Neobank Operating Model

The operating engine begins with customer cohorts: each year adds a count of new customers, an annual churn rate is applied, and a closing customer count is derived. Cumulative acquired customers are tracked alongside closing customers.

• Per-customer deposit and loan balances then scale with that closing count, so balance sheet size follows acquisition and retention rather than being set independently. Fee income per customer is also applied to the average customer base.
• The specification shows the deposit-to-loan ratio narrowing over time, from a deposit-heavy starting point toward a more balanced relationship as lending layers on. That progression matters because it shifts the earnings mix from fee and cash yield toward interest income, while also increasing risk-weighted assets and the capital needed to support them.

Revenue is assembled from net interest income plus fee income. Interest income is calculated on average loans at a loan rate, interest expense on average deposits at a deposit rate, and cash held at the central bank earns a policy rate.

• Fee income is average customers multiplied by fee per customer. Costs are split into customer acquisition spend, fixed operating costs that grow at a declining rate, variable operating cost per customer, and a loan-loss provision charged as a percentage of average loans.
• Pre-tax profit subtracts all of these from revenue, and tax is applied only when pre-tax profit is positive, so losses do not generate a tax shield in the model.

The balance sheet derives deposits and loans from closing customers and per-customer balances. Risk-weighted assets apply a uniform retail risk weight to loans, while cash is the residual funding after loans and earns the policy rate without a credit risk weight.

• Equity rolls forward from an initial founding raise, adding net income and any scheduled equity raise. The capital section calculates CET1 required as risk-weighted assets multiplied by a minimum ratio, CET1 actual as equity divided by risk-weighted assets, and the buffer as the difference.
• The model assumes equity is the only CET1 capital source, so a growing loan book can erode the buffer and require a raise to stay above the minimum.

The returns view summarises net interest margin, cost-to-income, return on assets, return on equity, customer acquisition cost payback and lifetime value to acquisition cost, using the model's own revenue and cost relationships.

• A scenario selector applies a scalar to new-customer counts for base, bull and bear cases, which changes cumulative customers and the pace of capital consumption.
• Validation checks confirm that the balance sheet balances, customer counts reconcile with cohort arithmetic, terminal CET1 is above the minimum, net interest margin sits in a plausible range, cumulative customers never decrease, and scheduled equity injections appear when equity grows.
• Together these give a structured way to test growth and capital trade-offs.