Things to know before your start your digital bank
A Comprehensive Guide to Starting in 2025
What You’ll Learn
• The fundamentals of digital banking and its market potential.
• How to define a winning strategy for your digital bank.
• The key regulatory and licensing requirements to navigate.
• How to build a robust and secure technology stack.
• Effective strategies for launching and growing your digital bank.
• The role of a powerful CRM like InvestGlass in your success.
• Understanding the development process for building a digital bank, including key stages and methodologies.
• This guide provides more detail on the technical, financial, and legal aspects of starting a digital bank.
Introduction
The financial services industry is in the midst of a profound transformation, driven by rapid technological advancements and evolving customer expectations. At the heart of this revolution is the rise of digital banking, which is reshaping how people and businesses manage their finances. This digital-first approach allows them to offer more convenient, accessible, and affordable financial services to a global audience.
The opportunity for digital banking is immense. According to the World Bank, there are still 1.4 billion adults globally who are unbanked, meaning they do not have access to formal financial services. Digital banks are uniquely positioned to address this gap by leveraging mobile technology to reach underserved populations. Furthermore, even in developed markets, there is a growing demand for more seamless, personalized, and user-friendly banking experiences, which digital banks are well-equipped to provide. Understanding potential customers and their needs is crucial when planning a digital bank, as it ensures that products and services are tailored to the target audience for maximum impact.
However, starting a digital bank is not without its challenges. The regulatory landscape is complex and constantly evolving, and competition is fierce. To succeed, you need more than just a great idea; you need a deep understanding of the market, a solid strategy, and the right technology and team in place. Leveraging solutions to automate your KYC processes can help ensure compliance while improving efficiency. Mapping the customer’s journey is essential to better target and serve users throughout their interaction with the bank. This comprehensive guide will walk you through everything you need to know to start your own digital bank in 2025, from navigating the regulatory maze to building a winning technology stack and acquiring your first customers.
Section 1: Understanding the Digital Banking Landscape
What is a Digital Bank?
A digital bank is a financial institution that provides banking services primarily through digital channels, such as mobile apps and websites. Unlike traditional banks, digital banks do not have physical branches, which allows them to operate with lower overhead costs and pass those savings on to their customers in the form of lower fees and better interest rates. To support these services, it is crucial to build a secure and high-performance digital bank platform, focusing on website design, system components, and operational setup to ensure a smooth user experience and regulatory compliance. Digital banks offer a wide range of services, including:
•Accounts: Current accounts, savings accounts, and business accounts.
•Payments: Debit cards, credit cards, virtual cards, and international money transfers.
•Lending: Personal loans, mortgages, and business loans.
•Investments: Robo-advisors, stock trading, cryptocurrency trading, and how to create a neobank from scratch.
•Other services: Bill payments, recurring payments, and integration with payment providers.
Types of Digital Banks
There are two main types of digital banks:
•Neobanks: These are new, independent digital banks that are built from the ground up with a digital-first mindset. Examples of successful neobanks include Revolut, N26, and Monzo. Neobanks often focus on serving a specific user group, offering tailored services and features designed to meet the unique needs of that group.
•Digital Arms of Traditional Banks: These are digital banking platforms that are launched by established, traditional banks. Examples include Marcus by Goldman Sachs and Finn by Chase. Digital arms may also customize their offerings for particular user groups, providing specialized products or access based on the needs of those segments.
The Market Opportunity: Financial Inclusion and Beyond
The market opportunity for digital banking is vast. As mentioned earlier, there are 1.4 billion unbanked adults worldwide, representing a massive untapped market for financial services. Digital banks can play a crucial role in promoting financial inclusion by providing accessible and affordable banking solutions to these underserved populations. Additionally, digital banks can tailor their offerings to meet the needs of a particular user group within the broader unbanked population, allowing for customized charges, restrictions, and authorization rules that address the unique requirements of each segment.
Beyond financial inclusion, there is also a significant opportunity to serve the needs of digitally savvy consumers who are looking for more convenient, personalized, and user-friendly banking experiences. These consumers are increasingly turning to digital banks for their everyday banking needs, from managing their spending to investing for the future.
