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How to Build an App for a Neobank?

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How to Build an App for a Neobank?

In the technologically obsessed society in which we all reside, individuals always seek security and comfort, both of which can be attained through mutually beneficial coupling.

When compared to traditional banking to now, people used to wait in large lines to conduct their banking. They are now able to save time and manage other tasks thanks to the awareness of and access to technology.

 But in recent years, virtual or digital banks have taken a bigger share of the market, making them a more trustworthy and practical choice for the public. When the older banks started to fail, the neo-banks developed a mobile banking solution, which was ultimately much simpler for the customers. More users are now able to get speedy banking solutions because of the banking industry’s swift evolution.

Neobanks are becoming more prevalent, which is no secret. Neobanks are expanding three times as quickly as conventional banks, according to a Boston Consulting Group report.

Entrepreneurs are becoming increasingly curious and want to know how to create an app for a Neobank. However, it is crucial to fully understand the concept before moving on to the construction of the application.

 These days, the name “Neobank” is all the rage in the financial sector. In every industry, this word is becoming more well-known. This word is used frequently in the media and news. But how much do we understand this idea?

 Let’s start by figuring out what Neobank means.

What is NeoBanks?

 A digital bank known as a “Neobank” only provides access to its services online or through mobile apps. Neobanks and conventional banks differ in a few significant ways.

 Neobanks don’t have any physical branches, to start. They are fully digital or mobile. Because of this, they are much more practical for clients who wish to do their banking on the go.

 Furthermore, Neobanks frequently charge cheaper costs than conventional banks. This is why they don’t incur the same overhead expenses of maintaining physical branches.

Finally, Neobanks frequently provide more avant-garde features than conventional banks. For instance, some Neobanks allow users to automatically save money depending on their purchasing patterns. Neobanks are in high demand among users nowadays because of their creativity and cutting-edge approach to the customer experience.

Neobanks Market Analysis and Statistics for 2022

Have you ever thought about the track record of the real-world neo-banking foundation? How does it more swiftly express its solace?

The solution is provided by its demand and filling model, which satisfies user needs. It features numerous economical alternatives at a modest cost.

With a combination of innovative services and simple solutions for IT, enterprises, and people, the urge has the potential to be one of the top solutions by 2022.

 In 2018, the Neobank market was worth around USD 18,604 million. By 2026, this figure was predicted to rise to USD 394,648 million. From 2019 through 2026, this equates to a CAGR of roughly 46.5%.

Many economic difficulties were faced by various sectors of the economy during the COVID-19 pandemic. However, Neobanks proved to be an appealing alternative to the traditional banking system. As a result, they surged in popularity. According to research, youths between the ages of 18 and 20 created accounts with Neobanks during the pandemic

.

First NeobankEstablished by Ben Morrison (CEO)  and John Waupsh  (CTO)
Neobanking’s biggest namesChime, Current, Aspiration, Varo, etc.
Vision of Neobanksto provide a standard of customer service that traditional banks could never provide
Services provided by NeobanksSavings account, direct deposits, cash account and more
Market Size For Neobanks In 2020USD 35 Billion
Market Size For Neobanks in 2021USD 47.39 billion

How NeoBanks are different from Traditional banks?

Operational Location

Neobanks only conduct business online. They don’t have any physical branches, which lowers their operating expenses. Traditional banks, on the other hand, have numerous branches. Additionally, they have developed their online presence through applications and websites.

Services Provided

Neobanks are not fully licensed to conduct digital banking. As a result, they are only able to offer a small selection of services, such as easy payments and money deposits. Traditional banks, on the other hand, provide a range of services like money deposits, lending, and even locker services. Customers can store their jewelry safely at traditional banks because they have physical locations.

Monitoring Several Bank Accounts

You can only access a certain bank’s account using a traditional bank. Because it’s a closed system, you must sign in each time you want to access information. Neobanks, on the other hand, increase visibility by allowing you to access many bank accounts at once.

