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Neobanks are a new breed of monetary companies that only operate online and are a substitute for traditional banking organizations with physical locations. The term has been in use since 2016 and refers to online-only financial institutions.
Neobank provides top-of-the-line and customer-focused banking services. The popularity of neobanking has grown recently, especially among young people.
This has led to a rise in the share of neobanks in the market. According to Statista, the size of the market is expected to reach up to $723 billion by 2028, a value of nearly $35 billion in 2020.
To expand, Neobanks can use the following methods:
The benefits of obtaining a banking license include widening the range of services, larger customer bases, long-term proficient capital bases, and competitive advantages in the fintech industry.
The N26 licensed bank began operations in 2016. In addition to providing top-notch monetary services, they also ensure their customers’ security. By the German Deposit Protection scheme, owners of accounts are guarded to a maximum of €100,000.
To ensure compliance with the law and regulations, partners with financial institutions can be a way to expand.
In one case, Monzo cooperated alongside Sutton Bank, which is an FDIC-approved bank. With its banking application for mobile devices, the partnership provides financial services, and profiles are covered by the FDIC for about $250,000.
Chime offers financial products through partnerships with local banks. It is not itself a bank. FDIC-insured banks hold all the funds in their members’ accounts.
In addition to lowering cost and market time, this also improves customer experiences. Some of the world’s most innovation-driven organizations are powered by Galileo Financial Technologies, like Dave, Monzo, SoFi, and MoneyLion.
In this article, we will inform you about the innovations that drive the most powerful Neobank apps around the world. Here, we specialize in creating strategies and solutions that enable our clients to compete successfully.
Our experts believe that analyzing profit-making resolutions specific to your industry is among the earliest stages on your road to success.
The Tech Behind Top Neobank Success Stories
Modern banking backend based on microservice architecture – Monzo’s experience
Monzo bank was originally supposed to come up with a model with the most-suitable technology capable of allowing businesses to open accounts in banks and current accounts. Additionally, the system needed to be flexible so it could support millions of users.
As big companies such as Twitter and Netflix know, monolithic codebases make scaling difficult. The team at Monzo decided to build the backend as a set of shared microservices. Typically, startups don’t use microservices to build the backend. However, they managed to create a commodity that will be versatile later on.
The Surf’s portfolio includes both the development of an architecture that is dependent on microservice from the ground up and the splitting of monoliths into microservices. These architectures are generally more fault-tolerant, scalable, quicker, and simpler to deploy.
Please don’t hesitate to find out more about microservice architecture in banking, which we have already described in detail.
How Chime Adopted AWS to Improve Engineering Productivity
Data centers that are handled by vendors hosted Chime before moving to Amazon Web Services (AWS). The company needed a structure that was capable of scaling quickly and would ensure availability even as the services and member base grew.
The team at Chime aims to provide better data, more reliable services, and better security all while focusing on member satisfaction. Consequently, they viewed the move to AWS like an opportunity to reach their stated goals. Migration commenced by 2019 and ended in 2021.
The Amazon Web Services platform offers a variety of services including caching, databases, and deployment infrastructure. AWS assists businesses such as Chime to make core competencies a focal point and deliver reliable services and commodities by making engineers’ jobs a little easier.” – Mike Barrett, VP of Engineering Services at Chime.
Revolut’s experience with a Platform such as Google Cloud
The 2015 startup Revolut presents another great instance. The company’s previous solution that focused on cloud-based technology was not sufficient to support the rapid growth of the company as its functionality expanded and customers grew.
To automate deployments and maintain stability and security, they required a structure that could handle it.
To do so, they selected the Platform that is based on Google Cloud. It’s easy to use and intuitive.
Using Google Cloud, deployment can be automated various times daily using APIs; incremental snapshots ensure resilience, access management, and cloud identity ensure security.
Nubank Moved to Flutter to Scale without Sacrificing Quality
Due to Nubank’s rapid growth, and the scarcity of mobile experts who are native, the company was unable to launch new products fast and simultaneously on Android and Apple.
The company made a decision to move to a technology that has a cross-platform to maintain its ambitions of shipping new products on a single platform using one programming and structure.
Flutter was the platform of choice for Nubank as it gave more reliable capabilities and robust documentation as compared to other platforms.
“The use of Flutter as Nubank’s major innovation has greatly lowered the barriers for new engineers to provide ideas to the app in several hours after the onboarding process,” said Noe Branagan, Engineering Manager, Nubank.
The performance of the system has improved significantly as a result. Applications based on Flutter have been part of the Surf culture since this technology first appeared.
In the banking domain, Flutter offers the following benefits:
- Quicker market time
- Cost-savings potential: 2 teams that are native require more costs than a Flutter team
- Simpler testing alongside debugging with a single codebase
- Scalable, maintainable, and developable apps powered by Flutter
- In terms of smooth animations, system-specific interface elements, and gestures, users see virtually no difference between native apps and the web
- As a form of protection, Dart code gets brought into code that is native and cannot be read by humans. As opposed to Java, Kotlin, or React Native, it makes reverse engineering complicated and makes security more reliable
How Tinkoff fabricated a Chatbot to Further Develop Client Exposure
Neobanks focus on the customers: a secure, continuous deployment and a forward-looking architecture are not less relevant compared to the technologies that power their front end.
New technologies like chatbots, biometry, and artificial intelligence are used by banks to enhance their remote customer relationship model.
Chatbots have become a popular trend in banking. According to NMSC, the universal markets for chatbots in the BFSI sector are forecast to reach $6.9 billion in 2030, up from $587 million in 2019.
Oleg, created by Tinkoff bank, is the world’s foremost voice assistant based on deep neural networks alongside voice innovations. This app integrates into the bank’s app and allows customers to handle their monetary information within the bank’s ecosystem.
He differs from the competition because he is emotion-based: the bot that is based on artificial intelligence can be sad, make jokes, and is gaining knowledge. As a result, customers feel as if they are speaking to a real person instead of a machine.
Oleg held the top spots in Markswebb research agency’s benchmarks for Customer Experience Quality in Bank Chats in 2021 and ‘Best Customer Experience in Chats’ in 2022.
Bank apps get automated testing
Customers’ sensitive information is handled by financial organizations and fraudsters have always taken advantage of any weaknesses or imperfections in products.
Because of this, many banking applications face security concerns, so testing should be given preferred attentiveness when discussing financial services.
Accenture conducted one of its successful case studies on a world financial organization that wanted to improve full-length testing automation. To achieve top-notch apps quicker and more affordable, we set ourselves the goal of delivering them faster.
In collaboration with Accenture, the bank implemented a full-length trial modification, and due to this, the bank was able to reduce the cycle for trial from 3 months to only 4 and half weeks. More than 60% of the total market time was reduced by the bank. There has been a 75% reduction in defect leakage.
Test mechanization is ideal for banking applications in our portfolio at Surf, where we have worked on many financial projects. Automated testing is important for products that will be developed over a long period (more than six months), such as bank products.
In the meantime, if you intend to constantly add new features (for instance, monthly), automated trials will assist in maintaining quality and speed up the market time.
Following is a list of significant aspects that you should concentrate on when making plans to construct the products you’ll use in the future, based on our experience developing neobanks for our clients.
- The ability to adapt business models and technology stacks
- Improving customer experience through innovative solutions
- Ensuring regulatory compliance and partnering with credible companies
- Using continuous deployments to deliver more immediate releases
- Choosing the right technologies to enable easy scalability
- Make sure you get the most quality with testing automation
Reviewing the most recent funding series, it is clear that nascent neobanks are targeting underbanked consumers and focusing on niche markets.