Natalie Monko Lead Project Manager

    What is Neobank: the Digital Future of Banking

    In a world where every product and service gets transformed by digital technologies, the sphere of banking and finance is no exception. The shift of customer interactions from brick-and-mortar bank branches to online lead to the rise of so-called neobanks. 

    If we look for the neobank definition, we’ll find out it is a digital bank that doesn’t have any branches and operates exclusively online. They provide common banking services and financial solutions such as money lending and transfers, credit and debit cards, brokerage, asset management and more. Neobank customers can get all these services from the comfort of their home or office via the neobabank’s mobile app or website. Depending on whether a neobank has a banking license, it provides financial services mentioned independently or via a partner bank. Sometimes this factor is used to create an opposition ‘neobank vs digital bank’, where the former has a banking license, and the latter does not, but, for the sake of simplicity, we’ll use both terms interchangeably

    We at Surf are closely following the fintech industry and have developed mobile apps for international banks and a crypto exchange. Since neobanks are part of fintech, it is only natural for us to actively follow the market trends and recent solutions provided by its top players. In the article, we’ll talk about the most prominent examples of neobanks, how they compare to traditional banks and how to start a neobank.

    Best neobanks in 2021

    Let’s start by reviewing the leading digital banks and what they currently offer to their customers.


    Chime is a most popular American neobank with over 12 million users. The company provides free financial services to its customers, without monthly or transaction fees, and earns from interchange fees paid by merchants with whom Chime users make purchases. The key benefits of using Chime: receive salary up to 2 days in advance, withdraw money fee-free from over 60,000 partner ATMs and overdraft of up to $200 on a debit card. The company invests heavily in its mobile banking app that supports instant money transfers, various notifications and block settings for certain types of transactions. Also, Chime customers earn a 0.50% annual percentage yield (APY) on their funds.

    Chime app and card


    The first US neobank to be granted a national bank charter, which has numerous regulatory requirements and effectively made it a ‘real’ bank, Varo is a San Francisco-based company without physical bank branches. The company provides neo banking services with zero fees, allows customers to get a salary two days in advance, as well as multiple exclusive offers and cashback from Varo partners. Also, Varo has one of the best interest rates on direct deposits, which can get as high as a 3% APY. The neobank has over 3 million bank accounts and total deposits grow by 900% every year.

    Varo app and card


    Nubank is a fintech company from Brazil and one of the biggest neobanks in the world. As of June 2021, Nubank has over 40 million customers and the number is expected to grow further: the key audience of the neobank are underserviced and unbanked Brazilians, who make up roughly 30% of the 211 million country’s population. Nubank has two main types of accounts: NuConta for personal clients and Conta PJ for corporate clients. It is completely free to open both types of accounts, and Nubank offers very competitive rates on transactions and withdrawals. Along with a modern-looking app created with Flutter cross-platform framework, these benefits are a clear answer to why Nubank is one of the most rapidly growing fintech startups.

    Nubank app


    Founded in 2016, UK-based neobank Monzo has over 5 million customers and provides fee-free banking services, such as opening an account, issuing a card, money transfers, and ATM withdrawal. The bank lets users earn up to 0.70% interest on savings and pay direct debits for utilities and other services. Monzo mobile app has a slick user interface and supports real-time transaction notifications, while also serving as a budget app: users can set up personalized ‘Pots’ to save money for various goals and invest spare change of rounded-up payments. While currently available only to UK residents, Monzo has launched a beta in the US with plans to become available to every American soon.

    Monzo app


    Of course, no neobank list is complete without Revolut, a famous fintech startup with headquarters in London, created by Russian and Ukrainian entrepreneurs. The company names itself “the UK’s fastest growing financial super app” and, since its expansion to EEA countries, the US, Switzerland, Australia and Japan, has gained over 14.5 million customers in total. The company offers financial services for individuals, and serves as a business neobank for corporate clients as well. What makes Revolut stand out among its competitors are multi-currency cards, which cut down usual fees that occur when paying abroad, and access to cryptocurrency exchanges and stock trading.

    Revolut app and card

    Why people choose neobanks over traditional banks

    With almost 40 million users worldwide and rapidly growing, neobanks begin to pose a serious threat to traditional banks with physical branches. Let’s take a look at the pros and cons of holding an account with a traditional and a digital bank.

    What neobanks do better

    Lower fees. Operating exclusively online, neobanks save significant costs that physical banks spend on maintaining offices, branches, ATMs and staff upkeep. This saving of resources allows neobanks to offer lower fees on transactions and withdrawals while remaining profitable. Inexpensiveness and absence of monthly commissions make neobanks especially appealing for the underbanked population in developing countries.

    Convenient mobile apps. The neobanks use the so-called ‘mobile-first approach’ with its main focus on easy and quick interactions between customer and bank via an app. This not only lets customers manage their finances from the comfort of their home but also supplies vast and rich data on how, when and where they use the app. This data can be used by a digital bank to implement predictive analysis that helps with fraud prevention and credit scoring.

