Mehta (2024): The research employs the Perceived Risk Theory, in which consumer
perceived risk influences their decision-making process, especially in adopting new technology. In the
context of Neobanks, this model is able to describe the factors affecting customers’ willingness to adopt
digital-only banking products based on perceived financial, security, and privacy risks. Authors refer to
research that suggests that although Neobanks provide new and convenient banking products, data
security is a problem, there are no physical branches, and regulatory issues are serious risks that may
deter adoption. There is literature that has established the significance of risk mitigation measures and
trust in driving the adoption of digital banking services. Despite the growing appearance of Neobanks,
there has been little research carried out to explore how far different dimensions of perceived risk
influence the relationship between customer awareness and readiness to use Neo banking services in
India.
Kayva Shabu (2022): This paper utilizes the Diffusion of Innovations Theory that explains how new
ideas and technologies spread across a society. For Neo banking, this framework helps to clarify how the
Neobanks are embraced by Indian consumers along dimensions of relative advantage, compatibility,
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complexity, trialability, and observability. The author synthesizes literature exhibiting how Neobanks,
being entirely digital, offer customer-centric services leveraging fintech innovations. Previous literature
has identified aspects like convenience, accessibility, and technological know-how as critical
determinants of the adoption of Neo banking models. International literature has briefly mentioned
adoption of Neo banking, but few empirical studies exist that look into customer perceptions towards
opportunities and threats presented by Neo banking in the Indian context.
R. Sharma and A. Kumar (2022): The study utilizes Unified Theory of Acceptance and Use of
Technology (UTAUT-3), Theory of Perceived Risk, and Trust Theory to account for Neo banking
adoption determinants. UTAUT-3 takes into account factors such as performance expectancy, effort
expectancy, social influence, facilitating conditions, hedonic motivation, price value, and habit. Perceived
Risk Theory analyses potential risks customers feel as they implement new technologies and Trust Theory
analyses the role played by trust as customers implement technologies. The authors address literature that
proposes Neobanks offer new and convenient banking products. Security concerns regarding data, lack of
physical branches, and regulatory uncertainties are significant risks that can hinder the adoption process.
Previous studies have also proposed the importance of trust and risk mitigation strategies to ensure the
adoption of digital banking products. Previous research has accounted for factors that impact digital
banking adoption but with limited studies integrating UTAUT-3, perceived risk, and trust perspectives in
examining Neo banking adoption in India.
P. Nair & V. Sharma (2023): The current study is constructed based on Trust-Based Acceptance Model
(TBAM), which illustrates that trust plays an important role in consumer adoption of online services,
specifically financial services like Neo banking. Institutional trust (belief in regulations and banks) and
dispositional trust (personal tendency to trust technology) influence user acceptance, as per the model.
The authors are critical of literature that posits digital banking trust to be determined by security,
transparency, and history. Studies have shown that some customers are hesitant to use Neobanks as they
are concerned about data breaches and lacking customer support in a physical environment. While
existing studies talk about the determinants of digital banking trust, very few studies consider specific
issues of trust toward Neobanks in India, where adoption of digital banking is in its nascent stage.
S. Verma & A. Singh (2024): The study utilizes the Financial Literacy Theory which provides an
understanding of how financial literacy of a subject influences banking choice. In Neo banking, financial
literacy impacts confidence levels in using digital banking channels. Existing literature has shown that
Indian customers are not aware of digital financial instruments and therefore remain reluctant to adopt
Neobanks. Studies show that more financially literate customers are likely to have faith and use online
banking facilities. While the impact of financial literacy on traditional banking is widely researched, its
direct impact on the adoption of Neo banking in India is not adequately researched.
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R. Malhotra (2023): The study is based on the Perceived Risk Theory, which holds that perceived risks
(security, financial, privacy risks) motivate a person to adopt digital banking. Earlier studies have
confirmed that even though Neobanks offer cheap and efficient services, customers worry about fraud,
hacking, and lack of personal support. Earlier literature discusses digital banking problems in general
terms, but little work has been done on understanding how Indian customers view risks in Neobanks.
D. Reddy & T. Joshi (2024): This study applies the Social Influence Theory to explain how peer
influence and online reviews determine financial decisions, e.g., the adoption of Neobanks. Studies
indicate that positive reviews and word of mouth significantly affect the adoption of online financial
products. Customers are likely to trust Neobanks if they see positive reviews from fellow customers.
While the social media influence on e-commerce adoption is well documented, its effect on digital
banking, particularly Neobanks in India, has not been studied.
A. Khanna & P. Bansal (2022): The study is based on the Unified Theory of Acceptance and Use of
Technology (UTAUT) that identifies performance expectancy, effort expectancy, and social influence as
the strongest drivers of technology acceptance. Available literature suggests millennials tend towards
online-first experiences but lack of physical banking interface creates doubts. Limited is the information
available on the role of UTAUT constructs toward Neobank adoption by Indian youth consumers.
N. Desai & M. Ghosh (2023): The research is founded on the Financial Inclusion Model, which posits
that digital banking solutions bridge the financial gap between unbanked communities and financial
