How to Start a Neobank: Step-by-Step Guide for 2026

Should I build a neobank app this year?

If you are a fintech startup, the answer is a resounding yes—no second thoughts!

Why? Because consumers increasingly prefer digital banking services. Millennials and Gen Z are leading the neobank movement, together accounting for 78% of global neobank users. In fact, over 62% of neobank users are between 18 and 35 years old.

Unsurprisingly, the global neobank market is witnessing exponential growth at around USD 210.16 billion in 2025. Next year, it is projected to jump to USD 310.15 billion in 2026.

And this is not a small climb, but a 49.30% CAGR. With this speed market is expected to reach USD 7,661.57 billion by 2034.

In this, Europe held the largest slice, contributing 37.20% of the global share. Meanwhile, the United States is picking up serious pace too. The U.S. neobanking market is projected to reach USD 302 billion by 2032.

So if you are planning to start a neobank in 2026, you are stepping into the right phase. Demand is already there. Users are comfortable with app-first banking. 

At the same time, it’s not just about launching a good-looking app. Behind every simple dashboard sits a long list of decisions. Licensing models, compliance requirements, banking partnerships, tech stack choices, regulatory approvals, and so much more. Each one matters more than it looks.

That’s exactly what this guide will help you with. We will break everything down in a clear, practical way so you can move forward confidently and choose the right neobank development company for your vision.

But before we dive into the how, let’s clear one common confusion. What’s the real difference between a neobank and a digital bank?

Neobank vs Digital Bank: Are They The Same?

A lot of people use neobank and digital bank like they mean the same thing. This happens because both banks promise smooth, app-first banking.

But under the hood, they are built differently.

A digital bank holds its own banking license. It operates under full regulatory supervision. It runs its own core systems and can offer savings accounts, loans, cards, everything, directly under that license. Think of it as a licensed bank with only online presence and no physical branches.

A neobank doesn’t hold its own banking license. Instead, it partners with licensed banks or Banking-as-a-Service providers. Those partners handle the regulated side of things, deposits, KYC, AML checks, insurance coverage, and more. The neobank focuses on what users actually see and use, the interface, features, speed, and overall experience.

So the simplest way to look at it?
A digital bank is a licensed bank that operates digitally.
A neobank is a digital-first financial product powered by licensed partners in the background.

To users, they can feel almost identical. Structurally, though, they’re not built the same way. You can also hire the top regulatory compliance consulting firms to help shorten the licensing process.

The structural differences usually look like this:

Expert Tip: For most new founders in 2026, the neobank model is easier to start with. It cuts approval time and lowers early complexity. Some banks later move toward a fully digital bank structure as they grow.

Step-by-Step Guide to Start a Neobank

Here is your step-by-step guide to starting a neobank. We also have a complete vendor list that you would need at each step in your journey. Explore the top-rated vendors for neobank here. 

Step 1: Define Your Target Market and Positioning

First, decide your primary audience. It could be retail consumers, SMEs, freelancers, cross-border workers, or a specific niche. Each segment carries different onboarding requirements, risk exposure, compliance complexity, and monetization potential.

Your positioning should answer three questions:

• Who are we serving?
• What financial problem are we solving?
• Why would users switch from their current bank?

For example, a freelancer-focused neobank may require advanced invoicing and tax categorization tools. An SME neobank may require KYB workflows and multi-user permissions. A cross-border neobank will face stricter AML and sanctions screening exposure.

Clear positioning reduces feature creep, simplifies compliance planning, and improves early product-market fit.

Only after this is defined should you move to regulatory structuring.

Expert Tip: Define your target segment and value proposition before committing to a regulatory structure. Your business model should support your market positioning without any restrictions.

Step 2: Choose Your Licensing and Regulatory Structure

You typically have two structured paths:

Own License Model

You apply for a banking or EMI license in your jurisdiction. This allows you to hold customer deposits directly and operate as a regulated institution. It requires capital reserves, regulatory approval, a proper setup, and more.

Sponsor Bank / BaaS Model

You partner with a licensed financial institution through a Banking-as-a-Service arrangement. The sponsor bank holds deposits and manages regulatory oversight, while you build and manage the product layer.

