Neobank Guide: Statistics, Top Players, Trends, Launch Steps, and Neobank Software Insights

Technology is changing the world, and familiar services are becoming more convenient and accessible. In this article, we describe how the development of the financial services sector has led to the emergence of a new concept – neobanks. You will learn what neobanks are, neobanks’ statistics, top players, how they differ from traditional financial structures, and how to launch a neobank.

Contents

What is a Neobank?

Neobanks, or digital banks, are FinTech companies that provide financial services only in digital format through a mobile app or a web banking interface. As a neobank operates online, it communicates with clients and provides services without offices and branches. Instead of visiting the office, the client can access various financial services through a mobile device or computer.

Conducting financial transactions without the need for cash or even physical cards has become much easier and more convenient. Because of advanced technologies and minimising infrastructure costs, the advantages of neobanks in 2024 include low or zero fees, user-friendly interfaces, efficiency and flexibility of customer service and support, and personalised services.

Neobanks statistics

The number of digital banks has increased rapidly since 2014. The total number of digital banking users is expected to increase to 3.6 billion worldwide by 2024. Neobanks offer convenience, accessibility, and innovation, making them competitive compared to traditional banks. They allow customers to open accounts and use their debit cards within minutes, all through a smartphone, often with lower fees.
2024 will be an important milestone in the financial services sector, partly marked by the expectation of further growth in neobanking. These digital-oriented organisations are redefining the traditional banking model by meeting modern needs for fast, efficient, and personalised financial services, operating exclusively in the digital space.

Today, more and more people use only digital banks and are less dependent on traditional banking. However, the trend began in 2014, when the first neobanks were formed in Europe. To date, the country with the largest number of neobanks is the United Kingdom – 37 neobanks operate there, a third of all European digital banks.

According to Statista, the transaction value in the neobanking market will rise to $6.37 billion in 2024. The neobanking market worldwide is projected to grow by 13.15% (2024-2028), resulting in a market volume of US$10.44tn in 2028. Neobanks operate with minimal physical infrastructure and focus on digital services to avoid the costs of maintaining physical branches. Thanks to this cost-effective strategy, neobanks can offer their customers lower tariffs for various services, including transaction fees, currency exchange and account management. In the neobanking market, users are expected to reach 386.30 m by 2028. User penetration will be 3.89% in 2024 and 4.82% by 2028.

Top Neobanks in the world

Crises often provide a window of opportunity for more fundamental change. After global shocks, the economy often reaches a new level. That happened after the global financial crisis of 2008. It caused a series of mergers and acquisitions in the banking sector. As a result, the I.T. infrastructure of credit institutions has become much more complicated. After that, banks began to develop almost from scratch on new technological platforms.

The first neobank, Simple, was founded in the USA in 2009, followed by Moven in 2011. This sector has been actively developing in Europe since 2014, when Atom Bank appeared in the U.K. Already in 2015, another English bank, Monzo, was opened. Over the following years, European neobanks have gone far ahead regarding technological development and the services offered. American banks are experiencing more difficulties because of restrictive legislation.

In 2024, neobanks became the norm for the global banking sector, and the digital direction no longer distinguishes virtual banks from classic ones.

Top Neobanks Europe

The largest European neobanks or digital banks in 2024 by the number of countries of operation

According to Statista, these are the largest European neobanks in 2024, by the number of countries of operation.

1. Wise – a neobank based in the United Kingdom that offers personal accounts, business accounts, debit cards, and the possibility of sending money to 74 countries worldwide. All transactions are managed from a mobile application or web interface.
2. Revolut – one of the most successful neobanks available in 38 countries. The company is proud of its 12 million customers worldwide, 500 thousand business accounts opened, 152 payment options in 152 cities, and a money transfer solution in 30 currencies.
3. N26 – Berlin-based N26 neobank offers personal and business accounts and operates in 24 countries.
4. Bunq bank – launched in 2015 in Amsterdam; in 2024, it is the second-largest neobank in the European Union after Revolut. Hitting nine million customers, Bunq offers personal accounts, business accounts, debit cards, currency exchange and savings. All transactions are managed from a mobile application.