Monitoring cash flow

Neobanks have tools that let you categorize your financial activities. It divides costs into categories like personal care, shopping, investments, etc. It enables you to keep an eye on your expenses and see where you spend the most money. However, traditional banking does not provide such features. You can acquire a bank statement at the end of the period and sort spending yourself.

Income Source

The differential in interest between savings and loan accounts is how traditional banks generate revenue. Because of this, they put a lot of effort into attracting and advertising fixed deposits, loans, etc. Neobanks make money by levying a little fee when clients pay the merchant (interchange revenue model). In addition, they can profit from interest on deposits. The money is invested in securities, and the interest earned outpaces the interest paid to depositors.

Consumer Assistance

Neobanks place a high priority on customer service. They put a lot of effort into gaining users’ trust and enticing additional clients. To maintain a positive relationship, they offer rapid and convenient customer help rather than keeping you on hold for minutes or hours. Traditional banking, in contrast, may or may not be effective with customers.

FeaturesTraditional banksNeo banks
Operational Location Possess several branchesOperate exclusively online
Services Provided A small selection of servicesA range of services
Monitoring Several Bank Accounts Access a certain bank’s amountUse one login to access several bank accounts
Monitoring cash flow Not a feature of that kindFeatures to help you categorise your spending
Income Source Utilize the distinction between savings and lending accounts to generate income.Make money by adding a little percentage to the price that customers pay the merchant
Consumer Assistance Customer care services could be effective or ineffective.Give customer service and assistance top priority.

Top-notch Characteristics of NeoBanks That Make Customer fall in Love

Users must recognize the importance of Neobanks because they significantly improve economic operations. These characteristics must be included in your application if you want to learn how to design an app for a Neobank.

Improved the Customer Experience

Neobanks use an interchange fee structure to reduce client costs. Their main goal is to provide real-time money management strategies. To speed up the decision-making process, several banks employ AI-powered credit ratings. With low fees, these Neobanks make ordinary actions like peer-to-peer payments and check deposits more convenient. Their account setup is simpler, and their processing time is quicker.

A nationwide network of ATMs and global transfers

Neobanks use mid-market exchange rates to simplify the procedures and facilitate cross-border transactions. Customers can transact with them in real-time and at minimal rates for safe, international payments. Additionally, Neobanks provides a network of ATMs located nearby, which streamlines and simplifies the withdrawal process. It only takes a few clicks for customers to open an account without any paperwork or costs.

 24/7 Access to Financial Services

Neobanks caters to the busy schedules of their customers by offering access from anywhere, at any time. They provide 24-hour access to banking and prioritize the best consumer comfort. The application and tech-focused Neobanks provide speedy, effective, streamlined, and paperless processes. They conveniently bundle several banking services for use while traveling.

User Personalized Design

Traditional banks manage their customers’ portfolios using both offline and online means. It is a laborious and time-consuming operation. Neobanks, on the other hand, prioritize the demands of its customers through a customer-centric design. Enhancing features offered by analytics and business intelligence include budget recommendations based on monthly costs, real-time data monitoring, reconciliation, etc.

Technical Support Infrastructure

The ability to add as many solutions as necessary is made possible by open technical infrastructure as opposed to an outsourced tech stack. Innovative ‘plug and play’ devices can be made by neobanks. They avoid the drawbacks of a bulky, sluggish system. Neobanks can give their customers an advantage by adding new goods and services in real time.

Integration of new capabilities is challenging for traditional institutions. Neobanks get around it by using an open technology infrastructure.

Now its time to understand

How to Build an App for NeoBank?

The development process is a major concern for startups in the Neobanking industry. These actions will support the business owners and direct them toward the more lucrative mobile application development process.

Identifying your target market and value proposition 

There must be sufficient research done to identify the target market and value proposition before beginning app development. Neobanks compete with traditional banks and seize their market. They must therefore have a clear understanding of the niche they will be targeting and how they will bring value.