services. Research has shown that Neobanks can potentially cater to financially excluded customers, but
issues like no internet access and financial literacy continue to be a problem. Though financial inclusion
initiatives are commonly debated, Neobanks’ contribution to accessing unbanked populations in India is
less researched.
K. Sharma & P. Iyer (2024): The study relies on the Regulatory Compliance Theory, which defines how
banking regulations influence digital financial services so that they are safe and consumer-friendly.
Previous research shows that government policies play a decisive role in the functioning of Neobanks,
such as licensing, KYC standards, and cybersecurity regulation. Research points out that stringent
regulatory environments guarantee security but constrict Neobank growth. While regulation on
conventional banks has been extensively studied, there is minimal research into how changing RBI
policies influence Neobanks in India.
A. Mehta & R. Bhatia (2023): The research uses the Technology Adoption Model (TAM), which posits
that users embrace new technologies depending on their perceived usefulness and ease of use. Past
research indicates that AI-powered chatbots, blockchain security, and API banking are revolutionizing
digital banking experiences. Neobanks in India research seldom examines how AI and blockchain
technologies in particular affect adoption.
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S. Chatterjee & N. Rao (2024): The research is grounded in the Customer Relationship Management
(CRM) Theory, which states that personalized services and high involvement are the drivers of customer
retention. Research points out that retaining customers is cheaper compared to acquiring new customers.
Literature also indicates that loyalty programs, personalized financial planning, and effective customer
support enhance retention rates. Customer retention strategies for conventional banks are well researched,
but Neobank-specific retention models are not.
R. Kapoor & T. Gupta (2023): This research employs the User Experience (UX) Design Theory that
dictates a seamless and intuitive interface enhances the adoption of digital services dramatically. The
evidence shows that inconvenient app design, transactional sluggishness, and complex navigation limit
customer satisfaction with Neo banking. While the majority of research into digital banking centres on
security and usability, very little research considers how UX design has a direct impact on Neobank
adoption.
M. Patel & P. Desai (2022): The Behavioural Economics Theory is used to formulate this research,
which posits that fiscal incentives such as cashback and zero-cost transaction motivate consumer actions.
Customers are found to take up digital banks in case they get rewards, discounts, and interest-free
transactions.Although incentive-based adoption occurs frequently in e-commerce, its application in Neo
banking has not yet been researched extensively in India.
T. Iyer & R. Shah (2023): Porter’s Five Forces Model is employed in the study to assess competition and
market positioning within the banking industry. Research identifies that Neobanks are challenged by the
presence of conventional banks, FinTech startups, and regulatory constraints. Previous studies consider
digital banking at large, but do not provide in-depth analysis of competition impact on Neobanks in India.
A. Rao & S. Mehta (2024): The research draws on the Innovation Diffusion Theory, which traces the
diffusion of new financial technologies in society. Research points towards increasing smartphone
penetration and adoption of digital payments driving Neobank expansion in India. While trends in
Neobank growth internationally are well researched, Indian market projections remain less studied.
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CHAPTER 3: PROBLEM IDENTIFICATIO
3.1 PROBLEM STATEMENT
In today’s fast-evolving digital landscape, banking has undergone a major transformation. Neo Banks and
Payments Banks have emerged as modern alternatives to traditional banking, offering app-based,
branchless services that are quick, convenient, and customer-centric. However, despite these advancements,
the adoption of such platforms in Ahmedabad has been relatively limited.
First, the adoption of Neobanks in Ahmedabad is relatively low compared to metro cities. While Neobanks
offer digital-first banking solutions, many people are still unaware of their existence and benefits.
Customers in Ahmedabad, especially in semi-urban areas, prefer traditional banks due to familiarity, trust
in physical branches, and concerns about digital banking risks. This lack of awareness and hesitation in
shifting to Neobanks is a significant issue affecting their growth.
Second, there is a general lack of trust in digital-only financial institutions. Customers often worry about
data security, fraud, and the absence of physical customer support. Since Neobanks do not have physical
branches, many users are hesitant to rely entirely on digital banking. Regulatory uncertainty is also a
challenge, as Neobanks operate in partnership with traditional banks rather than holding independent
banking licenses. This makes customers cautious about using their services, fearing instability or limited
legal protection.
Third, financial literacy and digital knowledge play a crucial role in Neobank adoption. Many potential
customers, particularly in small businesses and older age groups, lack the confidence to manage their
finances digitally. They are unfamiliar with features like digital payments, AI-based customer support, and
automated savings tools, which discourages them from switching to Neobanks.
Fourth, business users, such as SMEs (Small and Medium Enterprises), face challenges in integrating
Neobanks into their financial operations. Many SMEs still depend on cooperative and regional banks for
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loans and daily transactions, and Neobanks have yet to establish strong connections with these institutions.
This limited acceptance in the business sector affects the overall adoption of digital-only banking services.
Given these challenges, this study aims to explore:
The awareness and perception of Neobanks among different customer segments in Ahmedabad.
The impact of security, trust, and regulatory concerns on Neobank adoption.
The role of financial literacy and digital familiarity in influencing customer decisions.

