Can You Start Your Own Neobank?
Day after day, technology continues to progress. It replaces jobs, allows us to create innovative products, and brings convenience and security to our daily lives.
Neobanks are something that recently came up, but in just a decade, more than 250 neo banks have been created and are currently operating. Such products are allowed to exist because the mind and perception of the public evolved. Just 5 or 10 years ago, nobody would’ve trusted a neo bank. Now, people understand how things work and how secure their funds can be with a Neobank.
Since this market is expanding widely, is there a place for new businesses in the niche? And if so, how could you start your own neo bank? To answer this question, we must first start at the beginning – the definition of these digital institutions.
What is a Neobank?
Neobanks are fintech companies that provide some of the services a regular brick-and-mortar bank would, alongside other added services. All of this happens online since they don’t reside within a physical office anywhere. Each neobank specializes in something different, for example, deposits, investing vehicles, cryptocurrency trading, and others.
You might also have heard the term “challenger” bank. This term was first used in 2009 in the UK at the end of the previous financial crisis and referred to the freshly emerging neobanks.
Since mobile devices became mainstream, the room for disruptive innovation has grown substantially. Mobile applications like Airbnb, Lyft, and Uber shook the world in each of the niches they operate in. Neobanks are starting to do something similar.
What is a Neobank’s Business Model?
In order to create a neobank, you must first understand the business model of the venture. Since there are no physical locations, and these banks don’t give out loans and financing, there must be other ways to prosper and ensure a steady cash flow for their operations.