The largest European neobanks or digital banks in 2024 by funding amount

Below are top-5 of the Largest European digital banks in 2024 by funding amount:

1. Revolut – 1.7 billion U.S. dollars in funding.
2. N26 – 1.7 billion U.S. dollars in funding.
3. Wise – 1.7 billion U.S. dollars in funding.
4. Monzo – 1.1 billion U.S. dollars in funding.
5. Starling Bank – 1.1 billion U.S. dollars in funding.

The largest European neobanks or digital banks in 2024 by the number of customers

Here are the 5 best neobanks and digital banks in Europe in 2024 by the number of customers.

1. Revolut. Founded in 2015, Revolut now has 27+ million customers. Offered services: customers can send or exchange money in 28 currencies for no cost, enjoy free debit cards, and buy and sell cryptocurrency. It is best for spending online.
2. N26. Founded in 2013, N26 now has 8+ million customers. It offers personal and business accounts, including debit cards. It is best for everyday banking.
3. Monzo. Founded in 2015, Monzo has 7+ million customers. It offers all free current accounts, joint accounts, and business banking. It is best for everyday banking.
4. Bunq. Founded in 2012, Bunq now has 5.4 million customers. Its services include bank accounts for expats. Bunq is available in 27 European countries. It is best for people living in Spain, France, Germany, or the Netherlands who want an IBAN for one of these countries.
5. Starling Bank. Founded in 2014, Starling Bank now has 3.5 million customers. It offers personal and business banking online, which is best for everyday banking.

Top Neobanks North America

Discover the 3 best neobanks and digital banks in North America in 2024.

1. Chime. Founded in 2013, Chime now has 12 million customers. Offered services include checking, savings, and secured credit cards. It is best for customers who are comfortable with a mobile-only banking experience. Pros: Low fees, including fee-free overdraft on debit card purchases and cash withdrawals, are offered via a special optional service called SpotMe and a fee-free credit card.
2. Juno. Founded in 2019, Juno stands out as a crypto investment platform because of its 0% transaction fees on the first cryptocurrency trade up to $250,000. Offered services: a checking account and a debit card available either as a virtual MasterCard or a metal physical card. It is best for crypto rewards with every paycheck.
3. Current. Launched in 2015, Current is a banking app that offers faster direct deposits. Offered services include basic digital checking accounts and cards, savings, and crypto trading. It is best for families, including current teen accounts for children.

Top Neobanks South America

Explore the 3 best neobanks and digital banks in South America in 2024.

1. Albo. This Mexican neobanking startup was launched in 2016. Offered services include a digital account along with a рreраid МаsterСаrd debit card.
2. Ualá. Launched in 2017, Uala is an Argentine neobank backed by George Soros. It offers a mobile payment app linked to a MasterCard card.
3. Nubank. Founded in Brazil in 2013, Nubank is today considered the largest FinTech firm in Brazil, with more than 10M clients. It offers digital accounts, an international credit card (without fees), transfers, payments, and personal loans.

Top Neobanks Africa

Below are the 3 best neobanks and digital banks in Africa in 2024.

1. Eversend. Technically, a French startup, Eversend is now one of Africa’s biggest currency exchange platforms and an all-in-one borderless money app. Offered services include virtual USD cards, personal loans, individual and group savings, donations, cryptocurrency trading, crowdsourcing, and currency conversion. It is best for multi-currency accounts.
2. Kuda. Kuda is Nigeria’s first mobile-only bank licensed by the Central Bank. It offers personal and business virtual bank accounts and automatic savings. It is best for zero card maintenance fees and free transfers.
3. OurPass. Launched in 2021, OurPass is a neobank for businesses revolutionising commerce in Nigeria. Being a one-click checkout company, OurPass plans to become a global business neobank.

Top Neobanks Asia

The 3 best neobanks and digital banks in Asia in 2024 are:

1. Jenius. Launched in 2016, Jenius is a digital banking platform provided by the bank. Users must have a bank account with BTPN before they can use Jenius. Among its unique features is $Cashtag, which allows peer-to-peer money transfers.
2. Kakao Bank. Launched in June 2017 in South Korea, Kakao is an internet-only bank. Offered services include digital banking, loans, and financial services.
3. WeBank. Founded in December 2014, WeBank is the first digital bank in China and the largest digital bank in the world by user base. It is best for banking and applying for loans.

