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How to Build a Digital Bank in 2024?

8/04/2024
(8 min)

When looking at the present-day pace of digital banking adoption, I often recollect the wise phrase of Bill Gates, voiced in the distant 1997, “We need banking. We don’t need banks anymore.” The future envisioned by Gates has recently become a reality, with the digital banking niche currently evaluated at $25+ billion and exhibiting a CAGR of 20%+. This means that we’ll probably have a $138+ billion market in only a couple of years – a massive transition that took less than two decades to take full shape.

So, what are digital banks? The first thing you should keep in mind is that digital banking apps work 24/7 and offer a wider variety of banking services compared to the usual brick-and-mortar banking institutions. The latter require a physical presence in one of their branches to open an account, apply for a loan, or get a banking card. 

Digital banks process all data digitally, accept documents in digital format, and process all applications and operations without the need for face-to-face interactions. Thus, they make banking services more accessible, flexible, and fast for broader population categories. 

I have launched many mobile wallets and Neobank projects with the RNDpoint team, so I know the FinTech products’ design and launch algorithm inside out. I have also overseen digital bank development, from licensing to onboarding 100,000+ users. In this article, I am sharing my extensive expertise about how to build a digital bank from scratch to help you move on with this promising business idea. 

How You Can Benefit from Starting a Digital Bank in 2024 

According to our team’s digital banking report, the industry’s growth and maturation are in full swing, with the trend expected to continue in the coming years. Thus, you can reap numerous benefits by building and launching a robust, safe, and functional digital bank today. Some of the key advantages include: 

  • Outreach to global banking service users. 
  • Lower regulatory compliance requirements compared to traditional banking projects. 
  • Cost-effectiveness of building and running a digital bank. 
  • Ability to embrace the modern trend for digitalization and tech-driven operations. 
  • Ability to deliver stellar customer experiences and attract loyal customers with cutting-edge banking resources. 

All these pros are worth the effort, so let’s dive deeper into the technicalities of digital bank creation. 

benefits of starting a digital bank

Starting a Digital Bank: Step-by-Step Guide 

It’s short-sighted to treat digital bank development as a one-time project. The process includes several key steps that you can’t skip on the way to a safe and functional digital banking platform

#1 Market Research and Legal Requirements 

The discovery stage is the starting point of any digital product development. You should scan the existing offerings and identify unmet needs. At this stage, you should also give proper regard to the choice of target market and jurisdiction in which you will operate a digital bank. 

The implications of your choice will be enormous, as it takes much more time and effort to launch a digital banking project in the UK than you will invest in digital banking in Saudi Arabia and other jurisdictions with a friendlier regulatory landscape. Besides, the choice of jurisdiction affects the licensing costs, which may also play a vital role in the project’s budget. 

A quick illustration of this aspect is a Koto digital bank case from the creators of the Ukrainian Monobank. The Fintech Band team invested over $3.5 million in Koto and faced many licensing bottlenecks complicated by the Brexit process. They also discovered that the UK advertising industry is too heavily regulated, especially for financial products. 

Needless to say, the project is about to close now, unable to meet the planned KPIs even with such enormous investment. Thus, we all need to learn valuable lessons from this unfortunate case and study the target market’s viability from all sides before tapping into it with a digital bank.  

#2 Core Features and Functionality 

Now that you know what digital banking products exist in the market, it’s time to build a digital bank that surpasses them all and proposes a set of unique features to close all unaddressed user needs. At this point, you should list the mandatory features – those you should have for the bank to fulfill its operations – and extra features that may help your products stand apart from the crowd of competitors. 

Throughout my work on digital banking projects, I have figured out the following mandatory minimum of features we at RNDpoint recommend to clients:  

  • Contactless payments
  • QR code payments 
  • Multi-currency support 
  • Personal finance management 
  • Transaction history 
  • Advanced security features 
  • P2P transfers 
  • Loyalty programs and rewards 

Besides these, you can also explore some non-trivial, trendy features that will add appeal to your digital banking platform and attract tech-savvy, demanding users with experience in the industry: 

  • Integration with crypto 
  • Referral program 
  • Subscription management 
  • Personalized financial insights 

Don’t limit yourself to these features, as the digital banking niche is quickly progressing. It borrows from many related niches, such as gamification, social networking and rewards, and other fancy features your users are sure to enjoy. 

