Navigating Regulatory Arbitrage in Neo-Banking: Analysing Emerging Challenges in Financial Regulation

Abstract

The research article is about the neo-banking and its regulatory arbitrage. The traditional branch-based banking is shifting towards digital-only banking platforms. Therefore, the new system of neo-banking is renowned globally. As neo-banking ease the work with technological efficiency as compare to traditional banking. But the absence of substantial regulatory framework has raised the significant risk to the customers financial activities. Hence, article circumnavigate around regulatory arbitrage of the neo banks in Indian banking sector. With the help of judicial decisions from different jurisdiction of India, the problems are apparently observed. The breach of consumer trust, loyalty and digital engagement is prominent in all the cases. The qualitative research methodology is adopted to clarify the research problem.  The subjective analysis is based on financial regulations, legislation, IMF (International Monetary Funds) reports and journal articles to address the problem. For the redressal, the comparative solutions are derived from the IMF Global Financial Stability Report.