A new generation of banks now operates entirely online, offering a full suite of financial services without a single branch. These are digital banks, or neobanks, and knowing how to build a digital bank has moved to a well-known path. This guide covers what a digital bank is, how it makes money, what licences and architecture it needs, and what separates the ventures that scale from the ones that stall. Enrichment APIs, like those from the Tapix team, play a part in that shift, giving these banks the clean, contextual transaction data their apps depend on.
What is a digital bank?
A digital bank is a financial institution that operates completely online, providing banking services through mobile apps and websites. Unlike traditional banks, digital banks have no physical branches and rarely require in-person interaction. Their features typically include:
- Online account opening and management
- Mobile banking apps with advanced features
- Instant money transfers and payments
- Integrated budgeting and financial planning tools
- Enhanced security through biometrics and two-factor authentication
The sector has reached real scale. Digital banks now serve more than 500 million customers across 80-plus countries, and the count of unique neobank users has climbed from 146 million in 2021 towards a projected 350 million by 2026 (Fortune Business Insights, Grand View Research, and cross-referenced analyst estimates, 2026). Several neobanks now rank among the largest banks in their home markets by customer count.
Must read: 7 KPIs every digital bank should focus on
Traditional banks vs neobanks
Understanding the split between incumbents and challengers is the starting point for any build decision.
Neobanks, also known as challenger banks, are digital-first companies that operate exclusively online. They run on the cloud with minimal overhead, which lets them offer low or no fees, and they ship new features quickly without the constraints of a legacy corporate environment. According to Optima Consultancy, the average German neobank app carries around 71 features, nearly double that of traditional banks. Revolut, a leading neobank, regularly releases advanced budgeting tools, instant notifications, and customisable experiences. Personalisation is a core strength here, and it depends on accurate transactional data from providers like Tapix.
Traditional banks, or incumbents, are well-established institutions with extensive branch networks and a full range of services, from savings accounts to mortgages and investment products. Their approach is conservative, built on stability, and trust accumulated over decades. That stability comes with less room to adopt new features quickly, and the physical footprint keeps shrinking more than 4,000 US bank branches closed in 2025 alone. Incumbents still lead comprehensive services, in-person financial advice, extensive lending options, and deep regulatory experience, and many are now folding digital features into their offering to stay competitive.
Profitability is the biggest contrast. Traditional banks run on stable revenue streams, while most neobanks are still working towards sustainable margins. Estimates of the profitable share vary with methodology: broad industry aggregates put roughly 20 to 25 percent of neobanks in profit (Business Stats, CoinLaw, 2026), while Simon-Kucher & Partners, applying a stricter test based on at least 18 months in operation, puts the figure below 5 percent. Either way, the profitable minority is small. Average revenue per user sits near $45 at neobanks against roughly $350 at traditional banks. Revolut and Nubank are the clearest exceptions, both now firmly profitable at scale.
How banks and neobanks make money
Both models generate revenue through several channels:
- Interest income: Traditional banks earn primarily from interest on loans and mortgages. Neobanks also lend, but often lean towards shorter-term products.
- Fees: Both charge for services such as account maintenance, overdrafts, and international transactions. Neobanks typically keep basic-service fees low or free to attract customers.
- Interchange fees: Neobanks often rely heavily on interchange from card transactions.
- Value-added services: Premium accounts, financial advisory, and partnership products such as insurance and investment services.
Lending tends to be the pivot point. One of the clearest routes to profitability runs through loans, BNPL, and mortgages, and the neobanks that have reached profit generally built a genuine lending book rather than relying on interchange alone.
What it takes to turn the tide
Reaching sustainable profit comes down to a handful of levers:
Customer retention and engagement. Personalised services keep clients loyal. Increasing customer lifetime value through enriched data insights is one of the more durable ways to drive it.
Diversified revenue streams. A mix of subscription tiers, lending, and investment products reduces reliance on interchange and creates steadier income.
Cost efficiency. Technology that streamlines operations keeps the business lean, which is what lets a neobank scale without runaway expense.
Strategic partnerships. Working with fintech partners lets a neobank widen its offering without heavy capital outlay.
A bank's profitability is also tied directly to the type of licence it holds.
The licence as a foundational choice
Obtaining the right banking licence is a fundamental step, and requirements vary by country. The main routes are:
Full banking licence. Permits the complete range of services, including deposits, loans, and mortgages, which unlocks high-value revenue streams like mortgages and personal loans.
EMI (Electronic Money Institution) licence. Allows issuance of electronic money and payment services, but not traditional lending.
Specialised licences. Cover specific products, such as investment or savings accounts.
A key distinction is whether the bank operates as a full-stack bank or a front-end interface. Full-stack banks hold their own licences and offer services independently; front-end players operate through partnerships with licensed banks. The choice of jurisdiction matters here too. Fintech-friendly regimes such as Lithuania offer simplified licensing and live testing environments, and buying a company that already holds the required licence is an increasingly common shortcut.
