One of the most common requests we get from customers is, “how can I launch my neobank quickly?” The secret to launching a neobank with little delay is to ensure your neobank is thoroughly prepared to go through the implementation and bank due diligence process. We wrote the "How to Accelerate Your Neobank Launch" ebook to demystify these processes and help you launch your neobank as quickly as possible. 

This guide walks you through every step of the neobank launch process from start to finish. You’ll learn how to select a BaaS provider, how to prepare for bank due diligence, and what to expect before going live. It contains lessons learned from over one hundred successful embedded banking implementations and advises how to avoid common mistakes that can slow a launch. Organized chronologically, use the guide’s major milestones to ensure your neobank launch is progressing smoothly. 

To download the full guide click below. 

Below find an excerpt of the Accelerating Your Neobank Launch ebook.

Accelerating your neobank launch 

From planning to accepting deposits — how to get to market fast 

Introduction

In this guide you will learn how to prepare your organization to efficiently launch a neobank via embedded banking. 

Included in this guide: 

• What to expect during the implementation process
• How to select the right BaaS Partner and bank partner
• How to prepare for the bank due diligence process
• Common pitfalls to avoid for a quick implementation
• Project milestones

Note: This guide takes neobank leaders through the process of setting up a neobank via embedded banking. It does not advise readers on the business aspects of designing a neobank offering such as feature set, economics, and marketing. This guide is informational only and does not purport to serve as legal advice.

Phase 1: neobank preparation

Pick a BaaS partner, bank introductions, prepare for due diligence, test in sandbox environment

In the first phase of your neobank implementation journey you will be preparing for your bank partnership. This phase is critical to ensuring a smooth and efficient implementation as you’ll use this time to select the right partners, align on your requirements, prepare for the bank due diligence process, and begin building your UI. Alignment with your partners is critical here as changes to your requirements can lead to delays down the road. 

Finding an experienced BaaS partner can help greatly during the preparation phase. You’ll want to ensure you select a BaaS partner with not only the experience, but also the technology and compliance methodology that fit your neobank’s requirements. In this phase, the BaaS platform will help you select the right bank partner to fit your requirements. Note that this is only the case if the BaaS platform facilitates direct relationships between neobanks and sponsor banks, which is an important aspect of fintech bank partnerships.

1. Select the right BaaS partner for your business needs 

Your first step in this process will be to select a BaaS partner that fits your business needs. We advise taking the time to select a partner that can scale with your business. Check out this blog post for ten questions you should ask your BaaS provider before entering into a BaaS partnership. The following best practices will help you identify the right BaaS platform for your neobank. 

Check for neobank-essential features:

• FDIC-insured bank accounts with unique account numbers
• Payment rails: ACH, same-day ACH, wires
• Account funding: account funding via ACH, debit card
• Monthly statements

New account funding methods including ACH pull via Plaid and instant debit card funding via Astra provide user-friendly methods to make the initial transfer of funds into a bank account.

Nice to have features: 

• Checks, remote deposit capture (RDC)
• International wires
• Debit cards: issuing, program management, premium cards
• Additional deposit capacity — ask the BaaS vendors what your options are for adding deposit capacity if your neobank exceeds its deposit capacity at its first sponsor bank
• Additional FDIC insurance coverage

Good to know: Treasury Prime customers can add deposit capacity by adding a new bank to their programs with OneKey Banking. This obviates the need to switch sponsor banks as your program scales.

Spotlight on MVPs: You can get to market and revenue fastest by launching with an MVP and adding on additional products later. We recommend creating a list of must-have vs. nice-to-have features. At Treasury Prime, we generally advise founders to go to market with an MVP composed of bank accounts, ACH, and wires.

Check technical availability

‍Are the features you want available via the BaaS platform’s API, natively integrated partners, or non-integrated partners? Be sure to ask how the feature availability will impact your implementation and the experience of your customers. 

Check feature availability at the bank

It is possible that some banks might not offer all your requested features. Be sure to ask the BaaS provider the following questions at this stage: 

• Are all the features I want to make available to customers at one bank? 
• If the features are not available at just one bank, how does the platform handle working with multiple banks? 
• If I must work with multiple banks will I be required to manage multiple ledgers? 

