How to Start a Neobank? [A Step-by-Step Guide on Neobank Development]

9367 Updated 08.15.2023
Vasyl Polych

Founder & CEO at Northell


Table of contents

Bank and Neobank how are they different? Why should you start a Neobank in 2022? What difficulties will you face in creating a Neobank?? What development stages should you go through to build a great product? You will find answers to these and many other questions today in our new article. 

What is a NeoBank in 2023?

How to start a Neobank? Before we figure out how to create a Neobank, let’s find out what it is. 

Neobanks are Fintech companies that provide standard commercial banking services entirely digitally. Unlike conventional banks, Neobanks do not have their usual bank branches and, importantly, are not licensed as banks. Neobanks began to develop recently but have already managed to win a large client base.

What are the Trends of Neobanks in 2023-25?

To create an excellent and high-quality Neobank, you need to be aware of the trends in this field. Let’s take a closer look at the Neobank trends for 2022-2025:

Artificial Intelligence and Adaptive Machine Learning

Companies will begin to expand the use of ML and AI technologies. ML and AI are real tools that should increase conversions (for example, in smart sales) or, by anticipating a clients’ question, give them an accurate answer to reduce the contact time with the bank in service communications. The emergence of automatic consultants will not take long.

Transparent financial services

Neobanks operate transparently and strive to provide real-time information on any payments a customer makes. Neobanks try to clearly inform clients about all services, financial determinations, and additional expenses at every stage of cooperation.

Improving knowledge in the field of financial technologies

As more and more people use digital banking, they are learning to navigate and explore new technologies for the digital transformation of the banking sector. Thus, they become more aware of the financial instruments available to them and gain more knowledge in the field of financial planning and investing. 

Thanks to digital banks, it will be easier for the average customer to get a greater depth of financial products and mechanisms.

Cybersecurity in financial institutions

Security today is an integral part of processing digital transactions through banks. Often, Neobanks are not accredited like conventional banks, but the way they structure their operations makes it possible to establish a high level of cybersecurity.

Neobanks use biometric verification, encryption technology, and various other security measures to protect customer data and their mobile phone. In addition, they provide high-security features such as lock and freeze at any time through the app.

Why are Neobanks so Popular?

If you are interested in How to Start a Neobank you should understand what their popularity is. According to the latest foreign studies, interest in Neobanks is increasing every year, not only among the young audience (18-40 years old) but also among the 65+ age group. Research companies worldwide are investigating why more and more clients are switching from traditional banking services to using the services of Neobanks.

An Amazon bestselling author and Founder of Neobank Moven, Brett King, once said, “At 2030, I would say that you probably have two billion people that will be using day-to-day banking services, independent of banks”. 

And this shift in focus is obvious. It’s all about their wider functionality and accessibility. They also use reliable ways to attract new customers. 

These are separate cards virtual, disposable, holographic, and others. And, of course, the expansion of opportunities: from cash withdrawals without interest, without commissions around the world to access to cryptocurrency.

If you want to know How to Start a Neobank, you should understand that Neobanks take care of the safety of their customers. They care about people’s savings, using various services to protect users’ information and personal data. Neobanks not only care about protecting users’ finances but also motivate clients for socially significant actions.

Many Neobanks also have functionality that allows donations to be made to charity each month. In addition, the system shows what friends support the same fund. Such opportunities create a favorable environment for forming a high level of social responsibility among users.

Neobanks also have the ability to test changes in applications on users. For example, banks poll users about what they would like to receive from the application. Whether they want, for example, to create deposits or receive dividends in the form of bonuses and discounts that can be used at their own discretion.

Neobanks will continue to earn popularity. The secret of this phenomenon lies in the sum of approaches to attract customers, hiding behind the expression “new sincerity.” The definition implies a humane scheme for providing services when unnecessary paid services are not imposed on the client.

What’s the Difference Between Neobank and Bank?

To understand what to do and How to Start a Neobank we need to consider their differences with traditional banks. The principal difference between Neobank and a traditional bank is that Neobank does not have physically existing offices where you can come to take a loan or open a current account. Everything can be done through an application on your phone or website.

