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Start a Neobank in 2024. Ultimate Guide: Business Model, Costs, Core Features, Obstacles

(20 min)

Neobanking is one of the brightest FinTech trends. In 2021, 59 new players entered the global market. In January 2022, there were a total of 397 neobanks worldwide. Just imagine, all of them serve almost 1 billion customers.

Worldwide neobank launches
Fig 1. Worldwide neobank launches. Source: Simon-Kucher Neobank database, 2022.

But only 5% of digital banks in the world are profitable. If you want to create your own business from scratch and have success, you have to put in a lot of effort. To become recognizable, you need to develop a truly valuable solution for users. 

We have prepared a guide on how to launch a neobank that the audience will highly appreciate. Learn about key features, legal requirements, main challenges and other essential points in the article.


What is a neobank?

Neobank is a FinTech company that provides banking services exclusively in digital format. It uses a mobile app and a website for this purpose. It is often referred to as digital banking.

Simply put, it is a bank that exists only online and has no physical front offices to work with clients. The app and the website play the role of branches and offices. They are where all the key processes and interactions with clients take place.

Depending on the type of activity, the company can:

  • Have a financial license and provide banking services independently by the law and the orders of the national bank.
  • Be a partner of a conventional bank to provide financial services in a remote format.

Neobank offers non-traditional banking services (money transfers, bill payments, deposits, investments, subscription management) and sometimes budget planning tools. Extending loans is not as common due to high operating costs and financial risks.

Thus, the business model is aimed at the user looking for simple cash flow management. The emphasis is on modern technology to handle large volumes of data and provide access to neobanking solutions to a wide audience.


Neobank market size is $66 billion in 2022

Grand View Research reports that the global neobanking market size was USD 66.82 billion in 2022. It is projected to grow at a CAGR of 54.8% over the period 2023-2030.

Global Neobanking Market.
Fig 3. Global Neobanking Market. Source: Grand View Research.

The following factors will stimulate the market growth:

  • The desire of customers to maximize the convenience of receiving services.
  • Active use of smartphones and the Internet for online banking;
  • increase in partnerships of banks and organizations to launch neobanking platforms.
  • Growing demand from retail customers and small and medium-sized businesses.

In 2022, more than 51% of revenue came from the enterprise app segment. We are talking about credit, transaction, and asset management services. Personal apps will show impressive growth.

The market evolves constantly, and its players grow along with it. This business model will benefit you in the long run. The first step is to invest in the development of a decent app.

There are many reasons why this direction has earned popularity which grows every year.


Why has neobank become so popular?

According to Forbes, the value of neobank from a customer perspective is as follows:

  • Instant access to financial services.
  • Clear and transparent banking processes.
  • Low costs of using financial instruments.
  • Round-the-clock online services.
  • Fast money transfers, including international ones.
  • Availability of third-party services integration.

All necessary solutions in one app.

These are the reasons why more and more people are using neobanking instead of visiting physical branches. It is a more convenient alternative to conventional banking services. This means that your startup has a good chance of gaining the attention of a wide audience.

Five reasons to open a neobank:

  • Cost efficiency. Costs are low due to not working in the offices and the absence of financial risks. How do neobanks make money? Among the sources of income are transaction fees, premium subscriptions, integration of third-party services, exchange fees, account maintenance, and fee-based services.
  • Individual approach. The company provides its services remotely and interacts with users continuously. The company can serve more customers and offer exactly what they need. All this maximizes revenues.
  • Analytical capabilities. Digital platforms allow you to collect and analyze customer data and understand how they behave in the banking ecosystem. These observations make it easy to tailor services and functionality to users
  • Innovation. Digital technology is evolving rapidly. Neobanks are the first to adopt and use them for development purposes. Even more opportunities to both improve the customer experience and optimize internal processes.
  • Scaling. The app and website can be promoted online and adapted to market trends. This increases the company’s visibility locally and globally.

Thus, building a neobank means creating a foundation for continuous development and increased competitiveness. There are much more opportunities for this than in the case of a usual bank.

