The role of banking system plays a vital role in developing nations like India. In today's era banks not only keep deposits and lend money, but also they perform thousands of other functions to meet customers rising expectations. The paper develops an understanding of Fintech via the emergence of Neo-Banking as an innovation and describes its prospect for the Indian Banking Sector. Neo banks offer a current account, saving account and all other banking services just like traditional banking but completely digital at reduced costs, and a user-friendly interface. The objective is to analyse the neo-bank acting as a disruption to legacy banks and to study the prospects of Fintech in the banking sector. A descriptive research design has been followed with secondary data collected from reputed journals, banks' audited balance sheets, etc. The study further explains the functionalities and regulations related to neo-banks. This paper revealed that neo bank being a Fintech disruption is gaining importance in the financial industry as neo bank is trying to become the bridge between customers and traditional banks such that it gives rise to Banking as a service (BaaS).