Top Neobanks Oceania

The 3 best neobanks and digital banks in Oceania in 2024 are:

1. Up. Up, or Up Money and Up Banking is an Australian neobank based in Melbourne. It offers personal accounts and debit cards, and all transactions are managed from a mobile application.
2. Ubank. Ubank is an Australian direct bank owned by the National Australia Bank (NAB). As a separate entity, Ubank comes without monthly fees but with Spend, Save, and Share accounts.
3. Avenue Bank. Sydney-based Avenue Bank is the first and only Australian bank specialising in bank guarantees.

Neobanks trends

The remarkable growth of neobanking results from changing consumer preferences and evidence of constant technological innovation in this sector. And this dynamic seems to continue: the trajectory of neobanking is determined not only by current successes but also by its potential to constantly innovate and adapt to changing market dynamics and customer needs.

Here are some of the latest market trends in the neobanks 2024:

1. Integration of new technologies and customer-oriented products

In the future, it is likely that neobanks will continue to use technologies such as artificial intelligence (A.I.), blockchain, and cloud computing to offer a more personalised and secure banking experience. The focus will be on developing products that are not only technologically advanced but also deeply consistent with customers’ lifestyles and financial goals.

2. Expansion into new markets and global reach

Neobanks are ready to expand their global presence by entering new markets and serving a diverse customer base. This expansion will be facilitated by their inherently scalable digital model, combined with strategic partnerships and regulatory compliance in various regions.

3. Increased competition and cooperation

As competition with traditional banks intensifies, opportunities for collaboration will also expand. Partnerships between neobanks and traditional financial institutions may become more widespread by combining non-banks’ flexibility with the scale and trust of existing banks.

4. Regulatory evolution

The regulatory environment will continue to evolve, with a potential shift towards more standardised digital banking rules. This evolution will play a crucial role in shaping the operations and growth strategies of neobanks.

5. Financial accessibility and social impact

By offering affordable and accessible banking services, neobanks have the great potential to reach underserved populations and have significant social impact.

6. Sustainable finance

Neobanks focus heavily on sustainable finance and offer their customers environmentally friendly banking products, such as debit cards made from recycled materials and carbon offsetting programs.

How to launch neobank

Neobanks are steadily gaining popularity among tech-savvy consumers as a great banking option. The increased interest in financial applications is driving competition around the world.

Want to start a neobank? You need to know the main steps and weigh the pros and cons. Here is what you need to start a neobank:

1. Define your USP and target audience

You should develop a detailed roadmap by thoroughly analysing your business needs and expectations. You should start by choosing a niche and identifying your target audience, people who potentially need your services. Next comes the definition of your unique selling proposition (USP). Those two are crucial steps before starting your neobank. Your USP sets your service apart from competitors, and knowing your target audience’s needs will help you develop the right business strategy.

2. Allocate budgets

Costs include authorisation and licencing, connection to a BaaS provider, core banking software, and development of payment infrastructure.

According to our article on the cost of building a digital bank, the starting budget to launch a neobank for the first year of operations is 300 000 EUR as a registered agent of a financial services company (BaaS-provider) and 750 000 EUR as an authorised financial services company. However, remember that these final figures represent the lowest predicted expenses (the minimum) and that your actual expenses will be higher.

3. Prepare All Required Documents, obtain a financial services License and prepare all processes, including compliance

Compliance with local and international laws and regulations is crucial for your business. Some of the laws and standards governing the banking and FinTech industries:

• Anti-Money Laundering (AML) Policy.
• Know Your Customer (KYC).
• Payment Card Industry Data Security Standard (PCI DSS).
• General Data Protection Regulation (GDPR).

To ensure the credibility of your operation, you need to acquire the necessary licenses or registrations required to run your neobank. There are different types of licensing depending on the services you plan to provide and the target audience. The license gives the right to provide different services, such as payments, payment accounts, currency exchange, payment cards, and more, according to the licence type.

