Neo banks drive growth in India’s BFSI GCCs, market size to reach $395 billion by 2026

In a report, Business Standard quoted a PwC study as saying that the BFSI sector in India is expected to witness significant growth in the coming years, driven by the increasing adoption of digital banking services and the rising demand for online financial services.

According to a report by PwC, the market size of neo banks is expected to grow to $395 billion in 2026, up from about $19 billion in 2018. This rapid growth is being fuelled by the increasing adoption of digital banking services and the rising demand for online financial services.

Neo banks, which exist solely online and operate independently or in partnership with traditional banks, are mirroring the expansion strategies of larger global counterparts. These banks, spread across the United States, the United Kingdom, Australia, and Japan, are looking to tap the huge number of Indian IT professionals to support their global operations.

The growth of neo banks and mid-sized banks in India is a significant trend that is expected to drive the expansion of the BFSI sector in the country. The report noted that the establishment of GCCs by neo banks and mid-sized banks in India is a strategic move to leverage the country’s IT talent pool and support their global operations.

The growth of the BFSI sector in India is also expected to drive the demand for IT services, including digital transformation, cloud computing, and data analytics, the report noted. “Indian banks are adopting new business models to overcome the challenges related to NBFCs, asset management companies, FinTech firms and other financial services players. With mounting pressure from FinTech firms coupled with advanced technology and customer-centric services, Indian banks are seeking to introduce new business models such as banking-as-a-service (BaaS) and beyond banking for providing financial and non-financial services to the public and stay relevant in this competitive landscape. The growth of BFSI global capability centres (GCC) in India can also generate significant revenue by creating more employment opportunities and leveraging the rich talent pool present in the nation,” the PwC report, “Viksit banking – A roadmap for the Indian banking sector for 2047”, said.

Traditional banks are now partnering with neobanks financing has caught the attention of banks due to their which are gaining popularity with millennials, MSMEs lower penetration in this segment. Banks are keen on and individuals without stable incomes as they offer lending for medical equipment because of the proficient banking services primarily through digital means without customer profiles with good credit scores and business the need of a physical branch, the PwC report on Viksit Banking, which was launched in January 2025, said.