3.2 OBJECTIVES AND ALIGNMENT
➢ The aim of this research is to explore the awareness, adoption, and challenges associated with
Payments Banks and Neo Banks in Ahmedabad. The objectives below are aligned with the research
focus to examine customer perceptions and usage of these digital-only banking services.
Research Objective Research Alignment
1. To assess the level of
customer awareness regarding
Payments Banks and Neo
Banks in Ahmedabad.

This objective aligns with the overall aim of assessing
how well customers are informed about digital-only
banking services in Ahmedabad, which is important for
understanding the potential for their adoption and use in
the region.
2. To analyse the factors
influencing customer adoption
and usage of Payments Banks
and Neo Banks, including trust,
security, and regulatory
concerns.

This objective aligns with the research’s focus on
identifying key factors such as trust, security, and
regulatory concerns that directly affect the decision
making process of customers when adopting digital-only
banking services.
26

Research Objective Research Alignment
3. To examine the key
challenges and barriers faced
by customers in using these
digital banking services.
This objective aligns with exploring the obstacles, such as
technical glitches, customer service issues, and trust
barriers, that hinder the widespread adoption of digital
banking platforms like Payments Banks and Neo Banks.
4. To investigate whether there
is a significant association
between customer awareness of
Payments Banks and Neo
Banks and the type of banking
platforms they use.
This objective aligns with understanding the relationship
between the level of awareness customers have about
digital-only banking platforms and their actual use of
these services, compared to traditional banking options.

3.3 STUDY VARIABLES OR CONSTRUCTS
IV
Customer Awareness
Trust in digital Banking
Platforms
Security and Privacy Concerns
Financial Literacy
Regulatory Confidence
D V
Adoption and Usage
of Neo banks and
Payment Banks
The visual framework highlights how each independent variable connects to the dependent variable. The
objective is to understand which factors influence the digital banking behaviour of customers in Ahmedabad
and how these factors interact with one another.
In this study, variables are categorized into:
• Dependent Variable (DV)
• Independent Variables (IVs)
27
DEPENDENT VARIABLE (DV):
Adoption and Usage of Neo Banks and Payments Banks
This represents the actual behaviour of customers using these platforms. It focuses on how frequently
people use them, which services they rely on, and how integrated these platforms are in their daily
banking routines.
INDEPENDENT VARIABLES (IVS):
Customer Awareness
This reflects how familiar customers are with the services offered by Payments Banks and Neo Banks.
When awareness is low, even interested customers may not use these platforms simply because they don’t
know how or where to start.
Trust in Digital Banking Platforms
This focuses on whether customers believe these platforms are dependable for financial transactions. If
trust is high, customers are more willing to use digital banking regularly and for a wider range of services.
Security and Privacy Concerns
This examines how fear of fraud or misuse of personal data can affect usage. Customers with strong
concerns tend to avoid these platforms, even if they offer convenience or better features.
Financial Literacy
This shows how capable customers are in using digital financial tools. Those who can navigate apps,
understand transaction histories, and manage money digitally are more likely to use Payments and Neo
Banks confidently.
Regulatory Confidence
This looks at how much customers trust that rules and systems by institutions like RBI will protect them.
When this confidence is strong, customers are more open to experimenting with and continuing to use
digital banking services.
28
CHAPTER 4: RESEARCH METHODOLOGY
4.1 RESEARCH DESIGN
The study follows a descriptive research design with a quantitative approach. As the research focuses on
measuring customer awareness and perception, a survey method is used for data collection. The collected
data will be analysed using SPSS to test the hypotheses and identify patterns in customer behaviour.
4.2 Data Sources
The research relies on both primary and secondary data sources to ensure a well-rounded analysis.
Primary Data
Primary data is collected through a structured questionnaire, distributed digitally via email and WhatsApp.
The survey is designed to assess:
Awareness and understanding of Neobanks and Payment bank.
Usage and Preferences: The survey will inquire whether respondents have used any of the following
types of banking platforms:
Payment Banks (e.g., Mobile-based payment banks)
Neo Banks (e.g., Digital-only banking platforms)
Traditional Banks (e.g., Conventional banking institutions)
Secondary Data
The secondary data is sourced from academic research papers and journals used in the literature review.
These papers provide insights into:
• Consumer behaviour in digital banking
• Factors affecting Neobank adoption
29
• Security and regulatory challenges
• Financial awareness and digital literacy
The research papers used in Chapter 2 (Literature Review) serve as the foundation for theoretical analysis
and hypothesis development.
4.3 SAMPLING TECHNIQUE
Sampling Method
For our survey we use the Convenience sampling method to know opinions about Customer awareness and
usage of payments bank and neo banks in Ahmedabad
Sample Size is 200 as instructed by the project guide for the survey. We meet our target audience by
collecting 150 responses, this is our initial sample size of the survey.
4.4 Data Collection Methods
Primary data was collected using a structured, undisguised questionnaire to assess customer awareness,
usage patterns, digital banking preferences, and concerns related to security.
TYPES OF STATISTICAL:
The statistical analyses conducted in this research fall under the category of Inferential statistics which are:
CHI- SQUARE OF INDEPENDENCE TEST
30
CHAPTER 5: DATA ANALYSIS AND INTERPRETATION
5.1 RELIABILITY AND VALIDILITY SCALE
SCALE: ALL VARIABLES
Reliability Statistics
Cronbach’s Alpha
N of Items
.615
18
Reliability Statistics (Cronbach’s Alpha):
• Cronbach’s Alpha Value: 0.615
• Number of Items: 18
Interpretation:
The Cronbach’s Alpha value of 0.615 suggests that the eighteen items in the scale are generally consistent
with each other.
This suggests that while the items are somewhat related, the scale is not highly reliable. Some items may
not be strongly aligned with the overall construct being measured.
31
32