Transform the banking experience with RNDpoint’s White-Label Neobank Software. Book a demo now and learn how you can develop neobank just in a few weeks.


Difference between a neobank and a traditional bank

It would seem that the difference is obvious. A neobank works mainly through a mobile app. A traditional bank serves clients in the branch and, in some cases, on the website and in the app (mobile banking).

Besides, the former chooses to consult with chatbots, and the latter can use several communication channels with customers. These are chatbots, messengers, telephone communication, and personal meetings.

There are other differences:

  • Licenses. A conventional bank is required to have a banking license. A neobank can be without one, e.g., if it is a partner of a traditional bank. You need a permit to operate independently and offer many services.
  • Affordability to customers. Neobanks’ costs are much lower due to operating online. This will allow them to charge minimal fees and make higher interest rates on deposits. Another competitive advantage in the eyes of customers.
  • Number of services. It’s only natural that traditional banks offer more financial services. They can issue physical cards (debit, credit), checkbooks, and cash deposits. But neobanks are rapidly developing and adding more services, such as card issuance, loans, and BNPL.
  • Integrations. Neobanking emphasizes integrations with third-party financial tools. For example, connecting to accounting software opens access to every transaction and makes bookkeeping easier.

The key difference is related to the business model. Banks offer various financial services to legal entities and individuals. Neobanks offer non-standard opportunities that banks do not have. They also target more active Internet users.

If your goal is to open a neobank, you should first of all study all the legal nuances.


Legal requirements for a neobank

Financial services are strictly regulated. Restrictions may apply to the scope of activities, capital, interest rate caps, etc. There are also reporting requirements.

All this is necessary to maintain the stability of the economy, protect the interests of clients and achieve societal outcomes. That is why financial licensing is so important.

Local regulators and governmental bodies grant licenses. Requirements depend on the type of financial service and jurisdiction. Licensing is chosen according to your value proposition and business model.

Let’s talk about various licenses below.

Full banking license

You must get a banking license to be called a bank. Then you can take deposits, issue loans, and provide a wide range of services. 

As a rule, it is issued by the Central Bank. It all depends on where the company is registered and your target markets. In Europe, the ECB is the national regulator; in the USA, it’s the Fed. Examples of local and national regulators are SAMA (Saudi Arabia) and HKMA (Hong Kong). 

Obtaining a license is complicated and costly for a startup. The application process takes up to 15 months (depending on the jurisdiction). Regulatory and compliance obligations, as well as capital requirements, are high.

However, there are many advantages. Launching a neobank with a license means opening broad prospects for doing business.

Fintech license

Due to the rapid development of the industry, new licenses appeared. We can call them light versions of full banking licenses. They allow companies to provide services similar to banking ones. But the eligibility threshold is lower. 

There are other options. Among them is EMI for electronic money management. Companies can offer the same options for daily payments as with a full license. 

But there are limitations. For example, you can’t give out loans or store customer funds. There are also limits for the transactions and the amounts on the e-wallets.

Getting an EMI license is a cost-effective option for a new neobank. Plus, the application process takes between 6-12 months.

The partnership model

Previously, we looked at the legal nuances of creating independent digital banks. But who does not need a license? Someone who cooperates with a traditional bank.

This is a chance to avoid the long application process and save money on the first step. You can work with the bank until you have the funds and strength to operate independently.

It is essential to understand that this model is less flexible than the previous ones. The startup remains dependent on a third party and cannot fully control the financial flows.

Choosing the license depends on your business’s scale, long-term goals, and financial capabilities. But you should decide on this before contacting developers.


How to hire a development team for building a neobank

Neobank app development is a complex step-by-step process that requires a professional approach. Your task is to conclude a partnership with a software development team that can be trusted to implement the idea. 

Three steps to hiring an outsourced team to work on a project:

1. Find a company using proven methods:

  • Search engine: choose from search results on Google.
  • Business listings: research information about software development companies on Clutch and other catalogs. 
  • Freelance platforms: look for services on Upwork, Fiverr, and Toptal.
  • Social networks: search for skills and experience on LinkedIn.
  • Online meetups: talk to experts on OnlineGeniuses, etc.

