Neo banks— online banks, internet-only or no branch banks.
With the catered and personalized customer solutions— In the next five years, the global NeoBank market is recorded to grow at 47.1% and hit a $333.4 billion market size (CAGR).
Along with seamless 24×7 remote services, NeoBanks are easy to set up because of low operating costs and no need for tangible land.
They are most popular among niched audiences such—as “underbanked” and “unbanked” people as they offer high-interest rates and nudge them to get their services.
In this blog, we will dive into how you can set up your own NeoBank in seven steps, also crucial takeaways while implementing.
Seven steps to assist you set up your NeoBank
1. Define target audience and use cases.
Every Neobanks aims to solve a specific target audience’s needs. And deciding your audience and the market size is a must for them before doing anything.
It offers customers a hyper-personalized experience and robust knowledge about their life’s ins and outs and wants— eventually presenting your solution to their unique problems.
Craft unique use cases, define audience persona based on demographics and roles, and further locate their major pain points and desires. This way, you can offer an imperative value proposition of features that matters to them!
Later, you can also apply this to customer segmentation and analyze your customer lifecycle.
2. Build back-end pillars
To develop a flawless Neobank for your customers, strong pillars of back-end integrations are a must.
They ensure that system can run multiple operations and transactions without lags.
The main components of the operating system of any Neobank are:
- API – it synchronizes the workflow of your Neobank app with other processes like authentication and payment gateways.
- Card processing App – this deals with all transactions and operations involving debit or credit cards and constitutes the core logic of your applications.
- Back-office tools – these tools manage the entire workflow of your Neobank.
Creating a Neobank from scratch could be laborious as you need to invest a lot of effort, capital, and time.
However, you can cut your efforts and collaborate with an established bank NBFCs
You can leverage their reliability and fetch the early customer acquisition.
3. Deploy Immersive experience
Flawless transactions and robust experience are vital in retaining your customer in the long run.
Constant improving your UX, making it eye-soothing and easy to understand, shows you’re exerting efforts to give your customer a profound reason to say!
A good app design enables users to navigate your app without resistance while quickly doing all operations and transactions without compromising security.
So make sure to give your Neobank app cluster-free visuals— for frictionless navigation and customer satisfaction.
Your app must include clear CTAs, content forms, and pop-ups to give your prospect to get started.
Moreover, it must be flashy, with leading speed, and most importantly, with no overwhelming number of notifications.
You can also add customer support sections, where you can customers’ queries ASAP and help them.
4. Collaborate with BAAS/API developer
Collaborating with banks and NBFCs can boost your Neobank as it can accelerate its development process with relatively less cost and effort.
Collaborating with API providers who can help you with app development is a good idea if you want complete access to all operations.
It can make your Neobank ready-to-go in the market ASAP, with relatively low time and cost.
But integration with those banks’ software is challenging to do and is generally also slow.
Backing up your Neobank to traditional banks can exponentially increase your user base, and it’s also more accessible and faster than making a back-end system from scratch.
There are also restrictions on several portfolios of customer banking products.
The advantages of collaborating with BAAS providers are almost the same as above, but they generally restrict the flexibility of your Neobank to develop new features.
5. Set a security fortress
As online security has always been connected with data breach issues with good reasons.
Having an impregnable security infrastructure is a must for your Neobanks.
Tokenisation, generation, and issuance of a payment token and maintenance of token security vaults is a hard-to-do but essential task while maintaining PCI DSS compliances.
So first, you need to set up a security office center that governs as the controlling unit of your whole Neobank. It enables you to supervise all processes happening in infrastructure.
You can also deploy Security Information and Event Management (SIEM) softwares solutions to make your infrastructural tracking more analytical and precise.
Devising a security tool of your own could be another and better option. It is essential to keep logs and records of every transaction and operation happening in Neobank for future reference.
Make sure that tracking your operation does not invade customers’ privacy and runs regular tests to keep your security units updated.
6. Testing MVP (minimum viable product)
To achieve the status of a top-notch Neobank, you need to have a lot of automated tests, which is possible through experiments-driven development.
It starts with coming up with all possible use cases that could be used by the customer while interacting with the app.
With manual testing, there is no chance you can identify and get rid of all issues.
So all you need to do is, hire a QA engineer that can write codes and run the automated tests in the system. There are a whole bunch of tests you should try for the betterment of your core system, such as:
- Integration tests
- Security tests
- Penetration tests
- User acceptance test
- Regression tests
- Unit tests
7. Devise it, Revise it and Repeat!
Finally, your NeoBank is live and ready to serve your clients!
But the work starts here to sustain them— the customer retention!
You need to gather feedback and develop your services per that.
To get a clear roadmap, track crucial KPIs like CAC (customer acquisition cost) and CLV(customer lifetime value)
This further helps to segment your client and cater remedies for their individualized needs!
Another crucial aspect is marketing.
A good product will help you in retention and good marketing in acquisition.
And acquisition comes first.
Now, this is clear with regular upgrading and proactive marketing strategies. You can churn the best benefits for your business.
And make your customer stay with you!
How we can help!
To set and run your own NeoBank needs hands-on problem-solving solutions and a catered audience to pitch to.
But there can be aspects which you might be missing. So, we are here to help you!
We at NBFC Advisory, with 15+ years of experience in advisory and counseling — assist businesses to understand their audience better and make their venture thrive.
With insights and strategic deployment—our team of professionals is a one-stop solution, so you never miss an opportunity.
Book a call today!