How to Build a Neobank: Tips, Features, and Development Process
How to Build a Neobank: Tips, Features, & Development Process
Significant demand for simplifying daily processes appeared, including interaction with the banking system. As a result, for some people using neobanks became an everyday thing. However, there is enormous potential; here, you will learn how to build a neobank and make it work.
The idea of having a fully functioning bank just on your phone and being able to solve all possible issues in several clicks is a huge advantage. And it’s a great time to consider creating your own neobank.
It is definitely a very perspective direction, but for a better understanding of a factual demand, let’s examine some numbers first:
- According to Statista, in 2017, the number of active users of Neobanks was 18.88 million. It had significantly risen to 187.66 million by the end of 2022. But it’s not the end; the number is expected to increase to 376.90m users by 2027.
- Nonetheless, neobanking transaction value, which was US$ 3.25tn in 2022 and is expected to grow up to 18.15% resulting in a total amount of US$9.24tn by 2027.
The numbers are awe-inspiring and promising. But let’s get deeper and see the main working principles of neobanks.
How Neobank Works
As previously established, neobanks have a considerable advantage that leaves traditional banks far behind. You don’t need to leave your place to solve any requests or issues.
Everything is performed online without time wasted in the queue. It has formed a high client-oriented performance, leading to increased customer loyalty. When using a neobank, you feel that people made this to people, realize common problems, and are ready to solve them quickly.
Here are some more advantages of neobanks:
- Minimizing the bureaucracy through digitalization. This simplifies the interaction with the banking system itself
- 24/7 access to your finances and bank operations, which is sometimes essential
- Comparatively low service fees
- Higher interest rates for saving accounts. It usually ranges from 0.5-2.5%, which is considerably higher than 0.0-0.2% in traditional banks.
However, a money-earning system of neobanks is similar to traditional ones. Mostly it happens through bank commissions (which are lower), loan interest, and also providing customers the ability to gain VIP client status.
How to Make a Neobank
Firstly, reaching the right audience is essential. Finder research shows that men and women aged 18-44 are making the target audience of neobanking apps. However, despite common belief, neobanks are also heavily used among 45+ users, and this number is still growing.
After finding out your target audience, ensure your product is comfortable to use. That’s why you must develop an MVP(Minimal Viable Product. In other words, it’s a simple version of a product that can be used by real customers who can provide feedback for further development and improvement.
This is a beneficial method of fulfilling the requirements of your audience. This includes secure authentification, high registration, and fast login speed to access your account.
Make an Advanced Product
You should make it interactive and personalized. Try making it through gamification.
Gamification — a strategy of improving user experience by making it similar to a gaming process. So try to surprise your users with specific elements that will help them collect bonuses.
Don’t forget about some advanced neobank app features, such as:
- Push notifications about their account debits and credits, remind them about bill payments, etc.
- Include p2p features in your product. P2p( peer-to-peer) payment services or apps that allow you to send money to others quickly by simply searching their username, phone number, or email address.
- Accessible technical 24/7 support via chat
- Try implementing a referral system supported with bonuses to encourage customers to invite friends
- Cashback. After making purchases, you and your partners agree to return a certain amount to the user’s bonus account. This feature strongly encourages people
- Become crypto-friendly. It widens the possibility range for your users. Being able to store, buy, sell, and exchange cryptocurrencies feels like a gasp of fresh air
Forming a team of experienced professionals is essential to build a p2p payment app. Outsourcing may become a key to your success due to multiple advantages, such as:
- Lower labor costs mixed with high-quality performance
- A more significant number of talented specialists
- A complete team of well-trained experts, ready to invest their skills into your product
- Greater competitive advantage and more
A discovery phase is crucial as well. Here you’ll have to make the main decisions, such as the aim of your final product and what platform it’ll support. You can consider Android, iOS, or even cross-platform development.
The next step is to choose a monetization strategy by developing a correct business model, which will minimize and prevent certain risks. You should create it along with your business analyst.
Finally, stack your product with technologies with the help of your technology partner. They will navigate you through appropriate technological decisions for your case and advise you on choosing a financial service provider.
Launching and Service Support of Neobank
After you have established all details, it is necessary to provide proper service and technical support to such a big project as neobank. This includes code optimization, versions update, software compliance, etc.
Also, most outsourcing teams will help to release your product to an App Store or Google Play and provide you with all project materials.
Let’s Sum Up
Creating a neobank is promising and has substantial future potential. As you see, it is not that hard if you dive deeper into the topic.
You can still implement your creative solution and find partners who will join your initiative. The FinTech industry is still growing, so you can dedicate your interest and create something unique.