    Faster account opening. Neobanks have a more streamlined onboarding process, they ask for fewer details, support quick digital ID verification and let users add a card to Apple Pay (or Google Pay) as soon as the account gets approved. The aforementioned solutions let customers start using banking services much quicker. It takes 2-3 times fewer working days to open an account with Revolut or Monzo, compared to Nationwide or First Direct banks.

    More sustainable. The shift from paper documents to digital leaves a smaller ecological footprint, and neobanks operate completely digitally. The key thing here is to make the management of digital documents in a mobile app as convenient and easy as leafing through papers. In the banking sphere, which is notorious for excessive red tape, easy document management can be achieved by designing easy-to-use interfaces. When Surf developed a corporate banking app for Rosbank (part of Société Générale group), we created an adaptable home screen that highlights the most frequently used services and provides easy access to a separate tab with documents, which can be filtered by date, status, amount and other characteristics. A ‘repeat’ feature allows users to create invoices from existing templates in just three clicks.

    Quick processing. Neobanks use the power of AI to evaluate credit scores quicker and make the tedious process of loan application easier. For example, SoFi (Social Finance) fintech company lets customers prequalify for a loan and see their interest rate in a matter of minutes. The principle of quick processing also applies to international money transfers, which can take a week with a traditional bank, but digital banks effectively trim all unnecessary holdups, resulting in a minimal transaction time.

    Where traditional banks still win

    Person-to-person interaction. For people, who are not tech-savvy or prefer talking to a real person, traditional banks might be a better choice, since they can visit a bank’s office and get in-person support.

    Fewer services. Since neobanks are all relatively young companies and have their focus on what they can do better than traditional banks, some neobanks do not provide a full range of financial services that a customer can find in an established bank.

    More regulated. Because not all neobanks possess full banking licenses, there can be confusion over who is responsible for potential losses from fraud or software malfunction. However, as neobanks mature, such legal and regulatory issues are likely to be worked out in the not-so-distant future.

    How to create neobank app

    A mobile app is a cornerstone product of any neobank. In the absence of brick-and-mortar offices, the app becomes the ‘face’ of the company and a key tool for communication with clients. A stable and quick app with a convenient interface and customizable features is as paramount to neobank’s success as a bad app is a likely cause of its failure.

    If you think about starting a neobank, the development of a mobile app should be one of your priorities. Below you’ll find an overview of the main steps you should take to start developing an app for neobank.

    Business analysis and market research

    Learn about the current market trends and existing solutions. Try out the services offered by competitors. This will help define your target audience and the unique offering of your neobank that will set you apart from other fintech startups. Fintech companies are subject to strict legal regulations, and each country has its own set of policies. The best way is to start your neobank as a local service for residents of one country and then gradually scale the business. As mentioned before, neobanks have benefits that strongly appeal to the populations of developing countries, so starting a business in North Africa and the Middle East might show better growth.

    Choose the right technology

    There are two main ways to develop mobile apps. You can develop two separate native apps for iOS and Android using Swift and Kotlin languages, or you can build a cross-platform app from a single codebase for both platforms. While native apps provide the best performance and lowest risk of bugs, a cross-platform app is a cost-effective solution that allows you to have only one team of developers. For example, Surf chose Flutter cross-platform framework to develop an app for ​​cryptocurrency trading platform Twim that required responsive and intuitive UI, that will appeal to both experienced traders and crypto enthusiasts and won’t freeze in the middle of a trading day.

    Choose the development team

    To create a complex fintech app you will require experienced developers with fintech projects in their portfolios. While hiring a local team looks like the easiest solution, it might not be the best one. The geographical location of developers plays a significant role in the final price of an app. For example, an hourly wage of a developer in the US can be over $100, while rates of developers in Eastern Europe or Asia are half of that figure without any compromise on the code’s quality. Read more about the best places to hire developers in our dedicated article. 

    Estimate costs

    The final price of an app is influenced by many factors, including developers’ salaries, app features and chosen technologies. Because of complex architecture, third-party integrations and tight security, the price of a banking app development lies between $250,000 and $500,000 margin. For more details, check our article on what affects the cost of developing a banking app.

    Create a minimum viable product

    An MVP is a working version of an app with a minimal set of the most important features. This prototype will help you collect feedback from users, find investors and determine what to improve and change, without blowing the whole budget. Once an MVP is reviewed, it is time to start developing a full-scale version of the app.

    Improve & release

    After analyzing the data from MVP testers, the developers refine every aspect of the app, including design, functionality and integrations. At the same time, QA engineers work on discovering every bug and error. In the end, you’ll have a fully functional app, ready for public release.


    The next challenge for neobanks will be to shift from rapid short-term growth to a sustainable and profitable business model. The COVID-19 pandemic proved that digital banking services and contactless payments are here to stay and will gradually oust visits to bank branches and payments in cash.

    The demand for flexible banking solutions will grow, and there is surely a place and an audience for another neobank that provides improved existing services and completely novel ones. If you think about creating a neobank, make sure to invest in the mobile app for your clients, as it is one of the key elements of success. We at Surf have over 10 years of experience developing mobile apps, including several apps for the fintech industry. Fill in the short form and we’ll be glad to estimate your project and discuss it in detail.