How Much Does it Cost to Build a Neobank like SoFi?

The NeoBank Apps Evolution - Transforming Personal Finance

SoFi-like apps prioritize user experience by offering engaging interfaces and personalized financial coaching. Neobanking apps aim to optimize banking hassle with a more personalized and user-friendly financial management experience.

Since 2011, SoFi has accomplished amazing market growth driven by its distinctive array of financial services and banking approaches. The company’s revenue is braced by its remarkable services like student loan refinancing, mortgages, investing, personal loans and banking.

According to a report by Nasdaq, the key factor in SoFi’s success is its exponentially growing clientele base. In Q1 of 2024, the user base grew to 8.1 million, i.e. a 44% increase from the last year. Moreover, deposits scaled by 16%, owing to the 4.6% yearly percentage yield provided by SoFi Money.

These numbers clearly define that by prioritizing user experience with engaging UI and tailored financial assistance, SoFi attracts as well as retains customers. Furthermore, the company predicts an influx of ~2.3 million new users this year, portraying a 30% increase.

To your surprise, more and more people are only using digital-only banks. For example, the number of users using neobanks in the USA has already surpassed the milestone of 15.8% of the population and is projected to reach 20% by 2025.

A report by Gartner underlined the fact that in the next few years, more than 30% of high-revenue banks will coin their own Banking-as-a-Service (BaaS) platform. Zopa advocates the significance and promising potential of neobanks, which recently secured $93 million in funding, upholding its unicorn status from $300 million to $1 billion.

Substantial support like these sheds light on the strong trust and profitability potential of the neobanking segment.

This makes a great opportunity for investors to build a neobank app. Building a neobank app is a rewarding investment because of the FinTech industry’s exponential growth and consumer demand for digital banking solutions. Also, new players can dominate the lion’s share and cement their footprints by leveraging cutting-edge technologies, emphasizing user experience, and offering a competitive financial landscape.

Factors Influencing Cost to Develop SoFi App

As mentioned earlier, the neobanking app development price varies from $40,000 to $80,000 or above. Let’s find out the factors influencing the complete cost of developing a neobank app like SoFi.

• User Experience and Design

When it comes to neobanking app cost, first and foremost is to consider establishing aesthetically pleasing designs to attract and retain users. However, to build an app like SoFi, investing in UI/UX design is important for a flawless user experience.

After all, an engaging design improves usability, making it easier for users to navigate and complete transactions easily.

Comprehensive research, wireframing, and user testing are needed to make sure the interface addresses the user's needs and expectations. Regular design updates that improve user experience are equally crucial for building client loyalty and satisfaction.

• App Complexity and Functionalities

The Neobank app development cost is directly proportional to the functionalities and features added, like investment options, bill payments, tailored financial assistance and mobile cheque deposits. And, to build complex functionality, more effort and experience is needed. Careful planning, thorough testing and meticulous development of each aspect are important to ensure seamless integration and optimal performance.

Moreover, advanced features like AI-driven financial assistance or real-time transaction monitoring can contribute to the development and maintenance costs.

• Development Team

The cost of hiring an experienced and skilled development team varies on their location and expertise. Designers, developers, QA, and project managers all contribute equally to the development cost.

Outsourcing to regions with lower labour costs can immensely save on costs and also provide access to a wider talent pool. However, managing potential red flags like quality assurance and communication is inescapable.

Seamless outsourcing to countries like India proves to balance cost-efficiency and high-quality output, ensuring the successful integration of advanced features like AI integration and heightened security measures. With careful planning, outsourcing can offer a dynamic solution without compromising the project’s quality and standards.

• Security and Compliance Adherence

Fintech apps must adhere to compliance regulations and security standards. Establishing robust security measures, like encryption and multi-factor authentication, ensures compliance with financial regulations and adds to the development cost. If you choose to skip these security measures, remember that these security measures are crucial for preserving confidence and protecting user information.

Constant security audits, compliance checks and penetration tests are needed to remain ahead of the potential threats and regulatory changes. The cost of getting required licenses and certifications with the cost of educating employees on security procedures manifold the complete development cost. These investments are crucial and not catering these requirements can lead to harsh penalties and harm the app’s brand value.

• Choosing the Right Tech Stack

Selecting the right tech stack significantly impacts development costs. Latest and scalable technologies may seem expensive initially, but in the long run, they save money by improving performance and less maintenance.

Advanced technologies are more efficient, allowing the fintech app to accommodate a growing user base and intricate functionalities without compromising reliability or performance. A well-chosen technology stack can save ongoing development and maintenance costs by simplifying service integration and upgrades.

