How to Start a Neobank
What Is a Neobank?
In today’s fast-evolving financial world, neobanks are redefining how individuals and businesses interact with money.
Unlike traditional banks that rely on physical branches and legacy systems, a neobank is a 100% digital bank, offering core banking services like payments, cards, and savings through a mobile app or web interface.
While traditional banks are often burdened by outdated infrastructure and bureaucratic processes, neobanks offer a faster, more user-friendly, and cost-effective experience.
They operate on leaner tech stacks, often built using Banking-as-a-Service (BaaS) platforms and API-based architecture, allowing quicker innovation and lower fees.
Why Neobanks Are Booming in 2025
In 2025, the demand for digital banking is skyrocketing due to several key factors:
A mobile-first generation expects real-time, on-the-go banking
Fintech regulations are evolving to support digital challengers
Small businesses and freelancers demand low-cost, easy-to-integrate financial tools
Advances in KYC/KYB automation, embedded finance, and payment APIs have drastically reduced go-to-market timelines
As a result, neobanks are thriving , not just in developed markets but also in emerging economies where traditional banking access is limited.
Examples of Popular Neobanks
Some of the world’s leading neobanks proving the model's success include:
Revolut (UK) – Global multi-currency accounts and cards
Monzo (UK) – Full-service mobile bank with strong UX
Niyo (India) – Travel-focused and salaried neobank
Jupiter (India) – Smart money management for millennials
What You Need to Launch a Neobank
Starting a neobank isn’t just about building an app, it requires assembling a full financial ecosystem that’s secure, compliant, and scalable.
Below are the key building blocks every neobank needs to go live and compete effectively:
1. Compliance: KYC/KYB, AML & Onboarding
Before anything else, compliance is non-negotiable. You must implement:
KYC (Know Your Customer) for individuals
KYB (Know Your Business) for business users
AML (Anti-Money Laundering) protocols to monitor suspicious activity
A seamless onboarding flow that combines speed with legal safeguards
These checks can now be automated via APIs, allowing real-time document verification and fraud detection during signup.
2. Core Banking System
This is the engine of your neobank, managing:
Customer accounts
Transaction processing
Interest calculations
Ledger management
Traditionally built in-house by banks, you can now integrate a cloud-native core banking engine from a BaaS provider, saving time and millions in cost.
3. Wallet & Account Infrastructure
Neobanks need to support multi-currency wallets, enabling users to:
Hold balances in fiat or crypto
Make P2P transfers
Set up virtual accounts or IBAN equivalents
You’ll need APIs for balance management, ledgering, and transaction settlement.
4. Card Issuing & Payments Stack
Offering physical or virtual debit/prepaid cards is a must. For that, your neobank will need:
A card issuing partner (VISA, Mastercard, or Rupay)
APIs for card generation, PIN reset, transaction monitoring
Payments rails for pay-ins, payouts, UPI, QR, and POS compatibility
Modern fintech infrastructure lets you white-label these features with full control and brand visibility.
5. Customer UI/UX (Mobile App or Web)
No matter how advanced your backend is, users expect an intuitive frontend:
Mobile-first design
Real-time notifications
In-app KYC & support
Spend analytics and budgeting tools
Great UI/UX builds trust and drives adoption, especially in younger audiences.
6. Third-Party API Integrations
To offer value-added services, your neobank should connect with:
Credit scoring APIs
Insurance & investment tools
Bill payments & utility platforms
Analytics and fraud protection layers
3. Challenges of Building a Neobank from Scratch
While launching a neobank sounds exciting, doing it from the ground up is a massive undertaking.
Many fintech founders underestimate the technical, regulatory, and financial complexity involved. Here are the biggest roadblocks:
Licensing Hurdles
Operating as a financial institution often requires licenses from central banks or financial authorities. These may include:
Banking licenses (which are hard to get and heavily regulated)
Payment aggregator or PPI licenses
Cross-border remittance approvals
Periodic audits and financial disclosures
Navigating this legal maze can take 12–24 months, especially for startups without a compliance background.
