How to Create a Banking App: Ultimate Guide from Hands-On Experts

 

The growth of smartphone users encouraged companies to actively explore the new medium. Even banking organizations couldn’t stay aside and started creating banking apps.

For the past decade, mobile banking has been actively developing and morphing from balance-checking solutions into the whole banks in your pockets.

A banking app is a mobile application where users can access their bank account, complete transactions right from their mobile devices, check balance, view payment history, etc. The main goal of such applications is to provide key banking services right on mobile devices.

Today, three main types of banking apps are identified:

Mobile banking – a mobile application that provides users with features to control their banking accounts, make payments, get help from 24/7 customer support, and perform other financial operations.

Client banking – a software for corporate clients that is installed on a PC. It’s not designed for banking on the go, as you always need to have access to your computer or laptop.

Internet banking – a web application that works in a web browser and requires a stable internet connection. Sometimes, the capabilities of such solutions are wider than of mobile banking applications.

Billions of people all over the world are active users of banking applications.

Bank of America can boast the biggest number of users – 30 million active users of its mobile banking app.

Around 77% of Millenials are ready to switch to digital-only banks in the USA. The number among older generations is a little bit lower – at 66%. Around 95% of Gen Z are already using mobile banking solutions.

Banks without a dedicated mobile application are at the threat of being thrown out of the business in the very near future. Clients love such applications because of the provided convenience and instant access to banking services.

Usually, app development is divided into two big stages: discovery and development.

1.  Discovery stage – during this stage a common understanding of the future product is created between the product owner and app development company. 

·         Main goals: to save development time and cost, document project functionality, prioritize tasks and document the potential risk and how to address them.

·         Key deliverables: UX/UI design, project architecture plan, market and competitor analysis (can be performed by an IT vendor, clients, or a marketing agency.)

2. Development stage – during this stage the app is created based on the data delivered during the discovery phase.

·         Main goal: create a banking application.

·         Key deliverable: a working application based on the provided requirements.

Let’s find out how to create a banking app in more detail.

 CONDUCT MARKET RESEARCH

Market research will help you understand how to create a banking app and successfully deliver it to the highly competitive market.

The innovations mentioned below will be riding the mobile banking game in the foreseeable future:

Voice control – many banks are already using this technology, including ING Direct Canada and USAA. This feature provides an additional information input method for users as well as improves the user experience and accessibility of your application.

AI fraud prevention – the security and protection of personal data is the main concern of the banking industry. Implementation of Artificial Intelligence (AI) will automatically identify any actions that deviate from usual user behavior, flag them as fraudulent attempts, and launch the fraud prevention mechanism.

Mobile-only banking – mobile-only banks are those with no physical branches. Their number is growing by the year. There are dozens of already existing solutions, such as BankMobile, GoBank, Atom Bank, Osper, and many others.

Biometric security – many mobile banking applications already use this technology. Biometric authentication improves security and helps to protect sensitive data and comply with financial regulations. Face and voice recognition as well as fingerprint access can be used to prevent unauthorized access to devices and accounts, reduce credit card hacking, phishing, skimming, and identity theft.

AI-powered chatbots – such chatbots can improve customer service, provide 24/7 customer support, reduce the volume of daily manual work and optimize expenses needed for customer support.

Machine Learning (ML) – Machine Learning is a technology that can help you get valuable insights about your customers. It gathers and analyzes data to identify the needs of customers. Banks use the data to improve customer experience, deliver new features, and increase revenue.

DECIDE ON BASIC FEATURES

Every application is unique. Even companies, providing the same services, can implement different functionality. The final feature set will depend on the services provided, the target audience, the market for which you develop an app, and so on.

Here are some of the most common features that the vast majority of banking apps have:

·         Authentication and authorization flow

·         Account management

·         24/7 customer support

·         Atm & branches locator

·         Secure payments and transactions processing

·         Push notifications

·         Payments

ADDRESS KEY CHALLENGES OF BANKING APP DEVELOPMENT

You can know how to create a banking app from the features side, but you will fail without addressing some of the key issues usually associated with development for the financial industry.

TECHNICAL CHALLENGES

There are a lot of technical challenges that developers should take into account while deciding how to create a banking application.

Auto-input – this feature should be disabled for banking apps as it can lead to sensitive information being stolen by hackers.

Blur view – when users switch between apps, the screen of a banking app blurs, preventing people around to see sensitive information.

In-memory data storage type – such storage type allows to store information not on a disk of a smartphone but in the main memory. It improves speed response time and prevents data from being retrieved from a stolen smartphone with an installed mobile banking application.

REGULATIONS

Banking is one of the most regulations-heavy industries. Banking and fintech mobile app development are subject to a few regulations:

GDPR – General Data Projection Regulations was implemented by the European Union in 2016. It applies to all companies providing services for EU citizens. Even if you are an American company providing services in Europe, the regulations apply to you.

PCI DSS – Payment Card Industry Data Security Standard applies to all companies that handle, process, store, or transmit credit card information.

SEPA – Single Euro Payments Area applies to all organizations in European countries that make transactions in euros.

PSD2 – Payment Services Directive Two legislation applies to any payments made in the European Economic area and is designed to force payment services providers to improve customer authentication processes.

KYC – Know Your Customer is the process of verifying the identity of customers. The main goal of the guidelines is to prevent criminal elements from using banks for money laundering activities.

CCPA – California Consumer Privacy Act is quite similar to GDPR but deals with extra-personal data.

SECURITY

Though the above-mentioned regulations cover a lot of issues, there are a few other security best practices that will allow increasing the security of your application.

Two-factor authentication – allows you to verify clients and prevalent hackers from accessing your app. 2FA approaches usually combine the use of a password with biometrics, mobile signature, smart token, and so on.

Don’t store unnecessary information – try to keep information that you store at a minimum. If you must store some sensitive information of users, don’t store it longer than it’s really necessary.

Payment blocking – you can restrict payments and some other features with two-factor authentication. For example, users would need to answer a phone call to make a payment or sign a transaction with an electronic key.

Sessions inactivity timer – the feature requires users to provide a password again if the session of an app expires. It prevents situations when someone loses a smartphone and someone picks it up and gets access to the banking app.

Reminders to change passwords – these should be shown regularly to remind users to update their passwords from time to time.

Source code obfuscation – hackers won’t be able to decompile an app and steal data after hacking.

SSL and 256-bit encryption – their use will help you increase the security level of your application.

CHOOSE A TECHNOLOGY STACK

In order to create a banking app, you’ll need to decide on the technology stack. The final tech stack will depend on the operating system for which you create an app and what features you implement.

Tip: mobile banking app development requires the development of a native app, as only such technology can provide the required level of security. ​​

HOW MUCH DOES IT COST TO DEVELOP A BANKING APP?

Banking app development cost can be anything between $100,000-$500,000+ depending on a number of factors:

·         App complexity and implemented features

·         Number of targeted operating systems

·         Technology stack used to make it

·         Outsourcing location

·         Type of cooperation

For example, hiring of an in-house development team will increase the mobile banking app development cost by a few times. In some cases, the cost can reach $1 million or even go beyond this number.

Banking is a sector that must stay on top of the latest technologies. You can’t ignore the fact that a significant part of our life is in our smartphones. Read more about how to create a banking app.