Banking as a Service
There is another route in. BaaS (Banking as a Service) outsources traditional banking functions via APIs, letting new entrants reach the market without their own licence and cutting the time and cost of setup.
Did you know? Revolut initially launched on a BaaS platform before acquiring its own licences. It now serves more than 65 million customers and reached a $75 billion valuation in late 2025.
Whatever path you choose, a digital bank needs a multi-layered architecture built for functionality, security, and scale:
1. User interface layer. The customer-facing representation of the bank across mobile apps, web, and chatbots. It has to be responsive across every device.
2. Client-side layer. Secures user interactions through authentication and encryption, keeping data safe and communication protected.
3. API gateway layer. Acts as the middleman, processing API calls between client applications and backend services and managing usage.
4. Microservices layer. Splits operations into modular, independent services such as account management and transaction processing, so the bank can scale and update each service on its own.
5. Core banking system layer. The heart of the bank, handling transaction processing, account management, and compliance.
6. Data management and analytics layer. Enriched data from providers like Tapix is a cornerstone here, turning raw transaction records into an accurate, usable picture of the bank's activity.
7. Security layer. Protects data and systems with firewalls, intrusion detection, and compliance with industry standards.
Profitability: acquisition cost against revenue
Achieving profit is the central challenge, and Customer Acquisition Cost (CAC) is a big reason why. CAC commonly runs from €26 to €70 through referral programmes and from €131 to €350 through paid channels. Referral and social campaigns are the main way successful neobanks pull the average down; Revolut has historically sat near the low end at around €61 per user.
Monetisation spans premium account fees, transaction fees, interest income, and affiliate products such as insurance and investment services. The practical lesson is to start monetising early to ease the pressure on sustainability, and to treat a real lending book, across loans, BNPL, or mortgages, as the engine of long-term profit rather than an afterthought.
The scope of building
Building a neobank is an ambitious project, and cost scales with ambition. The main components to budget for are:
1. Licensing. Often the point where a launch stalls. A licence in a fintech-friendly country with simplified processes, or the purchase of a licensed company, can ease it.
2. Core banking system. Building or leasing one can run from hundreds of thousands to millions of dollars.
3. Mobile and web apps. User-friendly, secure apps demand significant resources.
4. APIs and integrations. Integrations for payments, identity verification, and transaction data enrichment are essential to a complete banking experience.
5. Security infrastructure. Robust protection against cyber threats is non-negotiable.
Must read: 7 KPIs every digital bank should focus on
Europe's top five neobanks by funding
Funding scale gives a rough sense of which European players have drawn the most investor conviction:
The customer numbers behind those totals have moved on considerably. Revolut now serves more than 65 million customers; Monzo has passed 12 million and become the UK's largest digital bank; and Wise operates across more than 160 countries, processing cross-border payments at scale. Funding rounds capture only the starting position, not the current one.
Must read: Why major banks struggle to innovate
Building enrichment in from day one: Partners Banka
Partners Banka launched with no legacy systems, which gave the team a clean slate to decide what a modern banking app should get right from day one. We mapped their launch to five product priorities:
- Mobile-only onboarding. Using Czech BankID, customers open a full bank account entirely on mobile in under four minutes.
- Instant payments. Payments settle in around ten seconds.
- Secure virtual cards. Single-use cards that refresh after each transaction.
- Transaction data enrichment. Tapix merchant names and logos built into the tech stack from the beginning, not bolted on afterwards.
- Smart features. "Chytrá bilance" blends advanced categorisation with financial advice.
The team saw that poor transaction clarity would make a brand-new app feel unfinished on day one, so they built enrichment into the core stack instead of adding it later. Tapix data was live from the start, and every transaction showed a clean merchant name, logo, GPS location, and category from the first login.
Enrichment at card launch: SwissBorg
The same pattern holds for fintechs launching a card product. SwissBorg runs one of the most used crypto apps in Europe, with close to a million verified users and around $1.2 billion in crypto assets under management. When it launched its virtual card, Tapix enrichment went live alongside it, so cardholders saw merchant logo, name, and category from the first transaction.
The path from conversation to production was short. The first discussion happened at Money20/20; from there, SwissBorg ran a self-integration through the Tapix developer portal and went live within eight weeks of signing. Merchant identity, retailer locations, and categorisation are all powered by Tapix, and the roadmap extends to a map view, deeper analytics, and marketing use cases built on top of the transaction data.
Both cases point to the same conclusion. Clean transaction data is far cheaper and simpler to get right up front than to retrofit once customers start asking what a charge was. Treating enrichment as core infrastructure, rather than a later addition, is one of the clearer lessons from the banks and fintechs that have launched well.