2. Make a choice by researching:

  • Carefully examine the portfolio.
  • Ask about expertise in the industry.
  • Read reviews on reputable platforms. 
  • Find out the company’s location and rates.
  • Discuss in person the work processes and desired outcome.

3. Sign documents:

  • NDA to protect confidential information.
  • Contract, indicating hourly rate, terms of work, deadlines, invoices, payments, and guarantees.

Following these steps, you can hire a team to develop a neobank as quickly as possible without sacrificing quality.

When you know all the details of preparing for development, it’s time to analyze trends, choose a niche, and develop a business plan. First things first.


Neobank market trends

To develop a neobank from scratch, you need to delve into trends in the field:

  • AI and Adaptive ML. Introduce smart technologies to create the best possible digital experience: virtual consultants, personal recommendations, and suggestions.
  • Internet of Things. Many neobanks offer their services to small businesses. The Internet of Things (along with AI) helps business clients track their revenues and payment of loans.
  • Process transparency. Neobanks need to inform the customer about everything that happens to their account in real-time. Notify about services, show financial calculations, and keep a history of expenses.
  • Emphasis on security. We’ve already mentioned tech measures to protect client data. But there is something else. It is essential to allow users to block and freeze accounts at any time, if necessary.
  • Quick transfers. People are looking for faster, more reliable ways to transfer money. According to FinancialIt, this is especially true for tech-savvy millennials. The pandemic has spurred the use of such digital platforms.


How to choose a market for a neobank?

Traditional financial players focus on all clients to get a better chance to scale. Neobanks, on the other hand, can provide both general and niche services.

Focusing on a niche allows you to tailor your operations to meet your customers’ needs. In this case, traditional banks (and neobanks from other niches) cannot compete with the company.

Here are some examples of niche customer segments:

  • Women: GoWomen, Sheroes.
  • LGBTQ+: Pride Bank, Daylight.
  • Ethnic groups, minorities, immigrants: MoCaFi, Cheese.
  • Specific professions: Uber Money, Nerve.
  • Elderly: Longevity Card
  • Minors: Copper, Kard.
  • Newly-weds: Hitched.
  • People with disability: Sibstar.

It is easier to personalize the customer experience when working in a specific segment. This determines what the branding strategy, app appearance, and functionality will be.

However, choosing one niche slows down the scaling. If it’s in your plans, it’s better to provide various services.


Neobank Business plan

When drafting a neobank business plan, focus on four aspects: business model, costs, core features, and obstacles.

Business Model

The first step is to create a solid business model.

What needs to be done:

  • Research the market, including an analysis of the target audience and competitors.
  • Make a plan for attracting and retaining customers.

Give a realistic forecast of the company’s expenses and revenues (whether it be through interest on loans, fees for services, or other means).


The cost of establishing a business depends on size, scope, location, and services. 

Among the main costs are:

  • Legal and regulatory compliance.
  • Technology infrastructure and software systems.
  • Staff salaries and benefits.
  • Marketing and advertising expenses.
  • Premises and equipment.

Core Features

The next step is to determine the core features of the neobank. We will tell you what you need to implement in your app.

Secure transactions and data access

Security is key for FinTech businesses. Your app must be protected from fraud, data leaks, and hacks. It is also essential to ensure the server’s security where customer data is stored. 

It’s up to you to increase the cybersecurity of your digital solution. Use biometric verification for account access and KYC-based identification. 

Encrypt financial flows with 3-D Secure. Create a real-time fraud detection system to detect irregular behavior.

Opening an account

This is a key feature of the app. Users should be able to create an account to manage their financial flows and receive and withdraw funds.

Some companies allow not only to open a virtual account but also to get a card. For example, let’s take Current, an American financial tech platform. Its users can use a debit or credit plastic card.

Basic financial transactions

We’re talking about money transfers, paying bills and taxes, and debiting/crediting accounts. These are the main operations that you should implement in the app and provide to clients.

It is also useful to implement currency conversion and offer a number of additional banking products. For example, savings accounts, deposits, and investment accounts.