Validity Check (Cochran’s Q Test via ANOVA):
• Cochran’s Q Value: 608.411
• Significance (p-value): 0.000
Interpretation:
The p-value of 0.000, being smaller than 0.05, shows that the test result is statistically significant.
This shows that the responses to the eighteen items differ considerably.
Such variation suggests that the items are capturing different dimensions or aspects of the concept being
studied, which supports the discriminant validity of the scale. However, it also indicates that the items
may not all be measuring a single unified construct, and the scale may benefit from further refinement or
categorization into sub-scales.

ANOVA with Cochran’s Test
Sum of Squares df Mean Square Cochran’s Q Sig
Between People 378.667 154 2.459
Within People Between
Items
743.794 17 43.753 608.411 .000
Residual 2477.540 2618 .946
Total 3221.333 2635 1.223
Total 3600.000 2789 1.291
Grand Mean = 2.333
33

1.Gender
Options Count %
Male 69 46
Female 81 54

Interpretation:
The pie chart shows the genders of people who responded to a survey.
81 respondents (54%) were female.
69 respondents (46%) were male.
Most of the respondents are female 54%.
2.Age

Options Count %
18-25 56 37.33
26-35 39 26
36-45 38 25.33
46 and above 17 11.33
46%
54%
150 Responses
Male
Female
150 Responses
25%
11%
38%
26%
18-25
26-35
36-45
46 and above
Interpretation: The pie chart shows the ages of people who responded to a survey.
56 respondents (37.3%) were in the age group 18-25.
39 respondents (26%) were in the age group 26-35.
38 respondents (25.3%) were in the age group 36-45.
17 respondents (11.3%) were in the age group 46 and above.
Most of the respondents are between 18 and 24 years old
3.Occupation
Options
Count
Student
40
%
26.67
Salaried employee
38
25.33
Bank employee
37
24.67
Bank Customer
35
23.33
34
150 Responses
23%
25%
Interpretation:
27%
25%
40 respondents (26.7%) were students.
38 respondents (25.3%) were salaried employees.
37 respondents (24.7%) were bank employees.
Student
Salaried employee
Bank employee
Bank Customer
35 respondents (23.3%) were bank customers (presumably not employees).
4. Highest level of Education
Options
Count
Undergraduate
63
%
42
Postgraduate or higher
86
57.33
35
36

Interpretation:
86 respondents (57.3%) had a postgraduate degree or higher.
63 respondents (42%) had an undergraduate degree.
5.Are you aware of Payments Bank and Neo Banks?

Options Count %
Yes, I am aware of both 54 36
I am aware of only Payments Banks 53 35.33
I am aware of only Neo Banks 20 13.33
No, I am not aware of them 23 15.33
42%
58%
150 Respondent
Undergraduate
Postgraduate or
higher
36%
36%
13%
15%
150 Respondent
Yes, I am aware of both
I am aware of only
Payments Banks
I am aware of only Neo
Banks
No, I am not aware of
them
INTERPRETATION
Aware of both (36%): A good portion of the respondents know about both Payments Banks and Neo Banks,
indicating increasing familiarity with new-age banking models.
Only Payments Banks (35.3%): Many respondents are aware of Payments Banks, likely due to their
advertising and partnerships with telecom companies.
Only Neo Banks (13.3%): Fewer people are aware of Neo Banks, possibly due to their relatively recent
introduction in India.
Not aware (15.3%): A small but notable group lacks awareness, showing the need for more financial
literacy.
Overall, most respondents are at least somewhat aware of digital-first banks, though there is still room to
improve awareness about Neo Banks.
6. Which of the following banking platforms have you used?
Options
Count
Payments Banks (e.g., Airtel Payments Bank…)
53
%
35.33
Neo Banks (e.g., Jupiter, Fi, Niyo)
31
20.67
Traditional banks (e.g., SBI, HDFC, ICICI)
66
44
150 Respondent
44%
35%
21%
Payments Banks (e.g.,
Airtel Payments Bank…)
Neo Banks (e.g., Jupiter, Fi,
Niyo)
Traditional banks (e.g.,
SBI, HDFC, ICICI)
37
38