To understand competitors’ perspectives, market research also includes competition analysis. You need to be aware of what they have to offer, as well as their effectiveness, profitability, flaws, and problems.

It benefits you by:

Decision-making, Planning, and Strategizing

Similar to this, apps must specify if their users are of a younger or older demographic. The younger, tech-savvy audience is more interested in the idea of Neobanks than the older population.

The latter may have difficulties and require a small learning curve. Therefore, it falls on the shoulders of app developers to give their potential clients a flawless and hassle-free experience.

Developers can learn about the most lucrative, potential-holding, and undiscovered markets by doing a complete market analysis. For instance, a Neobank application for housewives can help them manage their accounts and keep track of their spending on things like food, personal care, and shopping. By rounding off the sums to the nearest dollar and depositing them in a fictitious pot, it can promote their savings.

Also, Read – How much does it cost to develop a Banking App?

Establish the Foundation for a Neobank

Once you have a solid understanding of your target market and the competitors, you must move on to the features you want in your application. The target audience’s problems must be addressed by these elements. The application is built around these features.

An innovative, flexible, and customer-focused Neobank app strategy is employed. Utilizing technology most beneficially will result in comfort and ease for the user. Including distinctive elements will increase client retention and draw new ones.

Some features are required for a Neobank app, while others raise the app’s rating. 

Neobank applications need to improve their monetization plans. It must choose its primary and secondary revenue sources. Some of the most well-known monetization techniques include the interest and exchange models. The audience and features, though, may cause it to change.

The locations where the application will launch must also be chosen. Developers can adhere to local legal requirements by outlining these details in advance. Future troubles can be avoided by collecting all the data before the development.

The platforms on which you launch your application must also be chosen. These include iOS and Android. Additionally, the app may be hybrid or native. This information can be used to hire your tech personnel and developer team.

Building Strong backend and front-end infrastructure 

Neobanking applications require an extremely reliable infrastructure core. For quick transactions and movements to be possible, the frontend and backend development must be robust enough. A seamless user experience should be provided without lags or program crashes.

The following are features of a well-made Neobanking app:

Neobanks are linked to other payment gateways and authentication segments using application programming interfaces (API).

Card processing apps make card transactions simple.

The whole Neobank activities are managed through back-office tools.

Following are some methods by which businesses can create backend infrastructure:

– Significant time, money, and effort must be put forth when starting from scratch. A banking license is also necessary. You will create the tech stack, design, and infrastructure on your own.

– Reduce time and effort by collaborating with banks. The usual bank must be used, though. Additionally, since you may initially capitalize on the consumers of the banks, you do not need to invest money in customer acquisition.

– You may build the core and backend infrastructure with less time and effort if you collaborate with Banking as a service provider or an API provider. Go-to-market speed is improved.

Keep Neobank Compliant and Secure

Only when it makes use of sufficient security precautions and abides by rules can a Neobank app function better and win users’ trust. Regulation compliance and security infrastructure are very important in Neobanks since the personal and financial information of clients is at risk.

The following regulations are a few examples of complicated but necessary tasks.

PCI DSS Compatibility (Payment Card Industry Data Security Standard)

Tokenization

Generation of Payment Tokens

Issuance

Using the Token Vault

Maintenance

Testing

You must carry out extensive testing and debugging procedures before releasing the application on various platforms. The problems that could impair the functioning and performance of the app must be located and fixed. 

Run a sequence of the following automated tests, covering every area of the application that will have an impact on the user:

– Unit testing

– Integration Testing

– Security Examination

– User Acceptance Testing

– Regression Testing

The tests shouldn’t simply be conducted before launch. Even after the app is live, it must continue to operate. Automating tests may benefit from a specialized infrastructure. It lessens security and other operational concerns.

Implementation

Developers still have work to do even after the app has been released. They must make sure that the onboarding process is easy, seamless, and uncomplicated for the clients. To become the ideal version for users, the program must constantly change.