Infrastructure Complexity
Unlike building a simple app, fintech infrastructure must handle:
Real-time money movement
Secure encryption and KYC storage
Transaction validation and fraud detection
Ledger accuracy and audit trails
Creating a core banking engine, wallet infrastructure, and payment routing system in-house is not just difficult—it’s risky without banking domain expertise.
High Development & Compliance Costs
Developing a compliant and secure neobank can cost millions of dollars in:
Tech team salaries (backend, frontend, DevOps, QA)
Security audits & penetration testing
Legal consultation for compliance and licensing
Server infrastructure and cloud costs
Most startups simply don’t have the runway to absorb these expenses.
Time-to-Market Delays
Building everything internally means you're looking at 12–18 months or more just to launch an MVP. In fast-moving fintech markets, this delay can:
Let competitors take market share
Hurt investor confidence
Burn through your capital runway
Speed is critical — and building from scratch slows you down significantly.
The Smarter Option?
To avoid these pitfalls, startups today choose plug-and-play BaaS platforms like ArthaTech, which provide:
Prebuilt infrastructure
Developer-friendly APIs
Compliance-ready onboarding modules
Faster go-to-market with white-label support
4. The Smarter Way: Use a White Label Banking Platform
If building a neobank from scratch feels overwhelming, it’s because it is. The good news? In 2025, there’s a faster, smarter path: leveraging a white label Banking-as-a-Service (BaaS) platform.
What Is BaaS (Banking-as-a-Service)?
Banking-as-a-Service (BaaS) is a model where licensed banks and fintech infrastructure providers offer modular banking capabilities via APIs. Instead of reinventing the wheel, startups can plug into these services to launch fully compliant and scalable financial products.
Think of it like using AWS for cloud, but for your neobank’s backend.
Benefits of Using Prebuilt APIs
1. Faster Time to Market
Instead of spending 18–24 months building your core banking stack, you can launch your neobank in as little as 30–90 days using white label APIs.
2. Built-In Regulatory Support
BaaS providers often come with pre-embedded KYC, KYB, AML, and transaction monitoring features that help you meet compliance requirements without building custom workflows.
3. Scalable Infrastructure
You get access to a production-grade backend that can support millions of users, high-speed transactions, and layered security , all without needing a large tech team.
Types of Services Offered by White Label Platforms
Modern fintech infrastructure providers offer a full suite of services required to launch and scale a neobank:
Digital Wallets – Support for multi-currency balances, ledgering, and virtual accounts
Card Issuing APIs – Instant issuance of virtual/physical debit and prepaid cards (Visa/Mastercard)
Payment Rails – APIs for Pay-in (via UPI, cards, bank) and Payout (to bank accounts, wallets)
KYC/KYB Compliance – Automated onboarding, document validation, and AML checks
Crypto & Fiat Support – Convert and store crypto assets, on/off ramps, USDT/BTC/ETH wallet integration
Trusted Fintech Enabler
Platforms like ArthaTech’s white label neobank solution provide everything you need to go live in weeks, not years. From core banking APIs to card issuance, crypto infrastructure, and embedded compliance, ArthaTech allows you to focus on growth while they handle the heavy lifting behind the scenes.
5. Step-by-Step: How to Start Your Neobank
Building a neobank today is no longer limited to large institutions. With the right tools, even early-stage startups can launch powerful, compliant digital banks tailored to their audience. Here’s a step-by-step roadmap to make it happen:
Step 1: Define Your Niche
Before writing a single line of code, clarify who you're building for. Neobanks succeed when they serve a specific segment with tailored features.
Retail users – everyday banking with smart savings tools
SMEs – expense cards, invoicing, and credit lines
Freelancers/Gig workers – instant payouts, tax automation
Crypto-native users – wallets, on/off ramps, DeFi integration
Choosing the right niche sets the tone for your product features, compliance needs, and branding.