However, there are other significant differences between organizations:

  • Neobanks do not provide many services, but they promise to develop and expand the range of services.
  • The regulator for ordinary banks is the Central Bank, but for Neobanks there are two regulators the Ministry of Finance and the Central Bank.
  • Regular lending institutions can only work with full bank accreditation, while Neobank can have both payment and financial accreditation, depending on the services provided.

It is interesting that today Neobank and classical bank concepts are combined. The latter go online, become active in the digital space, and Neobanks, without offices, install ATMs or small representative offices based on partner organizations, so the differences are becoming smaller.

Who is the Target Audience of Neobank?

Target Neobank customers are men (58%) and women (42%) aged 25-44. Most of these people live in the European Union and/or the United Kingdom. The European Union and the United Kingdom generate 94% app downloads of all.

Neobanks are gradually expanding their audience, focusing on individuals in the European region and offering their services to businesses, including those on other continents. Particularly in the USA. This country ranks first in the number of downloads in the non-European region.

Why is Neobank the Best Option for Users in 2023?

The advantage of Neobanks is to minimize costs, which increases the speed of service, low tariffs are applied, a personal approach to clients is used. Advantages of using Neobanks for users include:

  • the clients can use Neobank services in any place convenient for them (at home, in the office, in a traffic jam, etc.);
  • the clients can use Neobank services from any digital medium (tablet, phone, laptop, PC);
  • the clients don’t need to wait in line in matters of work;
  • quick and easy control over the state of the account online; 
  • obtaining advice from bank specialists at any convenient time, wherever customers are;
  • confidentiality;
  • availability.

Neobanks provide almost the same services as ordinary banks: 

  • accounts and operations on them; 
  • loans; 
  • wealth management;
  • investments; 
  • deposits, etc. 

In addition, the majority also use modern formats: financial advisory robots, crowdfunding platforms, and cryptocurrencies. 

The scope of Neobanking services and activities in individual countries depends on the level of their economic and technological advancement, the legislation in force, and the degree of maturity of the banking system.

Why You Should Start NeoBank in 2023?

If you are still wondering if you should start a Neobank, then read on. Let’s take a look at some of the primary reasons why you might consider establishing a Neobank.

You are more competitive than banks

With such a wide range of features available from Neobanks, traditional banks find it tough to compete. Also, now there are not such numerous Neobanks that there is a lot of competition. Consequently, it will be easier for you to reach the top Neobanks.

More benefits for the customer

Neobanks provide customers with much more benefits than traditional banks. We have previously described the benefits of using Neobanks by clients. This type of bank is more convenient, easy to use, and quick to work with. They save the client time and allow them to use as many services as possible.

Still “Blue Ocean”

According to the book by Chan Kim and Rene Mauborgne, the market universe consists of two oceans: scarlet and blue. The scarlet oceans symbolize all the industries that exist at the moment. This is the part of the market we know. Blue oceans represent all industries that do not yet exist today. These are unknown areas of the market.

The Neobank market is still a blue ocean. Despite the risks and difficulties, try because you have great chances in the field of Neobanking. You definitely have the chance to become a market leader, reach a large capitalization and get great opportunities to grow or sell a business.

Investment attractive projects

Neobanks are very investment attractive projects, as this part of the market is only gaining momentum. Today, investors are looking for something new, unusual, something they haven’t seen yet. Therefore, if you prepare your MVP well, be sure that investors will definitely be interested in you and your product. To learn how to create a minimum viable product, read our article

How to Start a Neobank: Top Development Problems & Mistakes

In the development of any product, difficulties arise and mistakes are made. To avoid this, and know How to Start a Neobank in right way, let’s look at the most common ones:

Lack of focus on the audience

Earlier, we determined that the main audience of Neobanks is people from 18 to 40. Therefore, it is essential to focus on the people for whom you are creating a Neobank.

If you spread yourself across very different age groups or a group of people in a certain area of ​​employment, you will not be able to create a product that will be in demand. So don’t forget who your potential customers are and their needs.

Here, for example, how it looked at the product discovery stage while we were working on the AWSM bank project:

Lack of ideas behind

Behind every successful product is a good idea. Without an idea, you are unlikely to be able to create something really worthwhile. Therefore, think well about what you want to create, how it should look, what is the goal of your future product, etc.

And it will be great if you write it all down. It will be the beginning of your plan for the design and development of Neobank. For example, your idea is that you want to solve the problem of financial transactions and create cool banking for freelancers or traders.