Section 2: Defining Your Digital Banking Strategy
Identifying Your Target Audience and Niche
The first step in defining your digital banking strategy is to identify your target audience and niche. Are you targeting a specific demographic, such as millennials or small business owners? Are you focusing on a particular geographic market? Or are you building a digital bank for a specific industry, such as healthcare or real estate? By identifying a clear target audience and niche, you can tailor your products, services, and marketing efforts to meet their specific needs and preferences.
Developing a Compelling Value Proposition
Once you have identified your target audience, you need to develop a compelling value proposition that clearly articulates why they should choose your digital bank over the competition. What unique benefits and features will you offer? Will you focus on low fees, a seamless user experience, or innovative new products? Your value proposition should be clear, concise, and compelling, and it should be at the core of your brand identity.
Choosing the Right Business Model
There are several business models to consider for your digital bank, including:
•Freemium: Offer a basic set of services for free and charge for premium features.
•Subscription: Charge a monthly or annual fee for access to your services.
•Interchange: Earn a small fee from merchants every time a customer uses your debit or credit card.
•Lending: Earn interest on loans and other credit products.
Section 3: Navigating the Regulatory and Licensing Maze
Understanding the Legal Framework
The regulatory landscape for digital banking is complex and varies from country to country. It is essential to have a deep understanding of the legal framework in your target market, including regulations related to:
To ensure compliance with these legal requirements, you must configure system settings such as user registration, KYC, and transaction rules according to the relevant laws and standards.
•Payment Services Directive 2 (PSD2): This EU directive aims to create a more integrated and efficient payments market in Europe.
•General Data Protection Regulation (GDPR): This EU regulation governs how companies collect, process, and store personal data.
•Payment Card Industry Data Security Standard (PCI DSS): This global standard sets the requirements for organizations that handle branded credit cards.
•New York State Department of Financial Services (NYSDFS): This US regulator has established a comprehensive cybersecurity regulation for financial institutions.
•Financial Instruments and Exchange Act (FinSA): This Swiss law regulates the provision of financial services and the offering of financial instruments.
•Markets in Financial Instruments Directive (MiFID): This EU directive regulates investment services and activities.
•Anti-Money Laundering (AML): This is a set of laws and regulations designed to prevent criminals from disguising illegally obtained funds as legitimate income.
Banking License Strategies
There are several banking license strategies to consider, including:
•Proprietary: Obtain your own banking license, which gives you full control over your operations but is a complex and time-consuming process.
•Licensing: Partner with a licensed bank to offer your services under their license.
•Shared: Partner with other fintech companies to share a banking license.
•Joint Venture: Form a joint venture with a licensed bank to launch your digital bank.
When implementing any of these strategies, it is essential to focus on granting permissions and managing user access rights as part of your system configuration to ensure compliance with licensing requirements and maintain secure operations.
The Importance of Compliance and Risk Management
Compliance and risk management are critical to the success of any digital bank. You need to have robust systems and processes in place to ensure that you are complying with all applicable laws and regulations, and to manage the various risks associated with operating a financial institution, such as credit risk, market risk, and operational risk. It is also essential to control access to specific functions within your platform, so that only authorized users can perform certain actions, helping to ensure compliance and mitigate operational risks.
Section 4: Building Your Technology Stack
Core Banking Platform Considerations
The core banking platform is the heart of your digital bank. It is the software that powers all of your key banking functions, from account management to payments and lending. When choosing a core banking platform, you need to consider factors such as scalability, flexibility, and security. It is also important to select an online banking system that supports your operational needs and allows for efficient customization. As part of your system setup, make sure to configure and manage exchange rates to ensure smooth transaction processes and compliance.
The Role of APIs and Open Banking
APIs (Application Programming Interfaces) are essential for building a modern digital bank. They allow you to connect to third-party services and data sources, which can help you to offer a wider range of products and services to your customers. Open banking, which is the practice of sharing financial data securely between banks and third-party providers, is also becoming increasingly important in the digital banking landscape.