#3 Partnering with a Tech Team 

The next stage is hiring a dedicated development team to complete the project for you. It’s essential to find properly trained professionals with hands-on expertise in your niche. So, do your own research and due diligence to find a developer that meets your budget and can deliver a cutting-edge product. 

#4 UI/UX 

Once you partner with a development team, it’s time to come up with a sleek, intuitive, and modern design. Modern app users are extremely picky about usability, so you can win the hearts of your customers only by performing a star design that checks all boxes in the UI/UX checklist. 

#5 Backend Infrastructure 

The server side of your banking app is a mission-critical part of the project. The bank’s architecture should be consistent, functional, and fully intact to outside exploit or manipulation. That’s the hardest part of the development project requiring top-level software engineering expertise. 

#6 Payment Gateways and API Integrations 

At this stage, you need to take care of digital wallet integration and the addition of proven, reliable third-party providers to your service mix. The future of digital banking relies on super apps – large banking ecosystems that combine dozens of service providers and ensure a seamless, omnichannel banking experience for users through all-in-one service. 

#7 Security Measures 

Cybersecurity is an essential part of the digital bank’s success. Digital products are highly vulnerable to hacks and exploits, so your task is to take all possible measures to keep user data and funds intact. 

#8 Testing 

Before you launch a digital bank, it needs to go through a series of manual and automated QA tests to guarantee its code efficiency and the absence of vulnerabilities. The results of QA testing will highlight the bugs and inconsistencies you should eliminate for the sake of the bank’s smooth launch. 

#9 Marketing and Launch 

Nobody will know about your bank if you don’t tell them about it. Thus, we at RNDpoint always launch an extensive marketing campaign around one month before the digital bank’s launch so that the project accumulates publicity and outreach. 

#10 Updates and Support 

Once you develop a digital bank, the process doesn’t end here. It is only the beginning of a long-term project that requires round-the-clock support and maintenance, troubleshooting, efficient customer service, and regular upgrades. 

Building a Digital Bank from Scratch vs. with a Pre-Built Solution 

Whether you decide to build a digital bank from scratch or use a pre-built, white labeled digital banking solution, the timing and cost of development will vary widely. Both variants have their pros and cons, and only by weighing them can you make the right selection. Let me cover the algorithm of both options below.

Custom Banking AppWhite-Label Solution
Development timeLongFast
Development costFrom $30,000 to $300,000+From $30,000 to $70,000
Variety of featuresUnlimitedLarge but limited
MaintenanceYou pay for all support, maintenance, and update services to a hired teamThe solution’s provider handles all support and maintenance activities either as part of the subscription plan or as an extra paid service
Tech complexityHighLow to moderate
ScalabilityHighLow to moderate
OwnershipYou own the source code and the platformThe provider owns the solution and allows its use on a subscription basis

Based on these distinctions, you can now choose which option matches your budget, business needs, and expectations in terms of time-to-market. 

How to Build a Digital Bank with the RNDpoint Software Solution? 

For those who want to save money and time on their digital bank’s development, I want to introduce our proprietary software solution for banking projects. Our low-code platform ProcessMIX is ideally suited for everyone opting for quick development without quality compromises. It’s an unrivaled resource on the market of white-label banking solutions with the following unique features: 

  • Generation of native code. 
  • Rapid deployment of custom backends for a variety of Web3 projects. 
  • Easy handling of high-load scenarios.  
  • AI-adaptive capabilities for quick integrations. 
  • Significantly reduced costs and time to market. 

Thus, I sincerely recommend trying ProcessMIX out to see how seamless, scalable, and efficient white-label banking solutions can be.  

Final Word 

As you can see, it’s never been easier to embrace the fast-changing digital landscape than it is now, with reliable and qualified tech partners at your service. RNDpoint is ready to create a digital bank based on your unique business needs and technical specifications, letting you enter the competitive and highly lucrative niche without unnecessary friction. 

Feel free to use our software consulting services to find the right mix of features that will set your project apart from the competition. I firmly believe in the bright future of digital banking, and you can embrace the trend to create a stable revenue stream from it. 

 

FAQs

Can I start my own bank? 
What is the process of creating a digital bank? 
What partnerships are essential for a successful launch of a digital bank? 
What are the key roles and expertise required to build a digital bank? 
How much does it cost to start a digital bank? 
How do digital banks handle digital currency conversion and international transactions? 
Why choose RNDpoint to build a digital bank? 

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Andrew Klesov
Andrew Klesov
CEO
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