In 2022, the financial services niche is no longer available to a limited chosen few. The entry threshold has significantly lowered within the last couple of years, and if you think of starting a neobank, it’s high time to start developing your banking app. NerdySoft can be the partner of choice to help you build your innovative neobank.
Neobanks are fintech digital-only banks that are a growing challenge to traditional banks.
A digital-only bank is a bank that has no brick-and-mortar presence with no branches. Neobank customers access their accounts and services from a computer or smartphone from anywhere in the world. Neobanks typically offer their customers higher interest rates and lower fees. For many customers, using chatbots and support systems to ask for any time anywhere assistance is a price they gladly pay to get better application services at a lower cost.
Account setup with a traditional bank is a lengthy face-to-face-only event where you carry copies of a wide variety of documents and statements materials with you. Imagine that your target market is dentists. Suppose you focused on starting in a specific US state. In that case, you could interface with the state dental association and corporate registry to confirm that the provided driver’s license belongs to the person linked to the PCorp registered with the dentist. There are numerous ways to simplify the validation process to make opening an account faster and simpler for different types of customers.
Now that they have an account with you, how can your neobank make things simpler for your customers? If your customers are self-employed freelancers working with a smaller pool of repeating clients, how could you make their financial management world easier? Including customer setup and activity management in your service can add significant value. Recording service activities for an existing customer, generating invoices at the appropriate milestones, presenting the invoices, and receiving payments from your platform streamlines customers’ operations. Saving time and adding value for the entrepreneur will lead to customer satisfaction and positive referrals.
How can you target under-serviced portions of the consumer banking market? Would those who don’t understand banking, personal finance, and financial services benefit from a platform that allows them to improve their credit rating, decrease their financing costs, consolidate loans, and better manage their budgets? Combining self-service research and education can improve your customers’ financial health while letting you cross-sell your products. Understanding your customers and targeting their needs provides self-service education materials and creates a win-win for both parties.
Your loan software cannot be an island. It needs to interact with other organizations and service providers. Start the design process by answering the following questions:
There is no reason to dwell too much on this one, as this is a complete hoax. There is actually no explanation to how this superstition emerged on the surface, while facts remain facts. The average hourly rate per one developer in the United States is $150; in Europe, it amounts to €150. Meanwhile, if we’re talking about Asia, Africa, and Eastern Europe (where many countries are still not part of the European Union), the damage will be approximately $75. It seems like the difference is even more than tangible, given that the quality of services might be even better.
When you’ll hear about irresponsible vendors from outside Europe, may you ask yourself a question of how territorial affiliation can be the cause of irresponsibility? While you’re in the IT business, it is quite probable that logical reasoning is one of your core virtues. There are both responsible and irresponsible vendors within Europe and outside its boundaries. Hence, when it comes to choosing a software outsourcing company, think of their tech expertise, portfolio, and clients reviews, as this is where the grain of truth lies.
From a customer’s point of view, there are many pros and cons of neobanks vs. traditional banks.
From a customer’s point of view, there are many pros and cons of neobanks vs. traditional banks.
In addition to bank accounts, traditional banks offer a wide range of services, including loans, investments, and insurance.
Deposit insurance is crucial to the peace of mind of many customers, and they will not bank with non-insured institutions.
Deposit insurance
For risk-averse people, dealing with a trusted brand can be a showstopper when they pick their bank.
If you build it, will the users come? Many consumers have become accustomed to getting little to no interest payments for their traditional banks’ chequing and savings accounts. Will people switch if you can build a low-cost fintech startup neobank that offers higher interest rates for savings accounts?
Setting up and operating a neobank presents challenges.
To run a neobank, you need an appropriate license in each of your operating jurisdictions. When starting up a neobank, you need to decide what range of services you want to provide and the path you want to get to those services. Do you want to start small and grow or start with a big bang? You can start with a financial institution license and increase your service base from there. If you operate outside of the United States, you may be able to start with a virtual banking license. You can get straight to getting your banking license. If that is too big of a reach, you could affiliate with an existing licensed bank or become a subsidiary to one.
Deposit insurance is essential to some clients. The Federal Deposit Insurance Corporation (FDIC) provides deposit insurance in the US. You can start without deposit insurance and work around client risk aversion. Other options are indirectly FDIC insured through affiliation with an insured bank or directly insured by becoming a subsidiary of an insured bank.
Deposit insurance is essential to some clients. The Federal Deposit Insurance Corporation (FDIC) provides deposit insurance in the US. You can start without deposit insurance and work around client risk aversion. Other options are indirectly FDIC insured through affiliation with an insured bank or directly insured by becoming a subsidiary of an insured bank.