INTERPRETATION:
• Traditional Banks (44%): The highest percentage of users still rely on traditional banks like SBI,
HDFC, and ICICI.
• Payments Banks (35.3%): Many users have engaged with Payments Banks such as Airtel
Payments Bank and India Post Payments Bank.
• Neo Banks (20.7%): A relatively smaller portion have used Neo Banks like Jupiter, Fi, or Niyo.
Overall, traditional banks are still the most used, but Payments Banks and Neo Banks are slowly gaining
traction.
7. How frequently do you use Payment’s bank or Neo Banks for transactions?
Options Count %
Daily 42 28
Weekly 46 30.67
Monthly 35 23.33
Rarely/Never 27 18

28%
31%
23%
18%
150 Respondent
Daily
Weekly
Monthly
Rarely/Never
39

INTERPRETATION
Daily (28%): A significant number of users access Payments Banks or Neo Banks daily, reflecting trust
and ease of use.
Weekly (30.7%): The largest group uses these services on a weekly basis, which suggests regular but not
daily reliance.
Monthly (23.3%): Some users access these platforms occasionally for specific transactions.
Rarely/Never (18%): A small group seldom or never uses these platforms, possibly due to lack of trust or
awareness. Overall, most users interact with digital banks regularly, showing increasing acceptance and
usage.
8. For what purposes do you use Payments Banks or Neo Banks?
Options Count %
Fund transfers (UPI, IMPS, NEFT, RTGS) 49 32.67
Bill payments & recharges 41 27.33
Savings & deposits 33 22
Investments & wealth management 15 10
Linked or credit-related services 12 8

33%
27%
22%
10%
8%
150 Respondent
Fund transfers (UPI, IMPS,
NEFT, RTGS)
Bill payments & recharges
Savings & deposits
Investments & wealth
management
Linked or credit-related
services
INTERPRETATION:
Fund Transfers (32.7%): This is the most common use case, showing the popularity of fast and easy digital
transfers.
Bill Payments & Recharges (27.3%): Many users pay bills and recharge services through these platforms.
Savings & Deposits (22%): Some users also use these platforms for saving money and making deposits.
Investments & Wealth Management (10%): Fewer people use these platforms for investment-related
services.
Linked or Credit Services (8%): This is the least used feature, possibly because digital banks offer fewer
loan products compared to traditional banks.
Overall, Payments and Transfers remain the dominant purpose of using these platforms.
9.What is your primary reason for using Payments Banks or Neo Banks?
Options
Count
%
Higher convenience & ease of use
43
28.67
Lower fees/charges compared to traditional banks
43
28.67
Better customer support & digital experience
40
26.67
Attractive interest rates & offers
24
16
40
150 Respondent
16%
27%
29%
INTERPRETATION:
Higher convenience & ease of
use
28% Lower fees/charges compared to
traditional banks
Better customer support &
digital experience
Attractive interest rates &
offers
Higher Convenience & Ease of Use (28.7%): Most users value the simplicity and speed offered by these
services.
Lower Fees/Charges (28.7%): Equally important is the cost-effectiveness of these platforms compared to
traditional banks.
Better Customer Support & Digital Experience (26.7%): A notable portion appreciates the smoother
digital interaction and better customer service.
Attractive Interest Rates & Offers (16%): Fewer users are driven by higher returns or promotional offers.
41
10.Trust,Security&Perception(Likert Scale)
INTERPRETATION OF THE CHART: TRUST, SECURITY & PERCEPTION (LIKERT SCALE)
Convenience: While 43 respondents (29%) disagreed that Payments and Neo Banks are more convenient,
a significant 70 respondents (47%) agreed or strongly agreed, reflecting a growing preference for digital
banking. However, 37 (24%) remained neutral, showing some uncertainty.
Trust in Large Transactions: A total of 45 respondents (30%) expressed distrust, while 67 (45%) showed
trust in using these platforms for large transactions. Neutral responses (25%) indicate that full confidence
is still developing.
Security Measures: Although 44 respondents (29%) had concerns, 68 (45%) agreed that security features
like OTP and encryption are adequate. 25% remained neutral, signaling a need for increased user awareness
and transparency.
Customer Service: About 39 respondents (26%) felt dissatisfied, whereas 66 (44%) found the service
better than traditional banks. With 30% neutral responses, it suggests varied experiences among users.
Overall , Around 45% of users view Payments and Neo Banks as convenient, secure, and trustworthy.
However, 30% remain neutral and nearly 25% express doubts, particularly regarding trust and large
42
transactions. This points to mixed user perceptions, with a clear need for improved awareness, assurance,
and consistent service quality.
11.Have you ever faced any security or fraud-related issues while using Payments Banks or Neo
Banks?
Options
Count
%
Yes
71
47.33
No
79
52.67
150 Respondent
53%
47%
INTERPRETATION:
Yes
No
Yes (52.7%): More than half of the respondents reported experiencing security or fraud-related issues,
indicating a serious concern.
No (47.3%): A slightly smaller group has not faced such problems.
43
44

