How to Build a Neobank That Stands Out

Table of content

Table of content


The boom in fintech funding saw huge amounts of money flowing into so-called neobanks, digital financial companies offering banking services in the most innovative ways.

Many traditional banks are brick-and-mortar, and the services they offer cost more and engage customers less. This is where the need for neobanks arises. If you're among those who think, "Why not build a new bank that uses top-notch technologies to offer digital-only banking services?" – this piece of read is just for you.

We at Uptech have helped to develop five neobanks, among which are Aspiration. We know first-hand how to start a neobank, what features to add to stand out from the crowd, and how to help you build a neobank that engages users. There's a lot to cover, so let's start!

Neobank: What? How does it work? + Examples

We started with "why it's beneficial to start a neobank," which is critical for every fintech entrepreneur, but it's hard to develop anything without the "what" part. So let's figure out what neobank is, how it works, and name some good examples.

How to start a neobank

What is a neobank?

Neobanks differ from the classic ones, first of all, by their top-notch IT infrastructure. Neobanks offer almost all banking services online via desktop or mobile app. There are two types of neobanks based on how they operate:

  • a full-stack neobank;
  • a front-end-focused neobank.

A full-stack neobank is a standalone bank with a banking license that operates completely independently.

A front-end-focused neobank doesn't have its own banking license and must connect to BaaS and Bank Partner that supports a neobank in terms of license, audit and etc.

How does a neobank work? + Examples

To keep it more practical and less theoretical, let's see how digital-only banks work based on the best neobanks in the US:

  • Chime (13.1 million account holders)
  • Current (4.0 million account holders)
  • Aspiration (3.0 million account holders)


Chime is a digital-only fintech company that partners with banks to offer checking and savings accounts. What makes their 13 million customers love them, though, is the absence of banking fees. Chime has no monthly or overdraft fees, and it lets users round up purchases to the next dollar. But depositing cash can be expensive.


Current is a neobank that isn't set up like a traditional bank with different account categories like checking and savings. Instead, Current offers hybrid accounts that combine checking and savings components. Current offers cash-back rewards program, plus an interest rate of 4% on its Savings Pods up to $6,000. The key drawback of Current is the lack of phone-based customer support.


I can talk for hours about Aspiration because it's one of Uptech's long-term clients. We have been working with the Aspiration team for 3+ years and helping them develop iOS and Android apps, so I know all the ins and outs but will keep that for later.

From the very first day, Aspiration has named itself a do-good business. It donates 10$ of its income to environmentally and people-friendly businesses. In addition, Aspiration users can get a sustainability score on their spending habits.

Apart from that, the basic functionality includes the Spending and Saving account, which has both checking and savings features. Customers can manage cash, make payments, and earn interest. Aspiration offers two bank accounts options:

  • A basic account that has a "pay what is fair" monthly fee, which could be $0, making the account free;
  • Aspiration Plus account comes with a monthly fee and offers additional benefits, including a higher interest rate on savings.

How do neobanks make money?

Today, there are five business models for how neobanks earn money. I have rounded them up below.

How do neobanks make money
  1. Interchange-led model

This model relies on the revenue sourced through the interchange. Every time customers pay with the neobank's card, they get paid. [e.g., Chime].

  1. Credit-led model

This is a credit-first model. Neobanks using such a model start with a credit card or similar offering and then provide a bank account. [e.g., Nubank].

  1. Ecosystem-led model

The checking account may not be the main profit driver in this model, but it unlocks a range of monetization strategies. Some neobanks also have monthly subscriptions as an additional monetization vector. [e.g., Monzo].

  1. Asset-led model

The asset-led model offers saving accounts and looks to obtain deposits with competitive rates. Some neobanks focus on ethical or moral spending management. [e.g., Aspiration].

  1. Product extensions model

Credit-led models are distinctly successful but merely examples of product extensions, blurring the lines between financial domains. One of the biggest drivers here will come from more prominent tech companies and partnerships with banks. [e.g., Robinhood].

how to start a neobank

Why to Start a Neobank: Market Overview

If you're in a position to start a neobank, here are some real-world data to show you that you're making a good decision.

First, the number of digital-only bank account holders in the USA is 29.8 million, which is one of the highest. Second, the number will grow due to the country's massive population and ability to boast some of the world's oldest digital-only banks. Overall, 53.7 million digital-only bank account holders will be in the US by 2025, making up an estimated 20% of the national population.

How to start a neobank

Neobanks represent a new approach to financial services, and it's no surprise that the rise of neobanks will be primarily supported by younger consumers. Young generations and digital-only consumers will demand neobanks for several reasons:

  • A customer-centric approach is at the core of neobanks;
  • Financial services will become cheaper, simplified, and more useful;
  • New, innovative features.

Neobank startups that bring significant value to customers (e.g., neobanks focused on the middle class who benefit from lower costs) and build a strong standalone unite economics will succeed in the fintech market.

How to Start a Neobank: 8 Main Steps

Thankfully, you don't need to own a bank to start a neobank. What can be handy is being engaged in the fintech community, understanding how neobanks work, and getting equipped with a dedicated and professional development team.  

