Gartner predicts that 30% of high-revenue banks will launch BaaS (Banking As a Service) products like neobanks by 2024 to generate new revenue. Given the fact that over 80% of traditional banking services will become obsolete in the next decade, the banking industry must undergo a digital transformation. Read below to learn more about how to create an app like neobank.
The latest Neobanks’ funding has boosted our confidence in their success. For instance, UK Neobank Zopa raised $93M in its latest round and is now worth $1B+.
According to Grand View Research, the global neobanking market was $66.82 billion in 2022 and is expected to grow 54.8% from 2023 to 2030. Thus, now is the time to enter the neo-banking sector and help your customers make better financial decisions online to grow your business.
Cost of Developing An App Like Neobank
The price range for developing a neobank app is between $40,000 and $250,000. The hourly rate of development features to be included in the app, technologies to be used, app UI/UX design, underlying app platform, and other factors all have an impact on the total cost of development.
Hiring a specialized Neobank solutions development company can help you put things into perspective, even though several factors can affect your app development budget.
Now, allow us to attempt to provide you with a precise app development cost estimate based on the selected company using our simple formula.
The net amount of time needed to finish the app’s development process—which includes creating the wireframe, the UI/UX design, writing the code, quality assurance, deployment, etc.—is indicated by the formula’s total development hours. However, the hourly rate of development may differ depending on where the Neobank development company that was hired is located.
Factors Affecting The Neobank App Development
It is essential to comprehend that the features and technologies that are going to be implemented will have a direct effect on how much it costs to construct a neobank. Additionally, you can achieve maximum return on investment and increased market traction by working with a specialized app development team that has similar experience providing neobank development services.
App complexity
A FinTech mobile’s development budget is largely determined by how complex it is. For instance, developing a Neobank app with a long feature list and a lot of complexity will cost more than developing a Neobank app with few features.
UI/UX Design
Developing a strong neobank app design requires you to implement a clear UI/UX strategy that can guarantee your company’s success. Your mobile app will lead the way in technology and be successful if its sales design addresses user engagement and retention. To do this, the app wireframes must be validated against various testing methodologies, each of which has the potential to affect the Neobank development cost differently.
The following variables have an impact on the Neobank app’s UI/UX design cost:
- Visual elements
- Typography
- Color psychology
- Content writing
- Button placements
- Branding
- UI optimization
- Portrait or landscape mode
The Neobank development pricing is also influenced by the underlying app platform. For example, the cost of developing apps for iOS and Android differs. Any requirements depend on several variables, including the deadline, testing, etc. It is advised to begin with a single platform to maximize your app development budget. You have the option to move to a cross-platform app once the app becomes popular.
Team Size
An important consideration when estimating the total cost of developing a Neobank app is the size of the app development team. Although hiring independent contractors can save costs, the quality might suffer because of their inexperience. An alternative is to contract with a specialized app development company, which can maximize savings and benefit from years of experience.
Maintenance
One important component that significantly influences the total cost of establishing a neobank is the upkeep of mobile apps. The costs associated with maintenance comprise those necessary to guarantee that the application is free of bugs as well as those associated with providing updates for the app or introducing new features in response to market demands. To guarantee that apps run smoothly across all platforms, offering a flawless user experience and guaranteeing the
app’s longevity, important steps must be taken.
Tech Stack
For your Neobank app development to be successful overall, you need a strong tech stack. To help the app take off in the marketplace, the neobank app developers that were hired must incorporate cutting-edge technologies. The price of integrating various technologies varies, though.
Features
When estimating the cost to develop a neobank, the feature list is essential. A very feature-rich, sophisticated app should ideally cost more. A clear feature set that differentiates the app from rivals is essential for market success. The app’s feature set ought to be able to improve both the user experience and its functionality.
User-Centric Noebank App Features
Neobanks are digital financial institutions that operate entirely online and are becoming more and more well-liked as a result of their useful and intuitive features. These are a few features of a neobank app that are focused on the user:
Biometric Protection
One of Neo Banks’ biggest advantages is its advanced security measures. These banks employ biometric authentication, such as voice recognition, fingerprint scanning, or facial recognition, to guarantee that only the account owner has access to their account. This provides a higher level of security than traditional PINs, which are vulnerable to phishing and hacking attempts.
Multiple Payment Options
Customers of Neo Bank have access to several payment methods, such as A2A, ACH, and P2P payments. It is simpler for consumers to send and receive money instantly when they are given the option to select the payment method that best suits their needs. Neo banks are a good option for customers who value speed and efficiency because they process transactions faster than traditional banks.
Multiple Tiers
Neo Bank customers are afforded the option to select from a variety of service tiers, each offering unique features and advantages. These levels can be categorized by transaction volume, usage caps, or subscription-based business models. Neo banks are a desirable alternative because they offer a greater range of service tiers that cater to the needs and preferences of their customers.
Speed and Convenience
Neo banks are well known for providing excellent user experiences. Customers can manage their accounts online or on a mobile device with a simple and quick account opening process. These financial institutions offer budgeting tools, real-time transaction alerts, and phone and chat support for customers who require help with their banking.