Spotlight on feature availability through multiple banks: A problem you might face is finding a bank partner that supports the entire range of features you want to offer in your product. At Treasury Prime, customers can use OneKey Banking to develop a wider range of products with multiple banks using a single technology integration and ledger. On the back end you might be working with 2 or 3 banks, but on the front end, it will feel like working with just one bank.” 

Inquire about onboarding and compliance

‍Onboarding is one of the very first interactions a customer has with your company and is deeply entwined with compliance. The Know Your Customer (KYC) check, which is the process of verifying the client’s identity when opening an account, is one of the pillars of regulatory compliance. KYC is executed during the onboarding process, and can impact your customers’ experience with your business. Here are some questions you should ask your BaaS provider about compliance at this stage: 

• How do you handle compliance and onboarding? 
• Am I able to create a custom KYC onboarding experience (waterfall) tailored to my customers? 
• How are manual reviews handled? 
• Can I handle my own manual reviews? 
• How long does it take to execute manual reviews? 
• How are manual reviews handled outside of normal business hours?
• Beyond KYC, are there disclosures I need to work with the Bank to display to end customers?

Ask for customer references‍

Selecting a BaaS provider is one of the most important decisions you’ll make. Get a sense of what it’s like to work with a platform by asking for customer references and reading case studies. 

Pick the right bank partner for your business needs 

In this phase, the BaaS provider will introduce you to potential bank partners that may fit your neobank’s requirements. In these meetings, both you and the sponsor bank will try to determine if your goals, compliance plans, and requirements align in a way that will yield a mutually beneficial partnership. Selecting the right bank partner is yet another mission-critical decision, so you will want to be able to clearly articulate your elevator pitch and business plan, and arrive at the meetings prepared with questions. We find that entering these meetings with a desire to sell your vision and a willingness to collaborate with the bank helps speed the process of finding the right partner. 

Spotlight on direct bank relationships: not all BaaS providers will introduce neobanks directly to sponsor banks. Be sure to ask if you will have the ability to have a direct relationship with your sponsor bank. Check out this blog post for more information about the benefits of a direct relationship with your sponsor bank. 

To ensure the most efficient meetings, we recommend preparing the following before the meetings: 

Pitch deck to explain your business plan to the bank

The bank needs to be able to understand your business in order to evaluate your suitability as a potential partner. Be prepared to describe your business model, financials including funding, customer geographies, and more in detail. To ensure a productive meeting the deck should include the following elements:

• Overview of your neobank business
• Current activity (if live)
• Roadmap with MVP and phase II projects (this can be organized as a list of need to have vs. nice to have)
• Timing
• Financials including revenue source, projections, cash flow, and funding
• Customer acquisition and growth plan
• Usage projections such as bank accounts, payments, etc.
• Customer profile and geographies
• Flow of funds 

Questions for the bank‍

Selecting the right bank partner is one of the most important decisions your company will make. Not all banks are the same, so you’ll want to find one that aligns with your goals and operating style. We recommend asking these questions during your meetings with banks:

• How many fintechs do you have live? 
• How long did it take to get them live? 
• What were some of the challenges going live? 
• What kind of fintechs are you looking for? 
• What is your ideal depositor profile? 
• What’s your ideal customer/fintech partner profile? 
• How fast are you trying to grow with respect to deposits? 
• How hands-on are you typically with fintech clients? 
• How do you prefer to handle transaction monitoring, KYC?

As you can see, launching a neobank, or any product with embedded bank accounts, is a rather involved process that requires a high degree of alignment between the neobank, the sponsor bank, and the embedded banking platform.

Is it possible to launch a neobank quickly? Absolutely!

With the right partners, a little bit of preparation, and a clearly defined MVP you can set yourself up for an accelerated launch. 

This is an excerpt of the “Accelerating Your Neobank Launch” guide. To learn bank due diligence, the implementation process, and more, download the full guide to get started.