12.What factors influence your trust in digital banking platform
Options Count %
Strong security measures (OTP, encryption…) 49 32.67
Positive customer reviews & reputation 41 27.33
Regulatory approvals (RBI guidelines, compliance…) 44 29.33
Personal experience with the platform 16 10.67

INTERPRETATION:
Strong Security Measures (32.7%): The most important factor is the presence of robust security
features like OTPs, encryption, and two-factor authentication.
Regulatory Approvals (29.3%): Many users feel reassured if the platform is regulated by institutions
like RBI.
Positive Reviews & Reputation (27.3%): Customer feedback and a good brand image also influence
trust.
Personal Experience (10.7%): A few users rely on their own experience while judging a platform.
33%
27%
29%
11%
150 Respondent
Strong security measures (OTP,
encryption…)
Positive customer reviews &
reputation
Regulatory approvals (RBI
guidelines, compliance…)
Personal experience with the
platform
45

Overall Security (32.7%) and formal credibility (29.3%) are the leading trust factors, while personal
experience plays a lesser role.
13. What challenges have you faced while using Payments or Neo Banks?
Options Count %
Technical glitches or app crashes 44 29.33
Limited services compared to traditional banks 46 30.67
Difficulty in reaching customer support 32 21.33
Lack of awareness about available services 28 18.67

INTERPRETATION:
Limited Services Compared to Traditional Banks (30.7%): The most common issue is the lack of full
service banking options.
Technical Glitches or App Crashes (29.3%): Many users face problems related to app performance.
Difficulty Reaching Customer Support (21.3%): Some users struggle to get help when needed.
Lack of Awareness (18.7%): A number of respondents are not fully aware of the services offered.
29%
31%
21%
19%
150 Respondent
Technical glitches or app
crashes
Limited services compared to
traditional banks
Difficulty in reaching
customer support
Lack of awareness about
available services
46

Overall: Limited services (30.7%) and technical problems (29.3%) are the most common challenges faced
by users.
14.Do you think Payments Banks and Neo Banks will replace traditional banks in the future?
Options Count %
Yes, completely 36 24
They will complement traditional banks
but…
69 46
No, traditional banks will always dominate 45 30

INTERPRETATION:
Will Complement Traditional Banks (46%): Most people believe digital banks will work alongside
traditional banks, not replace them.
Traditional Banks Will Always Dominate (30%): A sizable group still thinks that conventional banks
will remain superior.
24%
46%
30%
150 Respondent
Yes, completely
They will complement
traditional banks but…
No, traditional banks will
always dominate
47

Will Completely Replace Traditional Banks (24%): A minority feels digital banks will eventually
take over.
15.What improvements would encourage you to use Payments Banks or Neo Banks
more frequently?

