Neobanks Development: Vital Integrations, Cost, Benefits, Use Cases

By integrating third-party services into your neobank solution, you can quickly add features and tools to your product that could take many months to develop on your own. Carefully selected third-party integrations add value to your product, help it compete in the highly competitive fintech market, and ensure a seamless and consistent banking experience for your customers.

But those are not the only benefits of integrating third-party services into your neobank solution. In this article, we have covered the key arguments for integrations, explained which integrations are a must-have for any banking solution and how much they cost, and highlighted points to look for when choosing an integration vendor.

How Integrations Benefit Neobanks

Neobanks are valued for their convenience, accessibility, and security. Another point to which neobanks owe their success among customers is the wide variety of services that make most financial operations much easier and faster.

Among other things, being that convenient, accessible, and multi-purpose is possible due to a wide range of third-party services available for integration with neobanks. The latter benefit from the integrations not only in terms of improved customer experience but also in many other respects.

• Cost efficiency. According to some reports, in-house development of integration can cost a neobank about $50000. Now count how many features your neobank solution needs to have to be competitive in the market, and you will see that you can save significant amounts of money by integrating with third-party vendors.
• Versatility. Integrations allow neobanks to quickly develop new product lines to enter new markets and meet the needs of a much larger number of customers.
• Customer acquisition. More features often mean more customers. By integrating third-party services, neobanks can offer a broader range of services, attracting more new customers whose needs were previously unmet.

Integrations to Use while Developing Neobanking Apps

When it comes to neobanks, the first thing that comes to mind is a great customer experience. Then it’s only logical that when choosing what features to add to your solution, you should understand exactly what your customers need and what problems they are trying to solve with your solution. Otherwise, you run the risk of overwhelming your customers with an over-featured and too expensive product.

That being said, there are integrations that every solution should have — let’s take a look at them.

KYC/AML Providers

Know Your Customer (KYC) is a mandatory process of identifying and verifying the identity of the customer while opening an account. Roughly speaking, KYC allows banks to make sure that their customers are who they say they are.

AML (Anti-Money Laundering) is a set of regulations, laws, and procedures that prevent criminals from disguising illicit funds as legitimate income. AML requires banks to collect customer information, monitor and audit their transactions, and report suspicious activity to financial regulators.

For fintechs, carrying out these two procedures is required by law to mitigate the risk of being used as a vehicle for financial crime. There are a variety of KYC/AML providers in the market that help neobanks and other financial institutions comply legally, and below we have listed some of the most popular providers.

Jumio

Jumio is an end-to-end platform that provides automated identity verification and AML solutions. Leveraging such technologies as AI, biometrics, machine learning, liveness detection, and automation, Jumio helps businesses fight fraud, onboard customers faster, and comply with regulatory requirements such as KYC, AML, and GDPR.

Jumio offers products for the following purposes:

• Identity verification
• AML
• Document verification
• Authentication
• Video verification
• Transaction monitoring

Pricing

Pricing is available upon request. Contact the sales team to learn more.

Shufti Pro

The platform is an AI-based identity verification SaaS designed to eliminate the risks of identity theft, financial crime, and cyber fraud. The key benefits are a fast and accurate verification process, wide global coverage, and two-fold technology. Shufti Pro offers a variety of services that you can tailor to your needs or use all at once.

• KYC
• Background AML screening
• Facial biometric authentication
• KYB
• Video interview KYC
• OCR for business

Pricing

Shufti Pro offers the following pricing plans:

• Free trial
• Start-up — $1,250 (pay as you go)
• Enterprise — $4,500 (pay as you go)
• Premium — contact the provider to get a custom price.

Monthly commitment is also available.

Data Aggregators

Data aggregators pool customers’ personal and financial data from a variety of sources and make it easily and conveniently accessible in a single place. This information is then used by neobanks to provide a more personalized experience to their customers and generate additional income. For example, data is collected and analyzed to develop new financial products. For this reason, the demand for such services has grown tremendously in recent years and continues today.

Plaid

Plaid is the leading provider of financial data, with over 11,000 financial institutions in its network. To access, cleanse, categorize and deliver customers’ financial data, Plaid uses screen scraping and APIs.Plaid ensures reduced fraud, simplifies bank account authentication, provides comprehensive transaction history, tracks geological transactions, validates user income, and offers a range of custom integrations.

Pricing

There are two publicly disclosed paid options — Launch and Scale.

• Launch means “Pay as you go”
• Scale is €200+/month

Truelayer

Truelayer offers a variety of helpful APIs, including a data API that ensures increased engagement and a more personalized user experience. TrueLayer data API helps to build a unified view of finances allowing your users to manage their credit cards and accounts in a single view and provides all the information they need to make data-driven financial decisions.

Pricing

Truelayer has three payment plans:

• Develop — free
• Scale — usage-based pricing
• Enterprise — custom pricing

Payment Gateways

A payment gateway is an online payment service designed as a channel for making and receiving payments. It makes the payment run smoothly by securely validating the customer’s card details and ensuring the availability of funds. Payment gateway services encrypt the sensitive credit card data and guarantee that the information is securely transferred from the customer to the acquiring bank.

Stripe

The service offers a fully integrated suite of payment products, enabling users to accept money globally and ensuring secure transactions. Stripe offers user-friendly reporting features, consistent service, and democratic and transparent fees, and works with all types of currencies, banks, and credit cards. In addition, Stripe makes it easy to cancel recurring monthly charges as well as refunding clients.

Pricing

Stripe charges 2.9% plus $0.30 per successful online card charge. Customers pay the same price regardless of what type of card they process. For on-site card processing, Stripe charges 2.7% plus $0.05 per successful credit card transaction.