Poor analysis of the market and competitors

In order to create a Neobank that will be filled with the functionality necessary for users and will be in demand, it is necessary to conduct a detailed analysis of the market and competitors. It will help you discover what is already on the market, what users are missing, what they want to see in modern Neobank, etc. 

Without analyzing the market and competitors, it will be difficult for you to determine the main functionality of your future product, its design, technical characteristics, etc.

Bad user experience

Bad user experience is the most common mistake made when developing Neobanks. UX is much more important than many people think. Without good UX, users will not use your product. We will talk about this in more detail later.

Start without MVP

Many companies often start to create a product with all the functionality. However, this doesn’t seem right. First, you need to create an MVP and use it to test your product idea. By creating a trial version of the product, you can test it on users faster and understand what you need to change or what needs to be added.

Lack of experience in the team

If you cooperate with a team that has no experience creating products for the Fintech sector, you are unlikely to succeed. When choosing a team for your project, pay attention to the portfolio, experience in the Fintech sector, previous projects, feedback from clients, etc.

If, at this stage, you are looking for a reliable partner in the creation of Neobank, contact us. In addition, you can read about our expertise in product development for the Fintech market here.

Top Neobank Development Challenges

Let’s also look at the challenges you will face during the design and development of Neobank. We will describe the things that you should keep in mind when creating a Neobank:


Since your product will be connected to the finances and personal data of a large number of people, you should keep security in mind. Your product should be provided with a sound security system that will not allow user data to leak.


KYC stands for Know Your Customer. This process obliges all financial institutions, including Neobanks, to identify and verify the identity of each client. Moreover, this should be done before users can conduct financial transactions. It protects companies from the risk of dealing with fraudsters and terrorists and ensures the safety of clients’ assets.

Two-factor authentication

To further ensure the security of your customers, you should add two-factor authentication to your Neobank. It will prevent users from logging into their bank accounts by unauthorized persons.

Fast Payment

Send money to Alexis

Northell Case in Neobank Development

Since Neobanks are often used by people from their mobile phones, they should be fast. Therefore, it is essential that you provide your Neobank with fast processing of payments and other transactions.


This is probably one of the most important things you should pay maximum attention to. Study the law in your country so that your Neobank functions without violating any rules and regulations.

Good integration

Don’t forget to think about integrations. For example, it can be payment parts, utility bills, swift code, etc.

Must-Have Neobank Features in 2023

How to start a Neobank that will meet all the expectations and requirements of users? To make it easier for you to understand what are the best features to add to your Neobank, we have compiled a list of must-have Neobank features in 2022:


For your users to understand how to use your Neobank and not get confused about it, you need to build onboarding. Onboarding will help users understand, for example, where what functionality is located, which button they need to click on to make a transaction, etc.


New family member

Northell Case in Neobank Development

Without authorization, users will not be able to enter the bank and use its functionality. Authorization should be as simple and clear as possible. Users should take a few seconds to register or log in to their accounts.

Personal account management

Users should be able to manage their accounts, change data, customize it for ease of use, and more. You should add different variations of the account setup.

Customer support

If users of your Neobank have a question about the bank’s operation or encounter any problem, they should be able to contact the support service. Do not forget that the support service should be fast and work 27/7.

Many banks now use messengers, and this is very convenient. Young people do not want to talk on the phone. They are used to solving problems where they are, and usually, this place is messengers.

Transaction history


Northell Case in Neobank Development

For your Neobank users to control their spending, add a transaction history. With this feature, people will be able to view their expenses and check the success of transactions.

Internet limits


Northell Case in Neobank Development

Add the ability for users to set Internet limits. Internet limit is a limit for payment on the Internet. Thus, users will be able to control their spending on the Internet.

Payment templates

To speed up users’ work with your Neobank, you can add payment templates. Such templates will help clients pay recurring payments in a few seconds without having to fill out the same forms every time.

Contact database synchronization

This feature will allow users to upload their contacts information to the app. In this way, customers will be able to make payments to each other faster without entering a friend’s card again and again.

Credit lines

Allow users to take a loan through your Neobank. You can also link it to the user’s rating. The higher, for example, the rating of users, the larger the loan they can take.

Notification and reminder system

For your Neobank users to know what is happening in their account, what payments are received, or, for example, whether there are any updates to the application, add a notification and reminder system.