We can help with the latter one. The Uptech team has successfully helped to launch five neobanks. We know how to start a digital bank first-hand. Here are some general guidelines from my experience and some tips I gathered from the Uptech team on how to start a neobank that brings value and profit.

How to start a neobank

Step 1: Conduct the discovery

I need to stress it more, but with in-depth product and market discovery, chances are low that your product will be successful. So start with:

  • Defining your target audience & value proposition;
  • Identifying and analyzing audience pain points;
  • Analyzing your competitors and their pain points.

We at Uptech are the ambassadors of Product Discovery and never miss it in the product development process. If you need help with discovering the neobanking market and shaping your value proposition, we are here to help.

Product Challenge: Choose the right business model

Choosing the right business model means keeping your neobank business profitable. Moreover, it would be great to foresee such circumstances and change the business model before you actually reach the stage where you’re operating at a loss.

Uptech Solution

The smartest way to choose the right business model is to analyze your consumers, define their behavior and determine what the best way for them to use your product is. We do all of the above during the Discovery stage. Once we know that, it’s easy to pick the business model (or combine several) that suits your business best.

Step 2: Research and communicate with a BaaS provider

The second thing you should do is find a reliable BaaS provider. Ok, you may ask: what is BaaS? A BaaS is a service that usually works directly with banks to provide financial services. Neobanks can use BaaS APIs to enable users to hold funds, pay bills, manage cash flow, loans, and access funding directly from the software.

Here's the list of BaaS APIs I recommend using:

  • Galileo
  • Solidfi
  • Bond
  • Unit
  • Treasury Prime
  • OpenPayd
  • Solaris Group

It's critical to have technical research on your potential BaaS provider to know their terms and check if they match your requirements. For example, you need to have KYC embedded and offer a crypto account, but the BaaS you chose doesn't provide this functionality.

So check the terms attentively and then make your relationship with BaaS official. State all the terms of your collaboration to the smallest details because it's time when your neobank can officially provide financial services.  

Step 3: Decide who'll be your Program Manager

It can either be an issuing bank, BaaS, or you. The role of a Program Manager includes a list of responsibilities:

  • Direct relationships with certain networks;
  • Web/mobile app development and ongoing maintenance;
  • Marketing/Promotions/Advertising/Branding;
  • Cardholder Communications;
  • Customer Service;
  • Compliance;
  • Legal/Regulatory monitoring;
  • Audits.

The list is far longer, but the point is Program Manager – a critical role you should cover. If you look at the footers on the websites of Chime, you'll see that it issues through The Bancorp Bank and Aspiration issues through Coastal Community Bank.

But it takes 90-120 days to get a deal with a bank. Meanwhile, you can collaborate with companies like Rise and mBank, who can be a Program Manager for you.

Step 4: Ensure compliance and security

Neobanks today are typically not directly regulated. It is the bank with which the neobank is partnering with that is the regulated institution. The partner banks are regulated by the examiners. During the audits and regulatory exams, these partner banks must prove that they comply with certain standards and security practices. The neobank needs to adhere to the standards of the bank it is working with, which makes the partner bank a quasi-regulator for the neobank. Your BaaS provider can support you and provide a tool kit to help build a top-notch compliance program.

Product Challenge: Provide a secure solution

Providing neobanking app security means taking steps to protect the user’s account and data. It’s often a challenge when a company doesn’t have a dedicated server/ data center or partners with unreliable third-party providers that hackers may attack.

Uptech Solution

Third-party integrations are extremely helpful in the fintech sector, and we at Uptech have worked on 6 fintech projects where we had to integrate third-parties. We researched dozens of providers and checked if they highlighted what data they used and for which purposes. And only after ensuring that the service is 100% compliant we integrate it.

Uptech Note 📌
Regulatory frameworks and licensing requirements vary widely across jurisdictions and types of financial services. The choice of regulatory licensing depends on your value proposition and business model.  

Step 5: Work on innovative, customer-centric strategies

This step isn't the one you should start cultivating only here. It's a 24/7 journey. The thing is that the neobank market demands new players to be innovative with their solutions. Otherwise, you'll lose.

That's because many startups push harder on the accelerator pedal as they grow and think innovation-first to buy future growth. Venture investors love this, as it allows them to return money to their baskets faster.

Step 6: Build a strong core and backend infrastructure

To build a secure and scalable neobanking app, it's necessary to select suitable components, including backend infrastructure, a tech stack, frameworks, and architecture. Developers with relevant skills and experience in fintech can help here a lot.

When selecting a backend tech stack, Uptech developers reckon with the following factors:

  • product's specifications (type, business goal, size, complexity, etc.);
  • project's timeline and budget;

Bearing the above factors in mind, we opt for the best-suited tech stack for your product.

Step 7: Focus on user-friendly design

If you open a banking app and are afraid to make a money transfer, the app design is probably poor. Why is that? Because banking apps should simplify and humanize things, not scare users away.

