Building a Neobank- The Path to Modern Banking Innovation in 2024

We have all gotten used to 10-minute meal deliveries and super-fast 5G internet speeds, so it grates on our nerves that we must wait all day for a bank transaction to complete. With today’s tech-savvy users, traditional banking, which has been the standard for hundreds of years, needs to catch up. A few concerns plaguing conventional banking institutions are long wait times, security breaches, and business hours set in stone. Enter Neobank in all its glory. Fintech companies will build a neobank for banking, saving, and investment purposes (see the Topflight comprehensive entry).

These modern banks are only available online and have no physical locations. They offer digital banking products optimized for mobile devices, including lending, money transfers, and payments. Customers can deposit and withdraw funds from them. They provide investment facilities, debit cards, and other services. They even offer loan and credit services. A lot of neobanks collaborate with banks that hold banking licenses, as they cannot function alone. This article focuses on how to build a neobank and everything you should consider when you build your first one.

How to Build a Neobank

As we’ve discussed earlier, it is unnecessary to be a bank owner to build a neobank. However, it can be helpful to be involved in the fintech scene, have a working knowledge of neobanks, and have a committed and qualified development team. Follow these steps to learn how to create a neobank from scratch.

• You need to conduct market research: What are the odds that your product will succeed without thorough product and market research? When researching, these statements should be your daily mantra: defining your target market and value offer, determining and assessing audience pain points, and examining the problems your rivals face.
• Reach out to a BaaS provider: The following action item on your list is hiring a BaaS supplier. A BaaS is a financial services provider that typically collaborates directly with banks. Neobanks can allow customers to retain money, make loan payments, handle cash flow, pay invoices, and get financing right from the program by utilizing BaaS APIs. Technical study is essential to understand the terms of your possible BaaS provider and determine whether they meet your needs. For instance, the BaaS you selected cannot provide a cryptocurrency account and incorporate KYC. Carefully review the agreements before formalizing your partnership with a BaaS provider. It’s time for your neobank to offer financial services formally, so spell out every element of your partnership.

• Select the program manager you want: You can choose among the BaaS provider and the issuing bank to be the program manager. The program manager has a lot of responsibilities like:

  • Mobile app maintenance
  • Marketing the app
  • Complete branding of the app
  • Running the customer service
• Compliance and security: Neobanks are usually not subject to direct regulation. The regulated institution is the bank that the neobank is collaborating with. The examiners oversee the partner banks. These partner banks must demonstrate that they adhere to specific security protocols and standards to pass regulatory examinations and audits. The partner bank functions as a quasi-regulator for the neobank as it requires the neobank to abide by its requirements. You can get assistance from your BaaS provider and a toolkit to help you create an excellent compliance program.
• Make sure you build a secure core and backend structure: Backend infrastructure, a tech stack, frameworks, and architecture are among the key components that must be chosen to create a neobanking app that is safe and scalable. Here, developers with fintech-related knowledge and expertise may be of great use.
• The overall design must be user-friendly: It’s poorly designed software if you open a banking app and are scared to transfer money. Banking apps must make things easier and more relatable rather than intimidate customers. Is there a tried-and-true formula for designing neobanking apps? Not really. But it’s elementary to differentiate between poorly designed and well-designed neobanking apps. A well-matched UX and UI define good design. To set up a neobank app that users will like, you need to work with a skilled UX/UI designer to nail both. The UI should have attractive colors and legible typography; other app parts should establish the overall style. The ultimate purpose of user experience is to maintain user engagement.

Conclusion

When you create a neobank, it is a fantastic experience with many prospects because the market is growing. However, you should be prepared for obstacles like app security, creativity, and using cutting-edge technology (blockchain, AI, and machine learning). As we delve into how to build a neobank, you must understand the nuance and gravity of the project you are embarking on. Beyond the development and design process, you will struggle with licensing issues and legal turbulence. It’s essential to be financially ready to begin, launch, and protect your neobank.

Reference: https://topflightapps.com/ideas/how-to-make-a-banking-app/