Ensuring Security and Data Protection
Security and data protection are paramount in the financial services industry. You need to have robust security measures in place to protect your customers’ data and to prevent fraud. This includes measures such as encryption, multi-factor authentication, and regular security audits.
Section 5: Designing Essential Features for Your Digital Bank
Designing a successful digital bank starts with delivering an all-in-one suite of essential features that delight today’s demanding customers. At the core, your digital banking ecosystem should provide seamless account management, empowering users to open, monitor, and manage their accounts entirely online with zero friction. A robust transaction history feature puts complete spending insights at your customers’ fingertips, allowing them to track expenditures, review past payments, and download statements from a single, unified platform.
Online payments are the cornerstone that sets you apart in the digital banking arena. Your platform should deliver lightning-fast, bulletproof payment processing for both domestic and cross-border transactions, plus automated recurring payments that keep subscriptions and bills running smoothly. Integrating multi-factor authentication and advanced security measures isn’t just critical—it’s your competitive advantage that protects customer data and prevents fraud, especially when you’re operating in the highly regulated financial sector.
To truly delight customers and outshine traditional banks, you need personalized financial services that speak directly to your target audience. This means offering investment products, travel insurance, and premium membership options, all accessible through an intuitive, user-friendly interface that your customers will love. Risk management tools, including real-time alerts for suspicious activity, don’t just enhance security—they build the unshakeable trust that transforms customers into loyal advocates.
By focusing on these game-changing features—comprehensive banking services, a rock-solid core banking system, and a superior customer experience—your digital bank doesn’t just attract and retain customers. You create an ecosystem that sets the new gold standard in online banking technology, positioning you as the partner who helps customers manage their financial lives with confidence and ease.
Section 6: Leveraging Artificial Intelligence in Digital Banking
Artificial intelligence is revolutionizing the digital banking landscape, empowering forward-thinking digital banks to delight customers with smarter, lightning-fast, and rock-solid secure services. AI-powered chatbots and virtual assistants deliver exceptional 24/7 customer support that never sleeps, instantly resolving queries and guiding users through seamless banking journeys—no physical branches required, just pure digital excellence.
Machine learning algorithms unlock the power of vast customer data to deliver personalized financial products that truly fit each client’s unique needs—from tailored investment advice that hits the mark to spot-on loan recommendations and dynamic credit scoring that adapts in real time. This doesn’t just enhance the customer experience; it unleashes tremendous new capital potential that benefits both the bank and its valued clients, creating win-win opportunities at every turn.
AI becomes your ultimate ally in risk management and payment processing, detecting unusual patterns and stopping fraud dead in its tracks with real-time precision. These intelligent automated systems flag suspicious transactions instantly, helping digital banks stay miles ahead of threats while effortlessly meeting regulatory requirements. Plus, artificial intelligence streamlines back-office operations like never before, slashing costs and freeing up your talented teams to focus on breakthrough innovation and high-value services that truly matter.
By embracing AI and machine learning as core strategic advantages, digital banks can dramatically boost operational efficiency, deliver game-changing financial products, and maintain an unbeatable competitive edge in today’s fast-evolving fintech arena.
Section 5: Launching and Growing Your Digital Bank
Creating a Minimum Viable Product (MVP)
When launching your digital bank, it is important to start with a Minimum Viable Product (MVP). This is a version of your product that has just enough features to be usable by early customers, who can then provide feedback for future product development. By launching an MVP, you can get to market quickly and start learning from your customers right away.
Marketing and Customer Acquisition Strategies
Once you have launched your MVP, you need to focus on marketing and customer acquisition. There are a variety of marketing channels to consider, including:
•Digital Marketing: Search engine optimization (SEO), content marketing, social media marketing, and email marketing.
•Public Relations: Getting press coverage in relevant publications, especially those covering innovations like Agentic AI in Banking.
•Referral Marketing: Encouraging your existing customers to refer their friends and family.
The Role of a Powerful CRM like InvestGlass
A powerful CRM (Customer Relationship Management) system is essential for managing your customer relationships and driving growth. A CRM like InvestGlass can help you to:
•Centralize your customer data: Get a single, unified view of your customers across all touchpoints.