Several payment options

Ideally, the app should have different payment options. You can implement it through API integration with third-party financial services.

Add the following transfer methods to your banking:

  • A2A: direct transfer from one account to another without additional intermediaries or payment instruments.
  • P2P: direct funds transfer from the sender’s card to the recipient’s card, phone number, or account (individuals).
  • ACH: a B2B payment method where funds are transferred between the sender’s bank and the recipient’s bank.
  • Services like PayPal: transfer funds in a few clicks domestically and abroad.
  • QR code: an opportunity to make a payment using a QR scanner built into the app.

Push notifications

This is an important tool to inform customers about actions with their accounts, such as crediting and debiting funds. Your users should be aware of everything that happens with their finances.

You can also set up automatic newsletters about new services and products, changes in functionality, etc. Another option is to send customized offers.


Use innovative technology and automation for neobank app development. These can tailor offers according to each client’s preferences and give instant answers in chat.

Here are a few more examples. The client can transfer money to a frequently used number in two clicks, see the history of expenses, have quick access to favorite services, and automatically accumulate a certain amount each month.


The dashboard contains valuable information for the user, e.g., analytics of the latest income/expenses with systematization by sources/categories. 

Dashboards present data in a visually appealing format. It can be graphs, charts, or tables. Thus, much textual information looks as simple and understandable as possible.


use unique pics/icons. For example, mark receipts related to communication expenses with a “phone” icon. Each transaction has its own visual representation.

And that’s not all. You can create a digital character to “communicate” with the user. Teach them how to use the app, answer questions in the chat, give hints on each operation, and even calculate virtual points for activity.

Referral system

With the referral system, customers can receive bonuses for inviting friends and relatives. For example, free access to a premium feature.

This opens up several opportunities for you at once: expand your customer base, keep the attention of those who have been using your app for a long time, and increase your company’s visibility.

Customer service

Since the user cannot go to a physical branch, all questions must be resolved remotely. Add chat to your mobile app to communicate with a consultant, as well as a button to contact technical support.


Neobank development Obstacles

Creating a neobank involves some barriers associated with the specifics of its activities.

Some of the main challenges:

  • Obtaining necessary licenses and approvals from regulatory bodies. You’ll need to get a license to have a lot of growth opportunities. Requirements may differ from country to country and fall under several jurisdictions. Be prepared that obtaining a permit is a long and expensive process. If you want to work in partnership with a bank, also be prepared for difficulties. It will take a lot of time to negotiate terms and prepare documents.
  • Meeting capital requirements. The goal of the financial regulator is to prevent the risk of insolvency. You must ensure that you have sufficient capital to bear operating losses while honoring withdrawals.
  • Competitive landscape. There is an increasing number of people who want to open a neobank. To succeed in such circumstances, it is necessary to offer the audience something unique, for example, non-standard conditions of the referral program and issuance of plastic cards.
  • Cybersecurity risks. The financial industry is attractive to fraudsters and hackers. But you can minimize risk with smart user identification and encrypted financial flows.
  • Managing interest rate risk. This is one of the strategic directions of any bank. You should develop a clear strategy in this area and the area of corporate governance, already at the first stage.
  • Neobank solution development. The app must fully meet users’ requirements and trends of the target market. This is the only way to attract attention to yourself. Ensure a perfect UX, including through personalization and gamification.

With the right approach and a clear understanding of the potential challenges, starting a NEO bank in 2023 can be a viable and rewarding endeavor. It’s important to have a well-researched and well-thought-out plan, and to be prepared for the challenges that may arise along the way.


How much would it cost to develop a neobank?

The amount depends on your project’s specifics, as well as the location of the developer. Let’s look at the cost of a product with key features.

Mobile app Developer Hourly Rate (Eastern Europe).
Fig 4. Mobile app Developer Hourly Rate (Eastern Europe). Source: Arc.Dev

Next, we calculate based on the hourly rate of mobile developers from Eastern Europe. Most of them charge $41–60. The minimum rate will guide us.

