With the increasing trend of digital banking across the globe, the establishment of a neobank offers a great opportunity to operate within the fully digital mode. Neobanks are new generations of banks that do not have a physical presence in the form of an office, and the services they offer are developed specifically to cater to the growing needs of young and vibrant clients. Other factors favoring the growth of the mobile bank market include the need for fast, simple, and convenient banking services. Allied Market Research estimates that the Neobank market will grow to $722.6 billion by 2028. As per Statista’s report, the global digital bank market size was USD 47 billion in 2021 and is projected to grow at a higher CAGR due to the growing preference for convenient digital banking services all across the world. This article outlined how to start a neobank, as understanding this basic sequence is critical to achieving success in this crowded market.
What is a Neobank?
A mobile bank is a bank that has no physical offices and functions online. Neobanks You are an app or website-only non-traditional institution offering business customers immediate access to their bank accounts, transactions, and payments, among other services. Neobanks appeared as a natural result of the increasing popularity of new technologies and the ability of customers to quickly and conveniently solve a wide range of problems using their mobile devices.
When it comes to neobank creation, one must fulfill legal criteria, create a robust system, and launch a helpful application. Below are the main guidelines to follow in pursuit of a new bank. It is suggested to read the article on Agilie’s website for more detailed information about the main stages of neobank creation and strategies to build effective digital banking services.
Steps to Start a Neobank
Here are the basic steps, but before we do that, there are a few things that should be noted.
1. Market analysis and identifying the business strategy
Firstly, go out and do market research to determine what your customers are shopping for, who your competition will be, and what trends are prevailing in the market. There is so much to discover and learn about customer preferences and unmet needs, which are essential for the successful positioning of your neobank on the market. It involves an understanding of the services for which the business is concerned; its core services could include checking and saving accounts, loans, payments… etc; business model, which could include revenue stream, for instance, through fees earned from transactions, lending services, subscription plan… etc.
2. Regulatory Compliance and Licensing
Probably the greatest difficulty in creating a digital bank is the obtaining of licenses in accordance with the needful legislation. Many, particularly neobanks, are under high legal requirements to shield the customers’ information besides preventing fraud. For instance, in the EU, users might be required to adhere to PSD2 laws, while in the USA, one would be required to obtain a banking license.
3. Choosing the Right Technology Stack
The choices you make regarding technology are critical to the speed, expandability, and protection of your neobank. Key technologies for neobank development typically include:
- Backend: Secure technologies like Node.js, Python, or Ruby are definitely fit for secure and big business transactions.
- Frontend: For the application side, Swift for iOS, Kotlin for Android and for the web side you may choose React or Angular for a smooth work.
- Database and Cloud Services: PostgreSQL and MongoDB are databases while AWS and others are cloud solutions, which are mandatory for the creation of a digital bank.
4. Developing an Interface for an Information Management System
The importance of bearing a good UX and UI is key to customers gaining a good experience out of the services provided. Organize the layout of the app within a system that allows for simple navigation, accentuating the possibility of attaining the most important functions in the blink of an eye, as well as the stylistically and aesthetically balanced interface. Tools such as moving money from one account to another in a single click, receiving real-time transaction notifications, and seeing personalized financial technologies increase the level of satisfaction that a user has with a financial app. Make it possible for consumers to get customer service or assistance, handle their accounts, or perform affiliate activities with minimal interference.
5. Security and Data Protection
Security is one of the biggest concerns in the development of neobanks. Since digital banks deal with important pieces of financial information, it becomes easy for hackers to exploit companies on digital banks. To protect customer data and prevent fraud, implement advanced security measures, including:
- Data Encryption: Encrypt data that has to be transmitted and stored to minimize exposure to check by unauthorized personnel.
- Two-Factor Authentication (2FA): Ask for the OTP code to be input into the website the second time you log in or use the biometric identification.
- Fraud Detection: Implement artificial intelligence to monitor and report real-time fraud in your organization.
Read also Key Metrics to Track Using Third-Party Risk Management Software
In this way, focusing on security becomes the main key to establishing credibility and compliance with the laws to offer customers a safety neobanking.
6. Development and Testing
As the name suggests, the development phase makes your neobank platform come into existence. Consult with great developers to create the app’s back end, front end, and interconnections. Stress testing helps to draw attention to and address all critical areas of your application that can lead to problems in the end-user’s environment. Testing should include:
- Functional Testing: Lastly, ensure that everything from signing up an account, to making payments and transfers is fully functional.
- Security Testing: Discovered and managed risks that are likely to be faced when dealing with a networked world.
- Usability Testing: This means assessing how easy it is for users to navigate and interact with the app so that it will not challenge the ease at which a push button is pressed.
7. Launch and Post-Launch Support
If that has been passed through testing, then it’s time to launch the neobank. That is why constant support is needed most of the time to reach the long-term goal successfully. The current section has shown that the assessment of additional information, such as the users’ feedback and the tracking of application performance, can yield valuable information pertaining to improvements that can be made.
Agilie is a talented development company that specializes in creating neobanks; thus, it can assist with managing the challenges of the digital banking environment. Applying its knowledge of fintech, Agilie offers complete assistance, including compliance, security, usability, and technical backend.
Conclusion
It is quite crucial to note that starting a mobile bank calls for a coherent analysis of the market and regulations as well as an implementation understanding. As a result, following the mentioned 5 steps: Defining a Business Model, Compliance, Technology stack, Security, & User Experience, you can learn how to build a new neobank for today’s consumers.