INTERPRETATION
Stronger Security & Fraud Protection (30%): Security improvements are the top request.
More Financial Services (27.3%): Users want broader services like loans, insurance, and investments.
Enhanced Customer Support (26%): Better customer service is also highly desired.
Higher Interest Rates on Savings (16.7%): Some users want better returns on deposits.
Options Count %
Stronger security & fraud protection 45 30
More financial services (loans, insurance, investments…) 41 27.33
Enhanced customer support services 39 26
Higher interest rates on savings 25 16.67
30%
27%
26%
17%
150 Respondent
Stronger security & fraud
protection
More financial services
(loans, insurance,
investments…)
Enhanced customer support
services
Higher interest rates on
savings
HYPOTHESIS TESTING
Research Question:
Is there a significant association between customer awareness of Payments Banks and Neo Banks and the
type of banking platforms they use?
Statistical Test Name: Chi-Square Test of Independence
Hypotheses
Null Hypothesis (H₀):
There is no significant association between customer awareness of Payments Banks and Neo Banks and the
type of banking platforms they use.
Alternative Hypothesis (H₁):
There is a significant association between customer awareness of Payments Banks and Neo Banks and the
type of banking platforms they use.
Chi-Square Tests
Asymptotic
Significance
Value
Pearson Chi-Square
68.936a
df
6
sided)
(2
.000
Likelihood Ratio
70.151
6
.000
Linear-by-Linear Association 17.617
1
.000
N of Valid Cases
150
48
Chi-Square Test Interpretation
The Pearson Chi-Square value is 68.936 with 6 degrees of freedom and the p-value is 0.000.
• Since the p-value is less than 0.05, it means the result is statistically significant.
• So, we reject the null hypothesis (H₀).
• This means there is a significant relationship between how aware people are about Payments
Banks and Neo Banks and which banking platform they use.
The Likelihood Ratio is also high (70.151) with the same p-value (0.000), which supports this result.
The Linear-by-Linear Association value is 17.617 (p = 0.000), showing that as awareness increases,
people are more likely to use digital banking platforms.
49
CHAPTER 6: FINDINGS AND CONCLUSION
6.1 FINDINGS
The responses of 150 participants provide useful insights into the awareness, usage patterns, preferences,
and challenges related to Payments Banks and Neo Banks.
Age Group: The largest proportion of respondents (37.3%) fell within the 18–25 age group, followed by
26–35 years (26%) and 36–45 years (25.3%). Only 11.3% of the respondents were aged 46 years or older.
Awareness of Payments and Neo Banks: The majority of respondents were aware of at least one type of
digital bank, with 36% aware of both Payments Banks and Neo Banks. Only 15.3% reported being unaware
of these platforms.
Banking Platform Usage: Traditional banks were the most frequently used banking platform, with 44%
of respondents using them. Payments Banks followed with 35.3%, and Neo Banks were used by 20.7% of
respondents.
Frequency of Use: A significant number of respondents (30.7%) used Payments or Neo Banks on a weekly
basis, and 28% used them daily, indicating a strong trend towards regular digital banking usage.
Purpose of Use: The primary reason for using these platforms was for fund transfers (32.7%), followed by
bill payments (27.3%) and savings (22%).
Reasons for Usage: The key factors driving the use of digital banks were convenience and lower fees, both
cited by 28.7% of respondents.
Trust, Security, and Perception: Approximately 45% of users found digital banking platforms
convenient, secure, and trustworthy. However, 30% of respondents had a neutral perception, while 25%
expressed concerns, especially regarding large transactions.
Security Issues: While 52.7% of users reported not encountering fraud, 47.3% had experienced some form
of security issue.
50
Challenges Faced: The primary challenges reported were limited services (30.7%), followed by technical
glitches (29.3%) and issues with customer support (21.3%).
Future of Digital Banks: A majority of respondents (46%) believed that digital banks would complement
traditional banks, while only 24% believed that they would fully replace them.
Suggested Improvements: To improve the digital banking experience, users suggested the following:
Enhanced security measures (30%)
More comprehensive financial services (27.3%)
Better customer support (26%)
Chi-Square Test Result
The Pearson Chi-Square value was 68.936 with 6 degrees of freedom, and the p-value was 0. 000.The result
is statistically significant, so the null hypothesis is rejected. This indicates that there is a significant
relationship between individuals’ awareness of Payment and Neo Banks and the type of digital banking
platform they prefer.
Reliability Analysis (Cronbach’s Alpha)
The study used a set of 18 questions, and its reliability was measured with a Cronbach’s Alpha score of
0.615. This reflects moderate internal consistency, indicating that the items are reasonably related but may
require further refinement to enhance the overall reliability of the scale.
Validity Testing (Cochran’s Q Test via ANOVA)
The Cochran’s Q value was 608.411 with a p-value of 0.000, confirming that there is statistically significant
variation among the 18 items used. This supports the discriminant validity of the tool, suggesting that the
items are capable of measuring multiple distinct aspects of the concept under investigation.
51
6.2 IMPLICATION
The high awareness of digital banking platforms suggests that banks should focus on educating users about
Payments Banks and Neo Banks to increase their user base.
Since traditional banks are still the most widely used platforms, they could improve their digital banking
services to offer the convenience of digital platforms while maintaining the trust and familiarity that comes
with traditional banking
The frequent use of digital banking platforms indicates that digital banks need to ensure their services are
reliable, easy to use, and secure to keep users coming back regularly.
With convenience and lower fees being the main reasons for using digital banks, these platforms should
focus on making the user experience even simpler and keeping costs low, while also adding features like
personalized tools or loyalty rewards to retain customers.
The security concerns raised by many users highlight the need for digital banks to improve their security
features, such as adding more protection options like multi-factor authentication and better fraud detection
systems to make users feel safer, especially for larger transactions.
The challenges regarding limited services and technical issues show that digital banks need to expand their
services and make sure their platforms run smoothly to improve customer satisfaction and reduce
complaints.
The belief that digital banks will complement rather than replace traditional banks suggests that banks could
look into offering a hybrid model that combines the convenience of digital banking with the stability of
traditional banking.
52
Given the need for stronger security, more financial services, and better customer support, digital banks