• Third-party Integration

Integrating with third-party apps or services like financial data providers, verification services, and payment gateways comes with an added cost. These integrations are vital for offering a comprehensive array of financial services.

To ensure flawless operations within the app, precise planning, development and testing are important for every integration. The potentially huge license fees related to using third-party services increase the entire cost. Besides, to build an app like SoFi it's important to keep the integrations up-to-date with emerging technologies and security standards, constant updates and troubleshooting are needed.

Third-party integrations are crucial to satisfy customers' ever-evolving demands and legal requirements, even if it means a huge investment.

• Legal and Regulatory Expenses

Sifting through the financial sector legal maze needs huge legal and consulting expenses. Thus, ensuring compliance with all legal regulations is vital, which may raise the final development cost. Often, this process includes getting the needed permits, abiding by data protection laws, and adhering to financial standards unique to each market.

Fintech app developers must always keep track of how the law changes and alter the app’s features and policies accordingly. Moreover, to ensure compliance, thorough paperwork and audits are important, which contribute to the development cost. The app’s success and profitability depend on maintaining legal and compliance efforts,  as non-compliance incurs hefty penalties.

• Hosting

The app’s availability and performance depend on hosting and infrastructure. Regular operating expenses consist of server maintenance and cloud services. Therefore, securing and effectively managing voluminous data and transactions requires a best-in-class solution. Plus, scalability is crucial because the infrastructure must brace the growing user population and growing demands.

The requirement of upgrades, system monitoring and security patches to keep peak performance and skip downtime increases the neobanking app development cost.

💡 Invest in trusted recovery solution to safeguard against data loss and service disruption, regardless of the increase in cost of building an app like SoFi.

Crucial Features of Neobank App Like SoFi

A fintech app like SoFi includes features that are important for improving user experience. For instance, the features should offer tailored financial insights, heightened security measures and simultaneously cater to the ever-evolving needs of modern customers.

To build a neobank app, it’s important to consider at the handful of the bespoke features.

• Loan Refinancing

This feature offers flexible and affordable interest rates to make refinancing loans easier. And when accepted, borrowers can pay back their loans quickly and with reduced monthly interest.

• Easy Mortgages

Neobanking apps provide an easy application process for loans and mortgage refinancing. Moreover, users get an array of loan alternatives, where borrowers can get personalized advice.

• Real-time Notifications

Provide users with push notifications or instant alerts regarding transactions, account activities or significant financial events to ensure users are updated.

• Trading and Investment Options

This feature provides users with the ability to easily invest in stocks, cryptocurrencies and ETFs supported with professional portfolio management services and automated tools.

• Personalized Financial Advice

Offers customized financial suggestions depending on individual user profiles and financial objectives.

• Budgeting and Financial Planning Tool

Including these features helps users manage their small to huge investments effectively.

• Mobile Cheque Deposits

By using a mobile camera, user can easily deposit the cheque into their account.

• Integrated Payment Solutions

Braces seamless payments and transactions to accommodate different payment methods for user convenience.

At Apptunix, we developed Vala, an AI-driven saving companion to help track daily expenses and spending. This smart budget management software offers effortless financial planning and intelligent money management. Our team’s dedicated efforts have resulted in rolling out a dynamic app across the globe.  

• Loans and Credit Services

Access several loan products and credit services with competitive prices and flexible terms.

• Cashback and Reward Programs

Provides cash back on spending and rewards to incentivize savings and spending.

• Account Management

Make sure your fintech app allows users to keep track of spending, and balances, and simultaneously manage multiple accounts.

Understanding Revenue Model of a Neobanking App Like SoFi

To build an app like SoFi, exploring the business strategy behind “How SoFi Earns Money” is of paramount importance. After all, the math behind this allows businesses to diversify their revenue streams, leveraging their portfolio to cater to distinctive customer needs and bring profitability while managing the complete cost.

Let’s have a look!

• Interest Income

SoFi reaps money from the interest collected on its loans, consisting of personal loans, student loan refinancing and loans. To add, SoFi's attractive interest attracts numerous borrowers.

• Investment Product Fees

Unsurprisingly, SoFi also earns money from its investment aspect. For example, charging transaction fees in cryptocurrency trading or management feed for automated investing.

• Loan Origination Fees

SoFi implies origination fees for a handful of loan schemes, although they are one-time costs that borrowers must pay at the time of loan disbursement.

• Interchange Fees

Sofi’s cash management account, aka SoFi Money, creates revenue through interchange fees, which are usually small fees charged to merchants whenever customers use their SoFi debit card for buying.