The sponsor model reduces time to market and lowers initial regulatory burden. However, you must align with the sponsor bank’s compliance standards and risk policies. You can also find top BIN sponsorship partners and top Banking as a Service (BaaS) providers here.

Your decision should align with:

• Capital availability
• Launch timeline
• Operational readiness
• Long-term independence goals

Most early-stage neobanks begin with a sponsor bank model and reassess licensing once they achieve scale and stable unit economics.

Expert Tip: Before signing with a BaaS provider, map your feature roadmap against their API capabilities. Confirm support for KYC workflows, card issuing, transaction monitoring, and reconciliation access.

Step 3: Architect Your Technology Stack

With the regulatory structure now in place, design your system architecture.

A neobank operates on multiple layers:

• Core ledger and account management
• Payment rails integration
• Card issuing partner
• Compliance engines
• Backend orchestration services
• Customer-facing mobile and web apps

Most early-stage neobanks use Banking-as-a-Service platforms for ledger and payment infrastructure. On top of that, you build your application layer and integration services. You will also need a card processing company.

It is important to focus on:

• Real-time transaction processing
• Event-driven architecture
• API development
• Reconciliation visibility
• Audit traceability

Expert Tip: Choose infrastructure that gives you clear access to transaction states and reconciliation data. Limited visibility at the ledger level creates operational risk at scale.

Step 4: Embed Compliance and Risk Controls

Risk and compliance controls should be integrated at the infrastructure layer, tightly coupled with account and transaction logic:

• Identity verification (KYC)
• Sanctions and watchlist screening
• AML monitoring software
• Risk scoring
• Manual review workflows

These systems should activate during onboarding and continue monitoring transactions in real time.

Design for traceability. Every flagged transaction, approval, or rejection should leave an audit trail. Regulators and sponsor banks expect clear documentation of decision logic. You can take help from the top KYC software companies.

Fraud patterns evolve once real money flows through the system. Your monitoring thresholds should be adjustable without heavy backend refactoring.

Expert Tip: Choose compliance tools that allow rule configuration and threshold tuning without major code changes. Post-launch flexibility matters more than pre-launch perfection.

Step 5: Design the Product and User Experience Layer

Start with onboarding. The goal is simple: help users verify their identity, set up their account, and activate their card without confusion. Break the process into small, clear steps. Show progress. Tell them what’s happening. Instant updates make a big difference. Here, you will need a fintech web design agency that can help you create the user experience you are looking for.

Inside the app, prioritize usability. Account balances, transactions, fees, and limits should be easy to find and easy to understand. Add practical controls like card freeze, spending limits, and alert preferences so users feel in control of their money.

Run usability tests with real user flows before launch. Feedback at this stage helps refine screens, reduce drop-offs, and improve activation rates. You can browse fintech cybersecurity providers offering end-to-end testing and security audits for banking applications.

Expert Tip: Test onboarding with real users before launch. Even minor improvements in flow clarity can significantly increase activation rates.

Step 6: Define Revenue and Unit Economics

Most neobanks combine multiple revenue streams instead of relying on a single source. Interchange income from card transactions is common, where you earn a small share every time a user pays. Subscription plans are another route, offering premium features like higher limits, analytics, or bundled services.

Additional revenue can come from foreign exchange spreads, lending products, partner marketplaces, and value-added financial tools. Each stream should be mapped against operating costs.

Build your pricing and revenue logic early so product features and cost structure stay aligned as you scale.

Expert Tip: Model your cost per active user early. Sustainable growth depends on disciplined unit economics.

Step 7: Launch Strategically and Plan for Scale

Start with a limited user group or beta program. Track onboarding success rates, transaction processing, fraud alerts, settlement reports, and support tickets. Fintech customer support services can help you tune risk rules and support workflows before going global.

Moreover, partnerships, niche communities, referral programs, and targeted campaigns usually deliver stronger early traction than broad advertising. All this will help you scale strategically. You can also partner with a top fintech digital marketing agency to help you reach your target audience.

Expert Tip: Use your beta phase to stress-test operational processes, not just the mobile app. Stability at scale depends on backend readiness.

Key Challenges in Starting a Neobank

Here are some of the challenges you will most likely face when you start your neobank.

