How to Build a Digital Bank in 7 Easy Steps

Sharing is caring!

Gone are the days when you have to stand in long queues to deposit money in the bank. 

With the advent of digital or online banking, people can now enjoy most of the banking services from the comfort of their home.

The banking industry has changed drastically over the period of time. We are living in the era of digital banks.

As there is great demand for digital banking solutions, many people are coming up with digital banks. These banks provide most of the banking services via online platforms.

You can simply use your smartphone or computer to access banking facilities 24 X 7. 

How to Start an Online Bank?

Starting an online bank is quite different from establishing an actual physical bank. It is quite simple as anybody with a business idea can start their own digital bank. If you want to learn how to start an online bank from scratch, follow this guide.

  • Step 1: Identify Your Target Audience

The first thing you need to do in order to create an online bank is to understand and know your customers. It will help you to create a development strategy and define your value proportion. You need to research the customers. It will help you to know what banking problems they are facing and what solution you can offer. You can prepare a questionnaire or conduct a survey to know your target audience.

  • Step 2: Define Use Case

Once you know your target audience, you need to define the use case to create an online bank. It will help you to know how people will be able to use your online banking services. You also need to highlight the technical requirements to start the bank. This step is like creating a blueprint to build your bank. 

  • Step 3: Setup Online Platform

This is the most important step. Now, you need to set up your own online banking platform. You will have three options. You can either create your own platform, partner with another platform or buy an already built platform. Most people use a combination of the above three options. The platform must cover account management, compliance, customer onboarding, KYC, AML, IT security, customer service, fraud management, regulation, application and website.

  • Step 4: Licensing and Regulation

In order to create an online bank, you will need regulatory approval. You need to follow all the regulations and get your bank licensed. Make sure you apply for a license and follow compliance.

  • Step 5: Create Platform

Once you are done with regulation and licensing, you can start building the platform. You need to create a platform that is simple, easy to use and contains many banking options. The user experience and user interface should be user-friendly.

  • Step 6: Launch the Online Bank

In this step, you need to launch the digital bank platform. During the initial days, the bank will need money to acquire customers. However, it is an investment as the customer will provide long-term value. In order to make a profit and gain more customers, the transaction fees should be less than the competitors. 

  • Step 7: Innovate and Expand

Simply launching a digital bank is not enough. If you want to stay in the market for a long time, you need to innovate and adapt to the market trends. It will help you to expand and grow your online bank.

These are the seven steps you need to follow to start an online bank from scratch. It will help you to launch and manage your digital banking business.

Leave a comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.