Challenger Banks or the Payment Service Banks (PSBs) have erupted as an efficient alternate banking solution across the world due to their ease of convenience. When we focus particularly on the more economically backward countries, we will notice the fulcrum PSBs have provided in order to make financial inclusion a reality. According to Global Findex Database, 1.7 billion people across the world are unbanked as on 2018.

Two-thirds of these people own a mobile phone that is the key to the expansive digital financial world. These figures are the reason big enough for the digital financial solutions providers to bring this massive volume of population into the mainstream financial system.

Payment banks can bring reform by involving themselves in government aids, pensions, and social benefits to over 95 million in developing economies. Let’s learn more about payment service banks, how they are giving stiff competition to the traditional banking services and promoting microloans for small businesses.

What is a Payment Service Bank?
A payment bank is a differentiated bank with the specific objective of catering to the unbanked and underbanked. Payment banks aim to serve unbanked customers, especially migrant workers and those from lower income households, as well as bring them into the formal financial system.

Opening an account with a payments bank is fairly simple and paperless as compared to a traditional bank account opening that needs substantial documentation usually difficult to achieve for the unbanked population.