• Regulatory and compliance pressure sits at the top of the list. KYC, AML, transaction monitoring, data protection, and reporting rules vary by jurisdiction and change over time. Expanding into new regions increases compliance workload and audit exposure.
• Profitability takes time. Interchange and subscription revenue grow only after transaction volume grows. Meanwhile, costs for compliance checks, fraud detection software, infrastructure, and support continue from day one. Unit economics need close tracking.
• Vendor dependency is another factor. Neobanks rely on BaaS providers, sponsor banks, KYC vendors, and card processors. If one layer slows down or changes terms, your operations feel the impact. Strong partner selection and SLAs help reduce this risk.
• Security and fraud risk stay constant. Digital onboarding and instant payments attract fraud attempts. Risk rules, monitoring systems, and review workflows need continuous tuning after launch.
• Trust building takes effort. New financial brands must prove reliability, safety, and support quality. Clear communication, transparent fees, and strong in-app controls help build user confidence faster.

Most of these challenges are manageable with phased rollout, strong partners, and early operational planning.

Neobank App Development Cost in 2026

Let’s talk numbers, because this is usually the first real question founders ask.

If we are only looking at the product side, most neobank app development companies in 2026 typically charge somewhere between $40,000 and $250,000+. That is a wide range, as the final cost depends on how mature you want the app to be. How strong is your security setup? How many compliance tools do you integrate with, which platforms do you support, and more.

And that’s just the app layer.

You will also need to factor in sponsor bank partnerships, program setup charges, KYC and AML tooling, card issuing, and ongoing compliance support. 

A partner-led model usually feels lighter at the beginning compared to building a fully licensed digital bank. Still, both paths require serious investment across tech, security, regulatory systems, and operations.

One smart way to manage budget pressure is to start lean. Build an MVP first. Use cross-platform frameworks instead of separate native builds. Go cloud-native instead of setting up heavy infrastructure. Done right, this can cut development expenses by around 40–50% and help you launch much faster.

Top Neobanks Active Around the Globe

As neobanks expand globally, some names have stood out by user base, innovation, specialty features, or unique business models. Some have now gained their own licences and converted to digital banks. Here’s a snapshot of some popular neobanks and digital banks and what they are known for:

1. Revolut

A UK-founded global fintech super-app offering multi-currency accounts, international transfers, trading, and business services, known for its travel-friendly perks.

2. Nubank

Brazil’s largest digital bank, with a huge customer base in Latin America, started with no-fee credit cards and now offers full retail banking products.

3. Chime

A leading U.S. neobank known for fee-free banking and early pay access; its mobile-first model helped it grow millions of users.

4. Starling Bank

UK-based, strong on customer experience with real-time notifications, budgeting tools, and business account features that attract freelancers and SMEs.

5. Varo Bank

One of the first U.S. neobanks to secure a national bank charter, it offers digital accounts with no fees and competitive savings

6. WeBank

China’s major digital bank, a pioneer in branchless banking, focuses on loans and retail services at scale.

7. Bunq

One of the largest and fully licensed Europe-based digital bank offers mobile-first personal and business accounts across Europe.

8. Monobank

A popular Ukrainian bank with millions of users and strong ratings for its mobile experience and simple financial tools.

9. GreenFi

A US-based climate-focused platform that offers services to support environmentally sustainable projects and responsible finance.

10. Wise

A UK-based neobank known for low-cost, fast international transfers at real mid-market exchange rates along with multi-currency accounts.

These neobanks represent different approaches from global multi-product platforms to regionally focused players and niche models centered on sustainability or multi-currency capabilities. Their variety shows how digital banking can be tailored to distinct market needs.

Turn Your Neobank Plan Into Reality

Starting a neobank in 2026 is more achievable than ever if you choose the right model early, line up strong partners, build compliance into the foundation, and launch with a focused feature set.

The opportunity is real. User demand for digital-first banking keeps growing, and the infrastructure to build secure, scalable neobanks is already available. What makes the difference now is execution, clear positioning, disciplined rollout, and smart vendor choices.

If you are planning to launch a neobank, start mapping your model, regulatory path, and tech stack today. Build your MVP, validate with a controlled launch, and scale with data. The sooner you move from idea to structured planning, the faster you get to market with confidence.