Cross-Border Payments
Cross-border transactions offer a win-win situation for companies and their clients. Companies can create more revenue by pooling their incomes, giving them a competitive edge over rivals and more financial power. Customers also gain from this improved financial capability since it makes it easier for them to conduct cross-border transactions.
Budgetary Support
Budget assistance is one of the most requested features of the Neobank app. Applications for neobanking that put the needs of their users first provide a wide range of financial services and encourage financial literacy. The main goal is to give users more value by assisting them in successfully and economically managing their daily budgets.
Mudra, an AI-powered budget management app that functions as a chatbot-centric budget management solution, was recently developed by Appinventiv. The app can monitor a user’s daily spending and alert them when their spending exceeds their budget.
Real-Time Fraud Detection
A fraud detection feature that can alert users to malware or phishing attempts must be included in every Neobank app. The app should also be able to distinguish between legitimate users and fraudulent activity.
E-wallets
E-wallets and fintech applications are intrinsically related, as the former offers a smooth payment experience to its users. Including e-wallet features in a Neobank app is a very beneficial choice in terms of security. Neo banking and e-wallet app development together can lead to major business advantages as well as higher user engagement and retention rates. Future trends also indicate that one of the most desired features of a neobank app would be cryptocurrency wallets.
Create An App Like Neobank
Identify your target market
Understanding your target market and what they require and desire from a Neobank is essential. You can make an app that meets the needs and preferences of your target market by having a thorough understanding of them.
Determine Current User Needs
Finding market gaps and figuring out what your target customer wants from a Neobank is the next step. You can add features and functionalities at this stage to enhance user experience and build credibility.
Hire Fintech Experts
Hiring fintech mobile app developers with experience in banking and financial apps—including neo-banking—is essential to creating a successful Neobank app. They will work with you to develop a mobile application that satisfies your business needs and offers a top-notch user experience.
Develop Your Neobank Fintech Mobile App
Your developers will design and create the frontend, backend, and UI/UX of your Neobank app during this stage of the development process. The essential features—user verification, fast signup, investment, transaction history, etc.—will be put into place.
Establish Core and Backend Infrastructure
For a Neobank to conduct all of its operations, a strong backend infrastructure is required. To integrate payment gateways with your Neobank app. A card processing app for debit and credit card transactions, and back-office tools for day-to-day management, you must set up APIs.
Compliance and Security
Ensuring the confidentiality and security of customer data is imperative for any provider of banking services. Because of this, you need to set up a strong security system to protect your Neobank app. Its usage from outside threats. It is crucial to realize that the cost of developing a Neobank app can vary depending on the security protocols that are used in the application.
Test Your Neobank App
You must thoroughly test your Neobank app before releasing it. You can find and address any bugs in your app and make sure it is safe and secure by testing it using real-world use cases.
Promoting your Neobank app and onboarding users is the last step. Expanding your customer base and attracting more users can be achieved with a well-thought-out promotion strategy. Make sure the user onboarding procedure is simple and easy. So that users can begin utilizing your Neobank app right away.
How to Monetize Your Neobank App?
Neo banks’ i
nnovative revenue streams and cutting-edge business plans have completely revolutionized the traditional banking industry. Below is a list of the five primary business ideas that nonbanks rely on to generate revenue.
Interchange-led model
Merchants have to pay interchange fees every time a customer uses their card to purchase for this model to function. Neobanks can also profit from referral commissions, cashback incentives, and affiliate marketing. (Take Chime, for example).
Credit-led model
This approach entails neobanks offering a credit card or similar product before opening a bank account. They get fees and interest on the credit they extend to their clients. For instance, Nubank.
Ecosystem-led model
Although it may not be the main source of profit in this model. The checking account opens up a variety of monetization options. Value-added services like investment options, savings targets, and budgeting tools are ways for neobanks to make money. As an extra source of income, some neobanks also provide monthly subscription services. such as Monzo).
Asset-led model
This model is centered on providing clients with high-yield savings accounts and making interest on deposits. Certain neobanks prioritize the management of moral and ethical expenditures and allocate client deposits to environmentally or socially conscious initiatives. For instance, Aspiration.
Model of product extensions
Under this model, neobanks provide a wider range of financial products, including loans, investment accounts, insurance, and more by utilizing their customer base and technological platform. This model encourages innovation in the sector and blurs the boundaries between financial domains. For instance, Robinhood.
Conclusion
One of the most noticeable developments in the FinTech industry over the past few years has been the rise of neobanks. Because they place a higher priority on digitalization, customer experience, and convenience than traditional banks, these digital banking apps are seen as an alternative. The creation of a Neobank is a complicated process that needs to be handled with extreme caution.
As previously mentioned, the price of developing a Neobank app can range from $40,000 to $250,000, depending on several variables including features, tech stack, hourly development rates, etc. Therefore, the secret to your company’s success is to work with a specialized financial software development company like Appic Softwares, which can assist you in leveraging current trends and market requirements at a cost that is optimized.
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