Building a neobank in today’s day and age has become much easier than it was a decade ago. All the tools and support are readily available to help you create and deliver core banking experiences to your customers.
Nonetheless, launching a completely digital bank requires a sizable investment. And the last thing you want is to see your bank tumbling a few years down the road for not meeting customers’ expectations or regulatory compliance requirements.
In this article, we will talk about how you can future-proof your Banking as a Service (BaaS) product.
So, let’s start with the basics.
Stick to your target market
Neobanking is not for everyone. Since it’s a novel concept, the public might not be aware of it, so knowing your target market will be key. You want to identify potential customers and create a blueprint of how you can cater to their financial needs better than traditional banks.
There are two ways to go about it. You can either focus on an industry vertical or offer a more general-purpose set of services that are applicable horizontally across the country. For example, you could target the entertainment industry, small and medium businesses, or freelancers. Or you could target by region, regardless of the industry. It’s up to your market research and who you want to help with your product.
Having a predefined target market will help you streamline your efforts and innovations towards sustainable growth and avoid major pitfalls in the future.
Customer experience is everything. It’s the very foundation of neobanks. Traditional banks struggle to deliver on this aspect, especially concerning commercial banking. That’s the #1 reason customers want to explore alternatives.
By providing your customers with an intuitive dashboard (user-friendly interface), you can enrich their online or mobile experience vs. those offered by traditional banks by giving them a fast, hassle-free banking experience without any manual intervention. If you keep banking convenient, your customers are going to stick around and contribute to your future expansion and growth.
With basics out of the way, let’s dive right into the core functionalities that can help future-proof your BaaS product.
Completely digital banks are valued for their security, accessibility, and, most importantly, convenience. All of that is possible because of third-party integrations that are not available with traditional banking.
Here are some of the key benefits of using third-party integrations with your neobank.
The cost of developing in-house software can spiral out of control, not to mention the continuing resources needed for future product development and customer support. All of this could set you back by tens of thousands of dollars per integration you want to build.
Instead of developing and testing integrations in-house, it’s better to work with third-party vendors, saving time and money.
Time to Market
The landscape of digital banking is changing rapidly. You need to think on your feet and roll out new integrations for your product as they come. Choosing a third-party integration over in-house reduces time to market. With a few tweaks, you can configure your integrations according to your customers’ needs.
Get more customers
The more features you offer, the more customers you can attract. By integrating third-party services into your neobank, you can deliver a wide range of banking experiences that were previously not available to customers.
Some of the crucial third-party integrations that your neobank is going to need are:
- KYC/AML Providers (Know Your Customer and Anti-Money Laundering)
- Data Aggregators
- Payment Gateways
- Communication Services for Streamlined Customer Support
- Brokerage APIs for Handling Investment Portfolios
Selecting the Right BaaS Provider
If you want a fully managed Banking as a Service solution, choosing the right BaaS provider is crucial. A BaaS provider is someone who takes care of all the behind-the-scenes development based on your unique blueprint so you can focus on creating amazing experiences for your customers.
From creating bank accounts to facilitating payments and issuing cards, a BaaS provider can build these functionalities into your product. You don’t have to worry about compliance or third-party integrations either, as your BaaS provider can handle everything from start to finish.
And the best part is that these solutions are configurable. If you want to make transformative changes in your product, your BaaS provider will implement new modules and functionalities as you go.
So, when it comes to choosing a BaaS provider, here are a few things that you should look for:
- Bank-Grade Security
- 24×7 Customer Support
- User’s Lifecycle Management
- Managed Bank Sponsorship
- Admin Rights of your Product
- Testimonials and Case Studies
The global digital banking industry is valued at $10.8 billion with a 19% CAGR between 2022 and 2027. Everything that you need to launch a neobank is readily available right now and the licensing and compliance requirements have tipped in the favor of entrepreneurs, creating a more conducive environment for fintech startups to exist and thrive.
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