Tools like DevOps are needed for distributing new versions and doing ongoing updates. Scalability and efficiency are easy to use as a result. As soon as the most recent updates start to receive a lot of traffic, it kills the older instances.

Marketing

Strong marketing initiatives are required that generate high levels of client attraction and retention. Engaging the customers throughout the process may encourage them to come back for more.

The customer lifetime value/Customer acquisition cost ratio determines profitability. The higher the ratio, the more money is made by each customer. Therefore, it’s imperative to keep customers satisfied.

Features to Include in NeoBank Mobile app development

The most important features for developing Neo banking from the ground up would differ from company to company. However, some of the important characteristics that we have compiled for you are as follows:

 Registration and Profile Creation

This is arguably the first and most private stage in the banking business solution for you. For the user registration, you need to add a few additional layers of security and location.

For both new users and future ones, the security layer must be completely accessible and facilitate simple banking. Once the user has completed the registration procedure, remind them to create strong, complicated passwords, add security questions and an email address in case of an emergency, and try to get their consent to confidentiality before moving on.

 Onboarding

You need to take care of a few key tasks for the rapid customer onboarding procedure. Ensure that clients utilizing your platform feel considerably more secure and at ease. 

 Planning own finances

If you are waiting in line to start your neo banks app development solution, your company must plan accordingly. The personal financial section includes everything, from loans to tools and software for budgeting and other tax planning.

 Integration of a digital wallet

You no longer need to hold your cash in your hand’s thanks to digital wallets. The fact that people can rely on and feel confident in the authority of the bank is fantastic.

 Branches and ATMs are shown on a map.

The user needs to identify the closest banking option for their needs. Filters and every conceivable ATM location must be added while creating the full program from scratch. That would be advantageous for the users. Introducing some fresh trends and technology makes your platform stand out in a crowded market and increases user confidence.

 Program enrollment for loyalty

By including this function in the app, the development aids the company in winning the patrons’ respect and satisfaction. To run and draw in devoted customers, you might provide incentives like discounts, awards, and other referral programs.

 Online Backing feature

This is the main benefit of online banking. The users start to trust it. The online banking feature itself has a wide range of features. Users benefit from the ease of using financial services anywhere and without any restrictions.

 Transaction management

Users of this page can compare several items side by side. The users can monitor their payments. With a few additional fields, such as recipient name, transaction amount and currency, date and time of the transaction, together with their present location and recurring payment spending summary, they can instantly view everything.

 Payments and expenses

Try to give customers more options for speedy payment; these options could include card information from reputable retailers like Paytm, PayPal, debit and credit cards, net banking, and banking through UPI.

How much does it cost to build a Mobile app for NeoBank?

The cost of developing an effective Neobank application relies on a variety of variables. Rich considerations for you include hiring costs, product-aligned technology, third-party integrations, the inclusion of effective payment methods, etc.

However, it should be noted that the total cost of creating the Neobank application would likely be in the $50,000 to $600,000 range.

 Conclusion

The banking and financial industry’s future lies in Neobanking. Although it can’t completely replace it, it presents the traditional banking sector with fierce competition. The most practical and adaptable banking options are provided by Neobanks to the younger generation. In addition to encouraging saving and investing, they address the painful issue of needless spending.

Neobanks do not advertise loan and deposit options needlessly. To draw and keep users, they instead advocate for customer-centric designs and solutions. Neobank applications thus provide enormous possibilities for development and profitability. Before competition increases and uniqueness becomes the norm, businesses must investigate and enter the market. If you want to make a Neobank application that stands out from the competition then get in touch with ReapMind at info@reapmind.com 

FAQ

What are the top examples of Neobank?

Here are a few Neobank examples, to mention:

– Varo

– Sofi

– Robinhood

– Monzo

– Chime 

– Nubank 

– Klarna

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