FeaturesDevelopment (hours)Costs ($)
Identification (KYC)953,895
User profile803,280
Payments 1004,100
Card Management753,075
Notification System451,845
Admin panel25010,250

Implementing a project for one operating system can cost you around $52,890. If the app is developed for both iOS and Android platforms, the amount may be twice as much.

The comprehensive work on the project also includes backend development, UI/UX Design, business analysis, project management, and testing. Based on our experience, the full development cost can be up to $150,000.

Consider all factors when making your calculations. To find out the exact cost, feel free to consult with an RNDpoint specialist. 

If you want to reduce time to market and save resources, use the white-label model.


Why choose a white-label neobank solution?

A white-label solution is off-the-shelf software. Everything you need for your company’s operation is already developed. All that remains is to customize the product to your individual needs.

A white-label neobank solution might include three layers:

  1. UI/UX Design. The layer consists of pre-designed screens, layouts and templates. All you should do is customize the design to your corporate branding.  
  2. Backend core. This layer should contain ready-to-use authentication and registration functionality, funds transfer and withdrawal, currency exchange, card issuing, user management, automated business processes, and reporting.
  3. Integrations. The white-label solution should contain an integration layer to perform important integrations for neobanks: KYC/AML services, card issuing partners, banking partners, payment providers, broker and stock trading platforms, notifications, analytics, and others.

RNDpoint provides such a white-label solution for eWallets and neobanks development. Also, we have our own backend low-code platform ProcessMIX, which supplies ready-to-use backend elements.

The value of the white label model for neobanks

Startups do not always have enough finances, development resources, and experience to create their product from scratch. Testing a hypothesis, e.g., to develop a niche bank, is also problematic because you need a license and infrastructure. The white-label model eliminates these barriers.

Neobanks choose these solutions due to:

  • Flexibility. The solution is customizable to the business needs and the target users of the app.
  • Comprehensive approach. Rebranding, onboarding, technical support, maintenance, and upgrades as needed. 
  • Better customer experience. Software is available for all OSs and browsers and has all the necessary integrations.
  • Fast time-to-market. Deployment and customization of new features take little time, speeding up a product launch.
  • Transparent costs. Cost is known at the start and depends on the selected modules, number of integrations, and budget.
  • Variety of services. Account management, balance tracking, deposits, virtual cards, mortgages, transfers, payments, etc.

If you are interested in such neobanking solutions, pay attention to the global arena. One of the industry’s TOPs are RadarPayments, Optherium, CurrencyCloud, Limepay, Mbanq, and SatchelPay.

Let’s get familiar with the brightest representatives.


Top neobank apps in the world

NeoBanks.app has highlighted the best neobanks and digital banks for 2022. These are apps for individuals and commercial entities.

Leaders in the Personal category:

  • Revolut. A multifunctional financial service to solve all monetary issues.
  • Wise. Online service for sending and receiving money internationally.
  • Bunq. An app that gives users from all European countries accesses to accounts.
  • Quontic Bank. An adaptive digital bank that offers vast financial opportunities.
  • Chime. A banking app with an emphasis on security.
  • Monobank. A Ukrainian neobank, operates entirely through its mobile app.
Best neobanks for Personal.
Fig. 5. Best neobanks for Personal. Source: NeoBanks.app

Leaders in the Business category:

  • Everestcard. A platform for managing business payments and expenses.
  • Go Solo. A financial platform with digital banking services for businesses in the UK.
  • Soldo. A solution for efficient enterprise expense management.
  • Starling Bank. A digital challenger bank providing both personal and business banking. 
  • Qonto. Online payment system for small and medium-sized businesses and freelancers.
Best neobanks for Business.
Fig 6. Best neobanks for Business. Source: NeoBanks.app

As you can see, neobanking apps are top-rated. The key is to provide users with the features they are looking for, from basic account operations to trading and cryptocurrency support.


Concluding remarks

Do you want to work in a promising field and earn a decent profit? Neobank development will be the right solution. Start with market research, study the legal requirements, and create a business plan. 

Next, find professionals you can trust with the essential thing: the success of your project. The RNDpoint team is ready to help you implement both neobank and other FinTech solutions.


Andrew Klesov
Andrew Klesov
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