should focus on improving these areas to keep existing customers happy and attract new ones.
CONCLUSION:
This research aimed to understand the awareness and usage of Payments Banks and Neo Banks among
customers in Ahmedabad. The findings indicate that although digital banking is gaining popularity, more
people continue to rely on traditional banks because of greater trust, improved range of services, and
familiarity.
Convenience, low fees, and simplicity were identified as the most important reasons that individuals utilize
digital banks. However, issues such as limited offerings, security, and improper customer support are
preventing broader adoption. The research also indicated a close correlation between awareness and
usage—individuals with greater awareness about these banks tend to use them more.
The report emphasizes the need for greater customer awareness, tighter security controls, and better digital
infrastructure in building trust in online banking websites. Efforts like digital literacy initiatives and open,
simple policies can bridge the gap between usage and awareness.
Overall, Payments Banks and Neo Banks can expand and facilitate financial inclusion, particularly for
technologically advanced and under-banked consumers. With appropriate development, they can
effectively augment legacy banks and play a key role in charting the future of Indian banking.
53
CHAPTER:7 SUGGESTIONS, LIMITATIONS OF THE STUDY,
CONTRIBUTION OF THE STUDY & FUTURE SCOPE OF THE
STUDY
SUGGESTIONS
On the basis of responses’ analysis, learning obtained through literature review, and the primary issues
which have been identified during the course of this study, the following are the recommendations to
enhance customer awareness and usage of Payments Banks and Neo Banks in Ahmedabad:
1. Enhance Financial Awareness
The research found that the majority of respondents remain unaware or only partially aware of digital
banking platforms, particularly Neo Banks. This calls for increased awareness programs. Financial
literacy drives through seminars, social media drives, and partnerships with educational institutions and
NGOs are likely to lead to increased public understanding and acceptance of digital banking services.
2. Establish Trust through Increased Security
Safety and trust are predominant issues for the users when employing Payments Banks and Neo Banks.
Most of the respondents were in fear of being defrauded or having data stolen. All these platforms have to
emphasize establishment of strong systems of cybersecurity like two-factor identification, encryption, and
fraud alarms to increase confidence among customers.
3. Diversify the Services Offered
A large number of respondents believed that these digital banks provide fewer services than the
conventional banks. To enhance customer satisfaction and new user acquisition, Payments Banks and Neo
Banks must increase their services to include savings accounts, credit facilities, insurance products, and
investment products.
4. Overcome Technical Challenges
Technological problems such as app crashes, login failures, or server crashes discourage individuals from
frequent visits to virtual sites. These must be addressed by establishing IT infrastructure, investing in
54
technology improvement, and periodic testing and updating for smooth functioning.
5. Collaborate with Conventional Banks
Because most customers continue to use the traditional banks, online platforms stand to gain by
partnering with them. This collaboration will assist in tapping more clients, providing hybrid services and
the seal of legitimacy by association with known companies.
LIMITATIONS OF THE STUDY
Although this study provides good insights into how people in Ahmedabad use and understand Payments
Banks and Neo Banks, it has a few limitations that should be considered:
Limited Geographic Scope
This research focused only on people living in Ahmedabad. As a result, the findings may not fully
represent how customers in other cities or rural areas of Gujarat or India feel or behave toward these
banks. Customer behaviour might differ across other cities and rural areas.
Sample Size Constraints
The study gathered responses from 150 participants. While the responses collected are valuable, the
sample size might not fully capture the views of the wider population. A larger number of participants
could have helped make the results more reliable and easier to apply to a broader group.
Time Limits
The study was done within a time frame of a fixed academy. Due to this, analysis depth and research
scope were reduced to some extent.
Response Bias
A few of the participants might have responded based on what they perceived was being asked, instead of
reporting their real experience. This might have had an impact on the validity of the findings.
Awareness Gap
A few of the participants had limited knowledge about Neo Banks, which could have impacted how well
they answered some of the questions.
55
CONTRIBUTION OF THE STUDY
This study adds value in the following ways:
This study offers valuable insights into how customers perceive and utilize Payment Banks and Neo Banks
based on their level of awareness.
It identifies the gap between customer awareness and actual usage, helping stakeholders better understand
the behavioural patterns of digital banking users.
The study emphasizes major decision-making parameters like convenience, trust, security, and customer
service.
The findings of this research can help Payment Banks and Neo Banks to better enhance their strategies in
order to make the customer experience better and to gain more trust.
Additionally, it helps policymakers and banking authorities to market digital banking solutions better by
resolving the current customer concerns.
FUTURE SCOPE OF THE STUDY
This study provides scope for further studies:
Subsequent research can delve into customer perception by having a larger geographic sample to find
regional differences.
The research can further be used to analyse customer behaviour in terms of age, income, and education
levels to note certain trends.
Longitudinal study can be used to analyse follow-up of perception and usage of Payment Banks and Neo
Banks over time.
Additional analysis can look into the effect of government policy or technological development on
customer adoption.
Future studies may also include comprehensive qualitative interviews in order to understand more about
user experience and online banking trust.
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REFERENCE
ssrn-3349534.pdf
A_STUDY_ON_CUSTOMERS_PERCEPTION_TOWARDS_NEO_BANKIN.pdf
JETIR2304446.pdf
https://www.eelet.org.uk/index.php/journal/article/view/2472/2227
NeoBanking_.pdf
https://www.researchgate.net/publication/370931068_A_Study_on_Customer_Awareness_and_Usage_of
_Payments_Bank_and_Neo_banks_in_Chennai_City
https://www.semanticscholar.org/paper/A-Study-on-Customer-Awareness-and-Usage-of-Payments
BHARGAVA/2d04104eec7dc4e97f7ea1978adba6b2df759724
https://www.researchgate.net/publication/358804098_Neobanking_in_India_Opportunities_and_Challeng
es_from_Customer_Perspective
57
FACULTY REMARK
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