Fintech app development has become increasingly popular over the past decade. After all, many startups and development teams are working on innovative fintech apps, especially in the mobile space. It’s a rapidly growing global industry estimated at a whopping $110 billion in 2020 and will likely hit $700 billion by 2030.
But why the interest in fintech worldwide? There’s not a single reason for the meteoric rise of fintech, but several developments have helped to transform this industry. The proliferation of e-commerce entities with the mass adoption of smartphones has led to the widespread use of secure payment processors. These payment platforms and other solution providers have forged ahead with various cashless digital payments and mobile wallets.
Furthermore, advancements in artificial intelligence (AI), machine learning (ML), Internet of Things (IoT) devices, blockchain technologies, cryptocurrencies, data analytics, and favorable government regulations have helped grease the wheels of the fintech industry. And the traditional banking sector isn’t sitting on the sidelines either, with many notable financial institutions investing heavily in mobile banking apps.
The banking sector must also replace and upgrade aging systems designed for an era when customers had to visit bank branches or automated teller machines (ATMs) to complete most financial transactions. Also, many banks are reducing their physical footprint and offering more financial services directly on their banking apps. These apps have become so compelling because they provide an A-to-Z approach for customers to manage their finances.
And that’s why fintech app development is so crucial. It empowers users when they have access to essential features. Now, let’s delve deeper into what must-have features today’s fintech apps should include!
What Should You Know About Fintech App Development?
Fintech app development is a multi-disciplinary process that often requires expertise in several key areas:
- Mobile app development
- Back-end development
- Software engineering
- User experience (UX) design
- User interface (UI) design
- Application and network security
- Cloud computing
- Financial software systems
- Payment processing APIs
- Artificial intelligence
- Machine learning
Since fintech apps handle large amounts of financial transactions and sensitive user data, security must come first. Therefore, every competent fintech app development studio must have one or more security experts available on the team. These security experts must deal with all present and future vulnerabilities that may occur within the app, the network layer, the back-end server, and the payment processing APIs.
As for the latter, it’s unlikely that the studio’s security experts can seal off all security holes in third-party APIs. But they should keep tabs on all known and new vulnerabilities and ensure they provide enough security features and defenses within the app to counter these. However, when dealing with open-source APIs with permissive licenses, they can rewrite parts of the compromised APIs or contribute additional code that will harden security.
What Is A Fintech Application?
As a broad description, a fintech app may include any application that simplifies and automates financial services. The majority of fintech apps are almost always the products of the fintech industry, which is in itself a broad term. In the fintech industry, it’s not uncommon for app developers, venture capitalists, and financial institutions to collaborate closely on products, such as banking apps, digital wallets, and money lending apps.
Several technologies that make up a fintech app may include AI, IoT, blockchain, cryptocurrencies, and data analytics. In some countries, cryptocurrencies remain in a grey zone legally. Thus, fintech app development studios must comply with regulations in these countries and apply certain restrictions on cryptocurrency transactions. But most mainstream users will use fintech apps to manage their finances instead of trading and investing in cryptocurrencies.
Generally, fintech apps fit into the following four segments: Business-to-Business (B2B) within the banking industry, B2B bank clients, Business-to-Consumer (B2C) within the small business sector, and wholly consumer based. If you want to develop a fintech mobile app, you’ll need to focus on one of these segments before forging ahead. And that’s because trying to create an app that serves multiple business models seldom works when starting out.
Consider how PayPal began as a digital wallet for electronic payments back in 1999. And soon after this startup launched its initial public offering (IPO), it was rapidly snapped up by eBay — subsequently becoming the preferred payment option for users on the famous auction site. Over the past two decades, PayPal has grown by adapting to the needs of its users. Today, the company effectively runs a two-sided business model in handling financial transactions for merchants and consumers.
What Are The Most Popular Types Of Fintech Apps?
One of the neat things about fintech app development is that appreneurs and developers can flex their creative muscles. That’s because there are already many types of fintech applications in the marketplace, and the list of categories will only grow in the foreseeable future. But if you’re new to fintech and wondering what type of app you should develop, then consider the following:
- Mobile banking app: You’re probably already using one or more banking apps right now. And you’re likely benefiting from the ease and convenience of handling many financial transactions through these. A side benefit of mobile banking apps is that they provide an indispensable service to formerly unbanked individuals, particularly in developing countries.
- Investment app: People that don’t have access to large sums of money or a broker will use investment apps to generate some wealth. Several of the best investment apps provide tutorials and simulated stock markets to train new users.
- Insurance app: Most people will experience at least one major mishap during their lifetimes. It may involve a car accident, a health issue, or lost luggage during travel. But even if insured, these are all stressful scenarios that cause people to hastily look for their insurance policies, wondering if they’re fully covered. Fortunately, today’s mobile insurance apps make it easy for customers to review their policies, make claims, and receive quotes.