So is there a formula for the neobanking app design that works?

Not really. But there's a way to recognize good neobanking app design from bad design. Good design is a perfectly balanced UX and UI. And you really need to hire a professional UX&UI designer to nail both to create a killer app that people will love. UI should have clear fonts and nice colors, and other app elements should create the general style. User experience has the ultimate goal – to keep a user engaged.

Product Challenge: Create a smooth user experience and build trust  

Building trust with customers is about building confidence in your product, its value, and its security. In the case of neobank app development, getting the trust of your users requires two things: transparency and security.

Uptech Solution

To build trust through the neobanking app design, we provide users with really important information that is teachable, available, and easily accessible when they need it:

  • We make terms of use and privacy policies easy to find during onboarding;
  • We ask permission for any data the app collects and articulate it very well;
  • We provide clear steps explaining each and every piece of data we’re asking for;
  • We make pricing options transparent, don’t hide any fees, and communicate any changes in advance.
  • We broadcast the regulatory compliance, show information on the certification, adopted AML/KYC policies, and so on.
how to start a neobank

Step 8: Ease onboarding and go-to-market strategy

Onboarding, user engagement, and marketing, while technically the last steps in the neobanking app development, are often the ones most overlooked by startup founders and business owners.

Creating a fintech product means you're dealing with sensitive information of your customers, so it's important to think about how to create a neobank app as intuitive, user-friendly, and easy to use as possible. Then build your onboarding and go-to-market strategy to supplement it.

Neobank Features to Stand Out in 2023

Here I gathered the must-have neobank features and added a few to help you stand out in the fintech market in 2023.

Must-have neobank features

  • Sign up/ Sign in
  • Biometrics
  • KYC
  • Home page
  • Checking (Spending) Account
  • Saving Account
  • Debit Card
  • Block/Unblock card
  • Change PIN
  • Report Card Lost
  • Support

Neobank features to stand out

neobank features
  • Cross-border payments, including crypto

Cross-border deals offer growth for both businesses involved and the users. Pooling the incomes generates more revenue for both companies. More revenue means greater financial power, which in turn means a privilege over competitors and an extra benefit for users.

  • Budgeting assistance

Consumer-friendly neobanking apps offer a full suite of services and promote financial literacy. It's all about more value to your users.

  • Payments through QR Codes

Payments through QR codes are surging. From a business point, it's a new way to reach customers and facilitate payments. From the users' point, it's so accessible, easy, and friendly.

  • Micro-investment

Gen Z wants financial apps that are customized to their lives and needs. Micro investment is among that needs.

  • Impact Score

Sustainability in fintech is one more awesome trend. For example, Aspiration users can measure their climate impact based on their expenses/ investments.

We offer full-cycle financial software development services, from creating product development strategy to top-notch fintech services implementation. Create, develop and design your fintech software with Uptech 🚀

How to Develop a Neobank: Uptech Case

It's a pleasure to say that we at Uptech had a chance to create five awesome neobank apps. Among them, there are the top US neobank – Aspiration. Here is the challenge we helped them to solve.

Aspiration challenge: Ensure app security

Since the Aspiration app contains confidential user data, we needed to make sure that it automatically logs off after 15 minutes of idleness, requires a touch ID or password, and shows an overlay to hide the sensitive data when the app goes to the background.

Uptech Solution

Our engineering team analyzed the potential risks and found the solution to develop the secure app using secured overlays, keychain, Touch ID, two-factor authentication, and session expiration.

How to start a neobank

As a result, together with the Aspiration team, we created the app with a 4.4 rating on the AppStore, 70% user adoption, positive reviews, and no security leaks.

"They provide high-quality work very responsibly — we’ve built a strong relationship and get along well."

Matt Lee, Aspiration Head of Product

How Much Does It Cost to Start a Neobank?

The cost of developing a neobank depends on numerous factors: the app's complexity, whether you need to polish the existing app or build a new one from scratch, the team engaged, and the outsourcing partner location.

At Uptech, we offer several options:

  1. Developing a neobank from scratch and starting with the MVP;
  2. Rebuilding the existing app and extending the feature base;
  3. Polish the existing app by improving some parts of the app.

The timeframe for each case is different, which means costs vary too. On average, it takes us 5 - 7 months to develop a functioning MVP.

To develop the fully-functional app, you'll need the project team, which includes:

  • Project manager
  • UX designer
  • Back-end developers
  • Front-end developer
  • QA engineers

This is the general scenario. To get the precise numbers of how much it may cost to build a neobaking app, contact our team. We’ll help you with the numbers and answer the related questions.


Developing a neobank is an incredible journey, full of opportunities, as the market is on the rise right now. On the other hand, you should be ready for the challenges, such as app security, innovation, and the use of top-notch technologies.

I have rounded up the steps to create a neobank — from searching for a BaaS provider to developing a go-to-market strategy. This is an incredible but not easy journey, and you always have the option to ask for a helping hand from the experienced Uptech team. Contact our team to share your idea, and we'll be happy to help.

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