Step 2: Choose a BaaS Infrastructure Provider
Pick a Banking-as-a-Service (BaaS) partner that offers:
Ready-to-integrate banking APIs
Licensing coverage or regulatory guidance
Card issuing and payment rails
Developer documentation and sandbox environments
Crypto or fiat flexibility, based on your target market
Example: ArthaTech’s white label platform gives you a full-stack backend, card issuing, onboarding modules, and multi-currency support—all under one roof.
Step 3: Set Up Compliance & KYC Workflows
Use automated APIs for:
KYC for individuals (ID verification, face match, address proof)
KYB for businesses (GST, incorporation docs, directors' info)
AML monitoring to detect suspicious activity
Your BaaS provider may offer these pre-built or allow easy integrations with third-party tools like Shufti Pro, ComplyAdvantage, or Onfido.
Step 4: Configure Wallets, Cards & Payments
Set up core product modules such as:
Digital wallets (INR, USD, crypto, multi-currency)
Virtual or physical debit cards with real-time spend tracking
UPI, IMPS, wire, or card-based payment rails for pay-ins and payouts
Optional features like bill payments, remittance, and reward systems
Customize fee structures, commissions, and limits based on user tiers (e.g., personal vs. business).
Step 5: Build the Frontend (Web or Mobile App)
Now, design a sleek and responsive frontend that connects to your backend via APIs. Focus on:
Simple, intuitive onboarding
Transparent transaction history
Push notifications and fraud alerts
Personal finance features (spend analytics, budgeting)
User experience is critical, especially for mobile-first users in emerging markets.
Step 6: Go Live, Iterate & Market
After testing your sandbox and production environments:
Soft-launch with a closed beta
Collect feedback and iterate
Run targeted digital marketing campaigns (especially on LinkedIn, X/Twitter, and fintech forums)
Set up referral or affiliate programs to boost organic growth
Launching is just the beginning , successful neobanks evolve constantly based on user behavior and market demands.
6. Cost, Timeline & Team You’ll Need
One of the biggest advantages of using a white label fintech infrastructure is the dramatic reduction in both cost and time to market. You don’t need to hire a 20-person engineering team or raise millions in venture funding just to launch.
Here’s what it realistically takes to get your neobank MVP (Minimum Viable Product) off the ground in 2025:
Estimated Cost for MVP (Using a White Label Stack)
Total estimated MVP cost: $10,000 – $30,000 (far less than $1M+ if built from scratch)
Time to Launch: 30 to 90 Days
With a ready-to-integrate backend like ArthaTech, you can:
Set up backend modules in 2–3 weeks
Design and connect frontend in 3–4 weeks
Launch your MVP in as little as 1 to 3 months
Traditional banks take years. Neobanks powered by modern BaaS providers can go live 10x faster.
Roles Needed to Get Started
You don’t need a massive team. For a lean fintech startup, here are the core roles to launch your neobank MVP:
You can expand later, but a lean 4–5 person team is enough to launch with the right infrastructure.
7. Conclusion
There’s no doubt , neobanks are the future of digital finance. As customer expectations rise and traditional banking falls behind, the opportunity to build innovative, user-friendly financial products is greater than ever.
The good news? You no longer need to raise millions or spend years developing complex infrastructure. With the rise of white label Banking-as-a-Service (BaaS) platforms, launching your own neobank is faster, leaner, and more accessible than ever before.
If you’re a fintech founder, SaaS builder, or digital innovator looking to bring your neobank vision to life without the tech headache, the smartest path forward is to leverage a plug-and-play solution.
🚀 Ready to Launch?
Explore how ArthaTech’s white label neobank infrastructure can help you go live in weeks — not years. From digital wallets and card issuing APIs to KYC compliance and embedded payments, ArthaTech offers everything you need to build, scale, and own your neobank.
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