- Peer-to-peer (P2P) lending app: Financial institutions may not always provide loans at favorable interest rates or to individuals with a bad credit score. That’s where loan apps conveniently fill a gap in the market by bringing P2P lending to the masses. But to mitigate risk, these P2P platforms seldom loan out large amounts like the big financial institutions.
Is Developing A Fintech Application Easy?
No, fintech app development ranks as one of the more challenging categories in software engineering. Don’t be fooled by the plethora of fintech apps in the marketplace and the many freelance developers making bold claims about quick turnarounds on fintech projects. While the abundance of projects in this domain may make it seem easy, much can go awry by overlooking certain scenarios.
The hard reality is that not all fintech products offer robust security or comply with mandatory financial regulations. Furthermore, freelancers don’t have the best reputation for tightening up app security or closely following the rules and guidelines set by regulatory bodies worldwide.
Since fintech apps deal with money, no developer should play fast and loose, especially with the law. Any security breaches that result in monetary losses may lead to jail time for the responsible parties, including the publisher or developer, for not following the necessary protocols. So, never place your trust in a freelance developer or a studio that doesn’t have a track record for quality apps and following best practices. Instead, partner with a multi-award-winning and reputable mobile app developer like NS804, which has already released over 100 applications.
Which Steps Must Every Fintech App Development Studio Follow?
We’ve already stressed how important it’s to closely follow best practices, government regulations, and security protocols. But what does that actually mean when developing a fintech application? Before adding innovative new features to your app, you should first ensure that your app adheres to several fundamentals. Be sure to include the following steps in your development process:
- Legal requirements: Even during your early planning stage, you must know what shape your legal compliance framework will take. Moreover, you must comply with various privacy laws for different territories, such as General Data Protection Regulation (GDPR) for the European Union (EU) and the California Consumer Privacy Act (CCPA). Consult a trusted legal advisor during every phase of your fintech app development process to ensure compliance with all regulations, regardless of how obscure or complex these may seem.
- App security: Security will play a central role every step of the way during your fintech app development process. Toughen security with mandatory biometrics, one-time password (OTP), and two-factor authentication features. Ensure that your team rolls out updates immediately to patch up any security vulnerabilities that may occur.
- API administration: Your fintech app must communicate with other apps and portals for smooth functionality. Thus, you’ll use APIs to connect these disparate applications. But you must ensure these APIs comply with the most stringent security protocols since this will impact your app’s risk factor.
- User support functionality: Sooner or later, users will experience issues with your app. Create an intuitive user journey to smoothen the onboarding process. Include built-in training tutorials to help users learn how to use your app and an AI-powered chatbot to respond quickly to their questions.
Before Implementing The Latest Must-Have Features
Fintech apps have evolved considerably over the past decade. Even the most rudimentary applications come with impressive features meant to engage users. While that may seem like a smart move, it’s never a good idea to flood a fintech app with unnecessary features. Instead, it’s better to offer basic functionality that does actually meet users’ needs. You can always add additional features when you roll out updates and when you scale.
Before commencing on expensive and risky projects, we always advise our clients to build a minimum viable product (MVP). An MVP is ideal for fintech app development because the focus is strictly on basic functionality. Moreover, it’s the perfect vehicle to test an app idea by bringing it to the market cheaply and quickly.
If users resonate with the MVP, that’s a good sign that it has the potential to become successful as a full-fledged app. And by monitoring and analyzing user data and feedback, it becomes easier to pinpoint the additional features users want. Below, we’ll discuss in detail the various must-have features you should consider for your upcoming fintech project.
Until now, gamification was more of a nice-to-have feature instead of a must-have feature. But user expectations have changed due to the interactive experiences they’ve had with gaming. There’s hardly a user that doesn’t become incentivized by leveling up their character, achieving a high score on the leaderboard, or unlocking an additional skill on the skill tree.
Gamification includes all these game-like activities and many more. And these have found their way into all kinds of apps, from productivity to fintech apps. But the real draw of gamification is that it helps to increase engagement by offering users a more fun and rewarding experience. For example, an investment app could award cool-looking badges when users meet specific investment milestones.
2. Push notifications
Push notifications are not new and are standard in just about every category of mobile app. But it’s not only a matter of having push notifications but how you’ll use them to engage users. The core principles of fintech app development require that you provide users with security and keep them informed of any app changes at all times.
Consider how users will want their banking apps to remind them of outgoing and incoming payments. And remind them about upcoming bills and alert them of any unusual logins or activity on their accounts. Push notifications are the quickest, easiest, and most reliable way to alert users. Emails and SMS messages sometimes go undelivered, and users may not always check these timeously or regularly. This may put them in a situation where they can’t respond to a potential security risk in time.