Advanced Neobank Features in 2023

If you want your Neobank to be more advanced and different from others, add advanced features to it. We have prepared a list of such features:


Cashback will allow users to receive a certain percentage of the money they spend. Most often, different categories of goods have a different percentage of cashback.

Dynamic CVV2

Dynamic CVV will provide good protection for users in case their phone is lost, for example. Dynamic CVV is a CVV that changes periodically.

Cost tracking

This feature will help users get statistics about their spending. Most often, Neobank users can see their expenses by categories (e.g., food, home, study, etc.)

Referral system

Bank users can invite their friends, colleagues, family members, etc., to use the bank using the referral system. Most often, Neobanks give some kind of bonus for this.

Work-based on the referral program has become one of the main growth elements, the best in the history of neobanking in Ukraine – Monobank.

Accumulation system

This feature will allow bank customers to save a certain amount of money. For example, they can set up the system so that a certain amount of money is automatically set aside on the same day of each month.

Stocks and cryptocurrencies

Stocks and cryptocurrencies have become very popular lately. Therefore, it will be fantastic if you add the ability to buy shares and cryptocurrency directly in the Neobank application.

A Step-by-Step Guide on How to Start a Neobank [Development Process]


how to start a Neobank

How to start a Neobank? Now let’s look at each of the stages of product development in detail. Based on our experience, we have prepared a step-by-step guide that will help you understand the main steps of creating a Neobank.

Point 1: Marketing Research and Product Discovery

You will need to conduct marketing research and product discovery to get started. At this stage, you should study the market and the existing Neobanks on the market. We recommend that you consider in detail the strengths and weaknesses of already functioning Neobanks to make your product better.

Product discovery will help you understand whether it is worth creating a new product at all and whether people will use it. Here are the main steps of product discovery:

  • Improve your ability to empathize with customers by familiarizing their underlying demands and emotions.
  • Crowdsource your team’s various points of view to get a comprehensive picture of your customer.
  • Pay attention to what your client says. Consider the customer’s issue source instead of rushing to a solution.
  • To gain clarity, try visual mapping.
  • Gather customer feedback from multiple means of communication (e.g., social media, email, customer service, user research, customer advisory board, etc.).
  • Maintain objectivity. Are proposed remedies congruent with the problems, or are you prejudiced? Keep in mind that not every concept will be adopted.
  • Validate your assumptions.

Point 2: UX Design: Prototype and Product Logic

Then you can start creating a UX design. You have a reduced probability of generating a solid UX product if you don’t have a sound UX design process. A well-defined and well-executed UX process, on the other hand, allows for the creation of amazing user experiences.

If we apply design thinking to product design, we’ll go through a UX process that includes the five steps below:

1.  Product definition

  • Stakeholder interviews
  • Value proposition mapping
  • Concept sketching

2.  Research

  • Individual in-depth interviews 
  • Competitive research

3. Analysis

  • Creating user personas
  • Creating user stories
  • Storyboarding

4.  Design

  • Sketching
  • Creating wireframes
  • Creating prototypes
  • Creating a design specification
  • Creating design systems

5.  Validation

  • Testing sessions
  • Surveys
  • Analytics

Here’s what the wireframes we developed for our AWMSBank partner looked like:

Banking Main

Northell Case Study: AWSM Bank

Point 3: Testing

After the UX design is ready, you will need to test it. At this stage, you should understand whether you have built the product logic correctly, whether it is clear to users where everything is located in the product, whether everything suits them, etc. After receiving the test results, you will know whether you need to change something in the UX design or not. 

At Northell, we use our in-house UX Laboratory that helps analyze how people interact with the interface and uncover products’ usability gaps. We use UX Eye Tracker, which allows exploring user behavior during interaction with the product. Only 1% of companies use this method. To know more about our UX Lab, read here.

Point 4: UI Design: Design System and Elements

How to start a Neobank that will be visually appealing? Build a great UI design. User interface (UI) design is all about building interfaces with an emphasis on aesthetics and interaction. The objective of the UI designer is to build an interface that is both easy to use and pleasant to the eye.

The aesthetic decisions a designer takes while creating a product, such as an image, button, menu bar, or footer, are referred to as UI design. All of these factors will have an impact on the user’s engagement. Thus, they should be considered carefully.