•Automate your sales and marketing processes: Save time and improve efficiency with automated workflows.
•Personalize your customer communications: Deliver targeted and relevant messages to your customers.
•Track your performance: Measure your key metrics and identify areas for improvement.
InvestGlass is a Swiss-based CRM that is specifically designed for the financial services industry. It is a powerful and flexible platform that can help you to build and grow your digital bank. With InvestGlass, you can manage your customer relationships, automate your sales and marketing processes, and deliver a personalized and seamless customer experience. InvestGlass is the perfect partner for any entrepreneur looking to start a digital bank.
Section 8: Managing a Digital Bank: Operations and Optimization
💰 Digital Banking Excellence Blueprint
Opening Hook
“Digital banks today must deliver flawless operations while staying ahead of the competition. Efficient operations and continuous optimization are your keys to long-term success and market leadership.”
1. Modern Technology & Rapid Deployment
- Leverage continuous integration and delivery practices for seamless updates
- Deploy new features rapidly without disrupting customer experience
- Modern tech stack that keeps you competitive and agile
- Zero downtime deployments that maintain service excellence
2. Security-First Operations
- Robust encryption and firewall protection as your foundation
- Regular security audits to safeguard sensitive customer data
- Multi-layered security measures that build customer trust
- Compliance-ready infrastructure that meets industry standards
3. Data-Driven Intelligence
- Data analytics and artificial intelligence that unlock customer insights
- Refine your business model with actionable intelligence
- Enhance marketing strategies through behavioral analysis
- Personalize services that delight and retain customers
4. Cost Optimization & Strategic Partnerships
- Automate routine tasks to slash operational costs
- Streamline workflows while maintaining high service standards
- Collaborate with financial institutions and fintech companies
- Expand your service range through strategic alliances
5. Operational Excellence Commitment
- Seamless, secure, and satisfying customer experience as your north star
- Drive sustainable growth through operational mastery
- Establish your brand as the leader in online banking
- Continuous optimization that keeps you ahead of the curve
Closing Line
“With this operational excellence blueprint, you don’t just run a digital bank—you deliver exceptional experiences, drive growth, and dominate the online banking landscape.”
Section 9: Trends in Digital Banking for 2025 and Beyond
Your digital banking institution stands at the threshold of unprecedented opportunity as 2025 approaches, driven by revolutionary technology advances and your clients’ evolving expectations. Artificial intelligence and machine learning will transform your competitive edge, delivering smarter, more personalized banking experiences that anticipate your customers’ needs—from predictive financial insights that surprise and delight to automated risk management that protects your institution’s future.
Blockchain technology is your gateway to payment processing superiority, enabling you to offer faster, more transparent transactions that build unshakeable client trust. Smart contracts will revolutionize how you serve your customers, while your commitment to mobile-first and user-centric design positions you as the leader clients choose. Your intuitive interfaces and seamless customer journeys across devices will set the gold standard that competitors scramble to match.
The surge of non-banking financial institutions and fintech companies creates your moment to shine brighter. This intensified competition pushes you to innovate boldly and diversify your financial products in ways that capture market share and client loyalty. Regulatory requirements, including open banking and enhanced data protection laws, demand your ongoing vigilance—but your proactive compliance approach becomes your competitive advantage, ensuring you maintain the trust that keeps clients coming back.
Your success strategy is clear: embrace cutting-edge technologies with confidence, focus relentlessly on exceptional customer experiences, and adapt swiftly to regulatory changes. By staying ahead of these trends, you don’t just secure your place at the forefront of financial services—you define what the future looks like for the entire industry.
Section 10: Digital Banks and the Future of Finance
Digital banks are the game-changers reshaping tomorrow’s financial landscape, harnessing cutting-edge technologies to deliver innovative, secure, and truly inclusive banking experiences that traditional institutions simply can’t match. As artificial intelligence, blockchain, and the Internet of Things become the backbone of modern banking, these forward-thinking institutions will revolutionize financial products with personalized solutions, lightning-fast payment processing, and advanced risk management that puts clients first.