3. User Profiles
It’s crucial to let users customize your fintech app to make it more personal and accessible. Users love using apps that feel comfortable and will continue using those that seem designed specifically for them.
You can do this with user profiles, which will contain each user’s individual preferences. Of course, you may also provide presets so that users can get up and running with a predefined UI, font style, and theme that they’ll find appealing. But customization doesn’t only need to affect the appearance of the app but also how it functions. Users may set their budget and spending preferences and save these in their user profiles.
While not every fintech app benefits from a blockchain implementation, it’s worth considering if your app meets certain criteria. If your app must handle cryptocurrency transactions, you’ll inevitably use a blockchain. But it’s also necessary if your users demand a transparent and secure system to record all transactions without a central entity, such as a large financial institution.
Where blockchain technology truly comes into its own is with any P2P network. So, if you’re creating a P2P lending application, your users will want to have the surety that there’s a record of all transactions on a distributed database. This way, lenders and borrowers will trust all transactions on your P2P lending app. And if there’s ever any discrepancy, the database will always reveal what happened with any funds after a transaction query.
5. Smart contracts
If you move ahead with a blockchain implementation, you should also consider smart contracts. The best way to think of smart contracts is that of smaller programs that run on the blockchain and automate tasks based on an agreement. And in their more advanced form, they may work with a central securities depository (CSD) to handle fungible assets like stocks, options, and bonds. Also, note that non-fungible tokens (NFTs) operate as smart contracts or under such a paradigm.
Therefore, if you’re developing a platform to trade NFTs, smart contracts will become central to your fintech app development process. You’ll also need to integrate various digital wallets, crypto exchanges, and NFT marketplaces with your app.
We’ve already discussed why you should implement user support functionality in your fintech app. And we even mentioned the need for an AI-powered chatbot that will respond to user queries. Obviously, these kinds of chatbots are not new and are not only meant for fintech apps. But they’re essential to fulfill customer support roles, especially if you don’t have the budget and staff to provide support 24/7.
Users will want to know how to set up and manage their accounts, get answers to technical issues, and learn more about new and specific features. And while they can find out this information by perusing your app’s docs or support forums, it’s better not to inconvenience them. Ideally, you want to keep users glued to your app and not look elsewhere, even your website, for information.
An AI-powered chatbot can answer most user questions in seconds and in their native language. Users will feel more confident using your app, even its more advanced features, knowing that help is only a screen tap away.
7. Big Data Analytics
Financial applications live or die based on how well they handle large amounts of data. For example, the more data a banking app has about a customer’s spending habits, assets, and credit rating, the better it can assess risk for a requested loan. When an app feeds from the bank’s Big Data pipeline combined with analytics, it will know if the customer is trustworthy and may also detect potential fraud or malicious intent.
Once everything is clear, the app can push through the loan request to the loan approval agent and notify the customer. And once the agent approves the loan, the customer will receive the fund in their account. This quick and frictionless way of applying for a loan without needing to call or visit a bank branch is only possible due to Big Data analytics.
8. Machine Learning
It’s hard to think of fintech app development without becoming proficient at implementing machine learning. And that’s because there’s hardly a fintech application that doesn’t have a ML component in one form or another. Moreover, there are many ways that ML algorithms can aid various functions, even within a single fintech app.
These algorithms can enhance an app’s fraud detection capabilities, predict market risks, and implement trading strategies. Bots powered by ML algorithms can also advise users on trades, upcoming investment trends, and market opportunities. However, it’s important to note that the quality and accuracy of the data these algorithms use will determine overall efficacy.
9. Multiple Digital Payment Options
No fintech app can function correctly without having at least one digital payment option. But users expect multiple digital payment options, so design your app for such a scenario. While it’s perfectly okay for your MVP or initial versions of your app to have one payment option, you’ll need to diversify payment options as your app matures.
But what payment options should your fintech app have initially? Offer wire transfer, debit, and credit card payments from the get-go. Then, closely follow with PayPal, Venmo, Cash App, Stripe, Amazon Pay, Apple Pay, Google Play, and Samsung Pay.
However, some digital payment processors prohibit risky speculative trading and investment products from accessing their services. Ensure that your fintech app complies with the terms of service (ToS) of any payment processor you plan on integrating. You may also add cryptocurrency payment options if your app’s meant for the crypto market.
Fintech app development has come a long way yet still offers many opportunities for forward-looking appreneurs, developers, and financial institutions. Users have become accustomed to handling all their finances on their mobile devices. They seldom visit a physical location or call an agent to do their banking, submit an insurance claim, or invest in stocks. Furthermore, fintech apps make most transactions easy, convenient, and quick. Contact NS804 today to learn how we’ll help you build your next fintech app for a growing and promising market!