Point 5: Start NeoBank Development Life Cycle

Slide 7

Now you need to translate the design into a working product. We divided the entire development life cycle process into several steps. Let’s take a closer look at each of them.

Product Technical Documentation

During this stage, all the relevant information from the client is collected to develop a product as per expectations and requirements. The team should write technical documentation and choose technical stacks.

At this stage, the team should also define the requirements for functionality (requirements for the admin panel) and user roles (admin and super admin). The team should complete the estimate and scope of work.


Mobile app developers use the documentation and architecture from previous steps to writing code for all the application components.  


QA engineers test all delivered code and carry out manual testing for developed components.

Deployment & Integration

After the development and regression testing from the QA team, the team switched to production deployment and integration. The tested version of the product is delivered to the users for beta testing. The team collects user feedback, fixes all the bugs, and implements some improvements.  


After deploying a product in the production environment, maintenance of the product, i.e., if any issue comes up and needs to be fixed, or any improvements are to be done, it is taken care of by the development team.

Point 6: Launch

Now is the time for the market to see your product! The product launch process causes meticulous preparation and should be carried out systematically to guarantee that clients accept the product favorably.

The following are the major steps to start a Neobank:

  • target audience identifying;
  • unique product packaging creation;
  • slogan and timeline creation;
  • competitors analysis; 
  • customer onboarding creation;
  • website creation;
  • advertising.

Point 7: Analyze user feedback

Next, collect user feedback about your Neobank. Take a survey to get answers to the following questions:

  • Is it convenient to use Neobank?
  • Do users encounter any problems while using the product?
  • To what extent does Neobank cover the needs of users?
  • What would users like to improve in the product?
  • How does the product meet user expectations?

By getting answers to these questions, you will know what you need to change, remove or add to the product.

Point 8: Improve and develop

The creation of the product does not end there. After analyzing the opinion of users about your product, you should continue to improve and develop it. The main thing to remember progress is the key to success!

Our Experience in NeoBank Development

The Northell team has a wide experience in creating Neobanks. We know how quickly Neobanks are gaining popularity, so we follow the latest trends in this area and use the best practices in product design and development. 

One of our partners, AWSM bank, USA Neobank for children, needed a Neobank application that both parents and children could use.


Northell Case Study: AWSM bank

The essence of this Neobank is that parents can control the expenses of their children, replenish their cards and monitor the financial development of their children.

The big focus in this application is on children’s financial literacy. Using the application, children can learn how to open deposits, for example, or take loans.

For AWSM bank, we have done full-cycle product development step by step. Our team has gone through all stages, from discovery to launch. Read More

Neobank Development: Best Technology Stack in 2023

What tech stacks are best for Neobank development? Let’s look at this issue in detail.

For IOS Development

  • Kotlin
  • Swift
  • React Native

For Android Development

  • Java
  • Kotlin
  • React Native

Cross-Platform Development

  • Flutter 
  • React Native 
  • Xamarin

How Much Does Neobank Development Cost?

The cost of building a Neobank may be estimated based on the scope of work, the development approach, the technology stack, and the team size chosen.

The following are the average hourly rate for employing different specialists in various parts of the world:

Rough project costs

Rough project costs

The quality of services differs according to location as well. While US-based startups and organizations hire elite talent, demand remains far greater than supply. 

As a result, daring businesses prefer to seek Neobank development services from abroad. The majority of them discover that outsourcing to Eastern Europe provides the finest price/quality ratio.

We have also prepared prices for the most suitable tech stacks for creating a Neobank:

  • Kotlin – $45-85+
  • Swift –  $50-90+

How to Start a Neobank: Summary

Corporations develop ecosystems, and this is the greatest area for Neobanks to fit. Neobanking is a much more promising field now. One of the most hotly debated topics in the FinTech sector today is how to start a Neobank and integrate it into a larger ecosystem.

Summing up all of the above, we can highlight the main points that you should pay attention to during the development of Neobank:

  • Conduct market and competitor research;
  • Focus on user experience;
  • Know the risks and challenges ahead of time;
  • Don’t neglect to describe your idea;
  • Choose your project team carefully;
  • Stick to the plan.

We hope our article will help you take the first step in creating a Neobank. And if you have any more questions, don’t hesitate to contact us. The Northell team will be happy to help you!

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