• Referral and Partnership Fees

The Neobank app collaborates with several partners and earns referral fees or commissions on a partnership basis directly from customers to third-party merchants or products.

Recommended Reading  - The Best Mobile App Monetization Strategies

• Insurance Based Commissions

SoFi Protect (an insurance element) offers a varied array of insurance products, like vehicles, homeowners and life insurance. Every sold policy generates commissions or referral fees.

• Membership Fees

SoFi leverages the membership model, in which basic features are free to use and premium features come with a cost.

How To Build a Neobank App like SoFi - A Step-By-Step Breakdown

Fintech app development for SoFi-like apps consists of numerous key steps, meticulously crafted to pace up with technological advancements and user expectations. Each step is drafted to optimize functionality and improve user satisfaction, ensuring that each step is synchronized with goal and market gaps.

Here's the breakdown of the development process:

Step 1: Do Thorough Market Research

Perform a comprehensive market analysis to understand your target audience, market trends, and competitors. This research will help you in crafting your app’s UVP (Unique Value proposition) and crucial features. Based on this analysis, it’ll be easy to draft a detailed plan outlining user acquisition, monetization models, client retention and scalability strategy.

Consider factors like use behaviours, demographics, preferences, market demands and competition analysis for a thorough market analysis. Further, use this information to personalize your app’ features and marketing strategies to cater to your audience’s needs and expectations.

Step 2: Craft Designs and Concept

Develop wireframes in the conceptualization and design stage to present the app's interface and experience.

Creating a clean and engaging interface that portrays your brand’s ethics and objectives is important. To achieve bespoke design leverage user feedback and usability testing, ensuring it addresses compliance and security requirements.

Imagine the user journey from onboarding to performing key tasks, and designing each interaction to be seamless and intuitive. Consider color schemes, iconography and typography to create an engaging and unified design, as these designs have a significant impact on neobanking app development price.

Step 3: Develop Your Neobank App

During fintech app development, ensure to follow the best practices with the right tech stack. For instance, adhere to modular design and code reusability for optimal and effective development. Frequently review and test your code to resolve any potential issues. Consider implementing agile development methodologies to address evolving requirements and deliver updates more effectively.

Step 4: Establish Third-Party Integrations

Establish third-party services, like KYC integration and payment gateways to manifold app’s functionality. This amalgamation should be done meticulously, adhering to the service provider’s guidelines and APIs. Do thorough integration testing to make sure the app works correctly and doesn’t compromise security or performance.

Also, integrate fallback mechanisms and monitoring tools to identify and solve integration issues. Make sure to consider the scalability and reliability of third-party services.

Step 5: Adherence to Legal and Regulatory Standards

Assuring legal and regulatory compliance for financial apps is a critical aspect.

Thus, get necessary licenses and certifications and integrate security measures to safeguard user data and transactions. Stay informed and updated about regulatory compliance changes and industry best practices to maintain a secure and trusted environment for users.

Step 6: Do Comprehensive Testing

Thorough testing makes sure the app functions correctly and quality standards are met. Do several tests, like functional, usability, security, and performance testing. Besides, use automated testing tools to streamline the process and identify any potential threats, ensuring high-quality apps.

Consider performing beta testing with selected people to gather feedback and solve potential challenges. Frequently update your testing strategy to add new functionalities and address emerging trends and red flags.

Step 7: Roll-out Your App

Outline a strategic roll-out of your app, including features like target audience, timings, and marketing channels. Ensure all technical aspects and app store guidelines are addressed before launching the app.

Conduct thorough testing and quality analysis to identify and address any last-minute slipups.

Step 8: Provide Regular Maintenance

Constant monitoring and updating of your app to resolve any issues, improve performance and add new features and functionalities. Thus, offer excellent customer assistance to resolve queries and threats instantly, curating a positive user experience.

Moreover, integrate a feedback loop to collect user input, prioritize feature updates and fix bugs. Regularly analyze user feedback and app performance to detect areas for improvement. Collaborate with your fintech app development company to implement functionalities based on industry standards and needs.

Finally…

Creating a neobank is an uphill journey that requires patience, hard work, and the willingness to learn from trial and error.

While there’s no thumb rule for success, the tips provided here will navigate you towards a rewarding outcome. After all, the key to a successful neobank lies in combining both basic and advanced features to make your service stand out. We at Apptunix, always prioritize customer satisfaction and create a user experience that is both simple and enjoyable for your customers.

Moreover, developing your SoFi-inspiring neobank app with a trusted fintech app development company curates you as a top choice for users for advantages, like lower operational costs, faster service, ease of use, advanced technology offerings, and seamless international payments.