Customer Perception and Service Quality - A Comparative Study Among Traditional and Neo Banks

The digital revolution in the banking sector has accelerated the rise of neo banks—branchless, digital-only financial institutions—challenging the dominance of traditional banks. This study provides a comparative analysis of consumer perception and service quality between neo banks and traditional banks in India, drawing on a sample of 150 respondents. Utilizing a quantitative research approach and ANOVA (F-test) analysis, the findings reveal that while neo banks hold a statistically significant advantage in overall consumer perception (p = 0.04), there are no significant differences between the two bank types across primary service quality dimensions such as reliability, responsiveness, assurance, empathy, tangibles, convenience, and innovation. Notably, neo banks excel in perceived convenience and innovation, whereas traditional banks rank highest in assurance. Despite these strengths, both models exhibit low scores in empathy, highlighting a sector-wide need for improvement in personalized service. The research underscores that trust and perception are nuanced and multidimensional; although digital convenience propels neo banks, regulatory credibility and in-person assurance remain strengths of traditional banks. The study identifies gaps in regional representation, digital security perception, and absence of longitudinal or qualitative insights as limitations. The results emphasize the importance of strategic enhancements in convenience, empathy, and digital trust building to achieve sustainable customer satisfaction in the evolving banking landscape.