The world is changing and so are the ways in which we build digital banks. The newest trend in banking services, neo banking, has been growing exponentially over the last few years. This article will walk you through some of the secrets to setting up a neo bank from scratch. We’ll cover everything from what type of software you need, to how you should price your services.
New start up will benefit from banking as a service plug and play approach.
1. What is a neobank versus a traditional banks?
Neo banks usually do not have a banking license, but you can partner with banks to offer services: personal loans, trading, mortgage, tax advsiory. Neo banks offer a better user experience. User experience is key to facilitate account opening. A financial institution can help you get a banking license umbrella in the country your company starts. These banks usually have a lot more features than neobanks: they provide saving accounts, checking account services, and loans. You might know – WeBank by Tencent, Yolt, and Moven are examples of neo banks.
2. Why setting up your own bank might be beneficial to you – do you need a banking license?
You don’t need a full baking license to start your neo bank. You can create your digital bank without your own banking license. Most challenger banks started with simple core banking systems and an umbrella license. An umbrella license is a license you are sharing with a traditional bank.
A banking license can be extremely expensive and long to obtain. Finding the right banking partner, or financial institution can be an easy way to start your business.
For card issuing, you’ll find in most countries local vendors that will produce prepaid cards and even offer a technology infrastructure and reporting tools.
3. Setting up a neobank from scratch which product do you need with traditional bank infra?
The objective is to be a one stop shop. Building digital will start with digital tools such as a CRM and the client onboarding digital form and good digital marketing tool to efficiently manage distribution channels. You must have a powerful CRM because this is key to collect future client data.
The rest is composable architecture. It is key that your neo bank service offers a lightning-speed digital account opening process. You should also look into payments processing solutions and KYC remediation. InvestGlass team is glad to share with you our knowledge.
4. Things to consider before opening a digital bank (security, fees, interest rates)
If you don’t have sufficient funding to start a modern banking solution we suggest you look into growth hacking. Growth hacking is about finding Viral’s methods to increase client attraction. Very few banks are using growth hacking techniques as most of them prefer spending on Google ad words.
You can be fully digital but physical branches could also be a nice way to welcome your clients outside the digital world. As you will start a financial institution it is important to set yourself apart from traditional banks and legacy systems. You can compete on security with a better cloud computing solution. All neobanks have a mobile phone solution so it’s not there where you will make a difference. Focus on customers journey from their current account to trading account. Focus on consumer experience is new financial institutions will stand out from existing banks.
5. Steps for opening an account with the neobank of your choice and getting started
Well, the first step is to contact us and we will share with you our best tips for building a digital bank and create innovative products. It is incredibly easy for a starter to kick off without a banking license. With pre-integrated key features of Investglass and he will find all caught banking systems, you are expecting to offer modern financial services.
As we studied several business models, we can guide you to find among traditional banking status quo which regulatory environment will be optimal for your own start-up! Niche market and underserved market segments will be key to grow your company at a faster pace.
How much money do you need?
Digital banking is very accessible as you don’t need to create your own core banking platform to start, you don’t need a full banking license.
Are you ready? Let’s start today!