PayPal

This is another world-known payment service that is easy to use and offers customers a high level of security and fraud prevention. The service records all transactions, so creating and monitoring invoices is less stressful for your business. Plus, loyal customers who purchase online through PayPal receive special discounts.

Pricing

There are different fees depending on whether you are a merchant or a customer.

• Invoicing for a merchant is 3.49% + a fixed fee.
• Sending domestic personal transactions for a customer — no fee (if the payment method is PayPal balance or bank account), 2.90% + fixed fee (if the payment method is a card).
• International personal transactions — 5.00% (PayPal or a bank account), 5.00% + 2.90% + fixed fee (a card).

Communication services

These services help neobanks streamline communication with their customers and therefore provide a better customer experience.

Twilio

Twilio is a customer engagement platform that offers a multitude of tools to unite communication across your business and personalize every step of the customer journey. In their arsenal, there are tools for messaging, email, calls, video communications, marketing campaigns, and more. Whatever your communication goal is, Twilio has a solution to help you accomplish it.

Pricing

Twilio offers simple and flexible pricing options for all of its products. Visit the website or contact the sales team for details.

Plivo

The service is ranked № 1 for customer satisfaction in G2’s Cloud Communications category. Over 98% of customers rate Plivo with 4.5 or 5 stars. It offers SMS, voice, and MMS APIs.

• The SMS API allows you to send and receive text messages in over 190 countries worldwide.
• Voice API allows customers to integrate voice calling features into their applications.
• MMS API enables sending and receiving images and videos using phone numbers in the US and Canada.

Pricing

Fees vary by region and are available on the company’s website or upon request.

Brokerage APIs

Enabling neobanks customers to invest in stocks, options, futures, currencies, bonds, and funds through a single integrated account, a brokerage API is a great add-on that would help you reach a wider audience.

InteractiveBrokers

The service is equipped with a range of technologies that optimize clients’ trading speed and efficiency and perform sophisticated portfolio analysis. It offers free trading tools, more than 100 order types, and a comprehensive reporting system.

Pricing

Pricing depends on the type and version of the account — Pro or Lite. For detailed information, visit the official website.

Apex

The platform offers a range of APIs to facilitate the entire trading and investing lifecycle — from account opening to regulatory support. Apex allows users to execute trades across all major asset classes, including support for partial orders, bookkeeping, and equity allocations.

Pricing

Fees are available upon request.

All the prices are relevant at the time of publication.

How to Choose the Integrations Covering Your Needs

As mentioned earlier, the selection of features you add to your solution should be based on the real tasks your customers are trying to solve with your solution. A deep understanding of your customers’ needs, wants, and painpoints can give you actionable insights on the further development of your product.

To get this in-depth knowledge of your target audience, you can try the Jobs to be Done framework (JTBD). In a few words, the idea behind this framework is to focus on the “job” that customers are hiring your product for. Customers simply need to get things done, and you need to understand what jobs regularly arise in customers’ lives for which they need your services. The critical thing is to define a “job” by its outcomes, rather than its functions — what is the ultimate purpose of using this or that banking service?

When you move beyond demographic and behavioral segmentation and focus on the job, you can gain many ideas for innovation. And when it comes to product development, JTBD can sometimes work better than other techniques.

Once you have decided on the third-party services you want to integrate into your solution, it’s time to shortlist the providers. Below are some key points to consider when looking for a third-party integration provider:

• Evaluate the documentation of the potential providers. Look for API providers with comprehensive documentation and detailed FAQs. Sometimes integrations have hidden costs or technical limitations such as scaling restrictions. We know that reading pages and pages of documentation is not a walk in the park, but you do not have to do it yourself. Our specialists will study the documentation from A to Z for you.
• Meet the legal requirements. We recommend bringing in a legal member of your team to verify that the data sharing process meets the legal requirements in your country. Make sure the vendors you have shortlisted for integration meet the security standards and legal requirements relevant to your target market.
• Customer service. Find out if your provider offers custom pricing to make sure you are getting a good deal. And ask about technical support availability and pricing.

It can be a daunting task to explore the variety of third-party service providers available in the market. Therefore, it is advisable to seek professional help from a fintech software development company that has vast experience in neobank app development. When you come to Itexus with an idea for your software, we discuss all your needs and requirements at Discovery Phase and select the types of integrations and the best vendors to give your solution a competitive edge.

Use Case: Integrations Itexus Used in Neobanking Development

One of the projects where we worked extensively with integrations was a mobile banking app for migrants. It was designed to facilitate money transactions, such as financial help to families, getting paychecks early, microloans, etc.

Our client wanted to craft a neobank solution that would serve a large segment of banks’ audience — migrants. In addition to the security issues and challenges of the regulated business environment, Itexus had to select and integrate a number of third-party APIs. Our client chose the following integrations:

• Alloy, Iovation, Vouched — an AML/KYC provider
• Mbanq — a payment API
• Plaid, Argyle — data aggregators
• Twilio — communication service

Despite the need to integrate multiple APIs, we managed to get the job done in 12 months and develop a feature-rich application.

If we are to give one piece of advice on third-party integrations for neobanks, it is that any API should add value. Integrating third-party services that add real value to the targeted customer base is more important than sheer volume. Lots of third-party APIs will only lead to more confusion or, worse, solve a problem your customer does not even have. That’s why it’s important to understand your real needs and shortlist the right third-party integration providers. Contact us if you need help with this.

Originally published on Itexus Blog on September 27, 2021.