The financial future belongs to institutions that embrace sustainability and social responsibility as core competitive advantages. Digital banks are uniquely positioned to seamlessly integrate environmental, social, and governance (ESG) principles into every aspect of their business model, championing green investments and delivering financial inclusion to underserved communities that deserve better than outdated banking systems.
Accessibility and inclusivity will separate the winners from the losers, with smart digital banks designing client-centric services that welcome diverse customers regardless of location or background—because great banking should be available to everyone, everywhere. Continuous innovation, powered by agile development and strategic fintech partnerships, enables these institutions to adapt faster than competitors and stay ahead of evolving market demands and regulatory challenges.
By embracing these transformative trends and maintaining an unwavering focus on exceptional customer experience, rock-solid security measures, and responsible banking practices, digital banks won’t just compete with traditional institutions—they’ll completely redefine what banking means in the digital age, creating a more equitable, efficient, and sustainable financial ecosystem that delivers real value for tomorrow’s clients.
Conclusion
Starting a digital bank is a challenging but rewarding journey. By following the steps outlined in this guide, you can increase your chances of success and build a digital bank that is well-positioned to thrive in the years to come. The future of banking is digital, and with the right strategy, team, and technology, you can be a part of it. Remember that a powerful CRM like InvestGlass can be a key enabler of your success, helping you to manage your customer relationships and drive growth.
Frequently Asked Questions (FAQs)
- How much does it cost to start a digital bank?
The cost of starting a digital bank can vary widely depending on a number of factors, such as the scope of your services, the complexity of your technology stack, and the regulatory requirements in your target market. However, you can expect to need at least a few million dollars in initial funding to get started.
- How long does it take to start a digital bank?
Again, this can vary depending on the complexity of your project. However, it typically takes at least 18-24 months to launch a digital bank, from initial concept to public launch.
- What are the biggest challenges of starting a digital bank?
The biggest challenges of starting a digital bank include navigating the complex regulatory landscape, building a robust and secure technology stack, and acquiring and retaining customers in a competitive market.
- What are the key success factors for a digital bank?
The key success factors for a digital bank include a clear and compelling value proposition, a seamless user experience, a strong brand identity, and a focus on customer service.
- How can I get funding for my digital bank?
There are a variety of funding options for digital banks, including venture capital, angel investors, and crowdfunding.
- What is the future of digital banking?
The future of digital banking is bright. We can expect to see continued growth in the adoption of digital banking services, as well as the emergence of new and innovative products and services.
- What is the role of AI in digital banking?
AI is playing an increasingly important role in digital banking, from powering chatbots and virtual assistants to detecting fraud and personalizing the customer experience. You can learn more about AI in banking in our article on AI in Digital Banking: How Is It Used?.
- What is open banking?
Open banking is the practice of sharing financial data securely between banks and third-party providers. It is a key enabler of innovation in the financial services industry, and it is helping to create a more competitive and customer-centric banking landscape.
- What is a neobank? For insights into the rise and impact of digital banks in Saudi Arabia, read our article on Die Zukunft der digitalen Banken in KSA: Chancen und Herausforderungen.
A neobank is a new, independent digital bank that is built from the ground up with a digital-first mindset. Neobanks are often more agile and innovative than traditional banks, and they are quickly gaining market share in many countries around the world.
- How can I learn more about starting a digital bank? For insight into how technologies like artificial intelligence are transforming banking, see the influence of AI on central banks, monetary policies, and decision-making processes.
There are a number of resources available to help you learn more about starting a digital bank, including books, articles, and online courses. You can also learn more by reading our other articles on digital banking, such as What Drives Success in Digital Banking? and The Best Digital Banks in Switzerland for 2023.
- How do digital banks handle cross border payments?
Digital banks often leverage blockchain technology and cryptocurrency integration to facilitate cross border payments. These technologies enable secure and efficient international transactions by reducing processing times, lowering costs, and enhancing transparency. Blockchain provides a decentralized ledger for tracking payments, while cryptocurrencies can be used to transfer value across borders quickly and securely.