Assemble all the required legal, financial and regulatory compliance documents, such as financial statements, identity documents, business registration documents, and any other documentation required by the regulatory authorities in the countries where you plan to conduct business.

Alternatively, you can ask companies like Advapay to assist and facilitate the licensing process. Get in touch with us to find out how we can help your business.

4. Open Correspondent Bank Accounts

The following stage in starting a neobank is to open correspondent bank accounts. Choose trustworthy banking or financial service partners who share your business objectives. Establishing a trusted financial relationship and guaranteeing a smooth transaction flow depends on open and honest communication.

5. Configure your core banking software or IT system

Consider investing in a safe, effective IT system or core banking software like Macrobank. This system handles transaction processing, client administration, card issuing, AML/KYC processes, data security, and more. It will serve as the foundation for your neobank operations. Furthermore, consider implementing white-label mobile banking or web banking applications to provide your clients an outstanding experience.

6. Build strategic partnerships with Financial Institutions and make required integrations with your key partners

Make partnerships with financial institutions – partner with banks and other financial organisations to extend the reach of your services.

Then, integrate your core banking system with leading partners, including payment gateways, banks, and other financial service providers. Seamless integration guarantees interoperability and facilitates an efficient flow of funds between your neobank and partnering organisations. Finding an experienced BaaS provider that fits your neobank’s requirements can significantly help. Check our BaaS-offering.

Neobank core banking software

White-label Neobank core banking solutions like Advapay’s Macrobank can provide a competitive, safe, and distinctive user experience.

Ready-to-use neobank core banking solutions guarantee that financial institutions can accomplish their business objectives using functionality ready to use. As the company expands, more features can be introduced at any moment to offer excellent business value with no hidden costs.

Key ready core Banking Solution Features

• Complete back-office platforms equipped with all the necessary functions and the operator interface.
• White-label mobile & web banking apps for end-users. Cross-platform support for all browsers and iOS/Android apps.
• Ready integrations with service providers, including BaaS-providers in place.

The benefits of ready digital banking solutions

Among the important benefits are:

• Introduce products and services to the market more quickly than using a neobank’s own development process. Usually, developing software from scratch takes years.
• Seamlessly integrate internal and external systems with a ready digital banking solution, often including several ready-to-use integrations.
• Customising a ready-made modern system with your branding is significantly quicker than developing similar solutions from scratch.
• Compared to developing their own products, neobanks can go live quickly and with minimal risk. The process can be held while they work on creating their own solutions. For instance, there’s the risk of losing specific skills and competencies when employees leave and going over budget, as total costs are tricky to work out accurately at the outset.
• Products can be created to meet your budget, which is far better than developing digital banking solutions in-house.

Conclusion

Current trends demonstrate that neobanks are our present. The first sign is obvious to users: mobile applications are becoming increasingly functional, and more services are available without visiting a branch. The second sign is a noticeable reduction in branches of traditional banks to switch to online services. This phenomenon is observed all over the world.

According to forecasts, neobanks will completely replace traditional banks in the future. Financial system researchers believe this could happen in the next 10-15 years. The main obstacle to such a transition now is the adult population’s inability to adapt quickly to technological progress. Older people are the main visitors to bank branches, while young people actively use mobile applications.

About Advapay

At Advapay, we can help you in launching a neobank. Our team will be happy to guide you through anything you need to launch neobank:

• Assistance in EMI/PI licencing in the EEA/UK.
• Registration of MSB company in Canada.
• Delivery of a comprehensive Core banking system encompassing back-office and white-label applications for end-users.
• Assistance in payment infrastructure development
• BaaS-solutions (Banking-as-a-Service) in collaboration with our partners – EEA/UK licensed EMIs and PIs.

Advapay is a tech company that provides the Macrobank platform for FinTech companies. Launched in 2015, the Tallinn-based company now has offices in Canada, Spain, the Netherlands, Poland and Serbia.
If you want more detailed information or an individual consultation, leave a request, and the Advapay team will contact you.

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