Some of the biggest breakthroughs in e-commerce today involve financial technology. In fact, fintech firms currently have a market value of $5 trillion on a global scale. What’s more, over the next five years, sector growth is anticipated to exceed 23 percent.
As a growing tech giant, fintech has become a distinguished force in the financial sector. Participants in today’s business environment face many risks and challenges that differ from traditional financial systems. Fortunately, this comprehensive guide to fintech software development can get you higher demand across industries and verticals within finance.
If you’re looking for ways to improve business through fintech, you’re in the right place. Keep reading to learn more about how your software development process can increase your value and boost client retention.
What You’ll Learn In This Post:
- What Is Fintech Software?
- Uses of Fintech
- Fintech Market Trends
- Top 3 Fintech Apps
- The Benefits of Fintech Software
- Essential Features of Fintech Software
- Technical and Legal Considerations
- Building an MVP
- 6 Steps to Develop Fintech Software
- Fintech Software Development Cost
- Idea Maker’s Experience In Fintech Software Development
What Is Fintech Software?
Fintech refers to “financial technology” that is used to supplement, streamline, digitize, or alter existing financial services. It includes financial software, supply chain technology, and data analytics. Fintech software enables the completion of routine procedures like check deposits, money transfers, bill payments, and financial aid applications.
In addition to serving businesses and managing their finances, fintech can help companies grow, as startups can utilize various fintech software development tools to build products for other bankers or business owners. Fintech software also offers opportunities for business owners to expand into new markets, improve customer service and transform internal processes.
Uses of Fintech
Fintech is not a relatively new buzzword in the financial services industry. The term, which became popularized in the mid-2010s, essentially refers to the different technologies that are used for making financial transactions faster and simpler.
Perhaps one of the most important innovations today, fintech has grown rapidly due to emerging technologies like blockchain, artificial intelligence (AI) and machine learning. It now includes everything from cryptocurrencies, such as Bitcoin, to mobile banking apps and money transfer services. These new technologies are helping to make many industries more efficient and effective.
Here are fintech software development best practices in the following areas:
As more people try to take charge of their finances, investment apps are becoming a growing trend in the market. One of these apps, called Robinson, can give consumers free, immediate access to financial items. Established in 2013 as a social network for stock traders, Robinson offers automated mobile trading services, including tools and market data.
At first glance, it may seem like Robinhood is another fintech company that uses technology to disrupt the traditional brokerage industry. However, Robinhood has successfully combined traditional venture capital funding with bootstrapped growth. The company tapped into its user base through social media platforms to provide access to stocks, ETFs, and cryptocurrency.
Payments apps have become increasingly common on mobile devices like smartphones and tablets. They can be used to buy things online, pay in stores, and even send money to other people. They also have two-factor authentication (2FA) and other safeguards to prevent hackers from accessing your bank account through a third-party website.
Payments are a huge part of the economy, and it’s an area that is ripe for innovation. With fintech described as a bit like “cloud computing,” it sits on top of existing systems rather than replacing them entirely. It’s not just about moving data from one place to another; it’s about making the whole system more efficient.
Fintech created an entirely new way to manage your debt, plan for emergencies and make better financial decisions by providing services such as mobile banking, payment processing, investment management, peer-to-peer lending and crowdfunding.
Some companies even specialize in helping people manage their finances more efficiently by offering various financial planning tools. Budgeting apps and robo-advisors, for example, offer advice based on real-time market data and personal information about each user’s financial situation. With these tools, users can make smarter decisions about their investments and spending habits.
The peer-to-peer market provides an alternative to traditional financial institutions, allowing borrowers and lenders to connect directly through platforms. In P2P lending, individuals or businesses lend money directly to each other rather than through banks or other traditional lenders.
P2P lending, which is based on the principles of honesty and trust, has traditionally been used for short-term loans and longer-term lending and investing in other assets. With fintech, the system allows users to find low-interest loans at affordable prices. Additionally, , lenders benefit from having more borrowers competing for their attention. If you decide to go with one of these companies, it’s important to learn how the process works before starting.
Fintech Market Trends
By 2021, the total value of the global fintech sector had risen to about $135.9 billion. Due to its cost-effectiveness and major effects on the financial services industry, the fintech sector has expanded quickly over the past few years, and is projected to increase at a compound annual growth rate of 11.9 percent between 2023 and 2028. This means that its revenue will likely soar to more than $266.9 billion by 2027.
Throughout the COVID-19 pandemic, the fintech industry has remained essential in increasing access to financial services. In fact, the business models of two-thirds of the fintech companies claimed to have changed in response, extending fee reductions, altered qualifying standards, and loosened payment restrictions. This move allowed fintech companies to offer innovative solutions for the changing landscape.
Fintech software development trends involve utilizing the latest technology to make the most money. With the constant evolution of technology, conventional methods of banking and finance are becoming outdated, resulting in the development of new ways of providing financial services to meet customers’ current needs.
Top 3 Fintech Apps
Fintech apps are all over the place – from simple personal finance tools to sophisticated investment strategies and crowdfunding platforms. Here are the top 3 fintech apps that are being used by millions:
MoneyLion is a mobile banking app that allows users to save, borrow, and spend money easily. Users can send money anywhere worldwide using a mobile phone number, making it a convenient option for people who don’t have access to traditional banking services.
Valued at $2.4 billion when it first launched in 2013, MoneyLion has continued to expand its financings and services, and now has more than 3.3 million registered members worldwide.
Robinhood is a mobile app that allows users to invest in stocks, exchange-traded funds (ETFs), and options. The app’s popularity stems from its ease of use, with no account setup necessary and no minimum balance requirement.
By adding additional services for existing customers, the company achieved 22.5 million verified users by 2021. Its success can be credited to its focus on the younger demographic, who are less likely to use traditional banking services.
Chime is a fintech app that allows users to send money to other people, businesses, or organizations from their phones. In addition to Chime’s basic features, it provides users with various other options for enhancing their financial experience.
With a user base of more than 12 million, Chime Financincial Inc. aims at making it easy for people to access money through their app by providing users with a convenient interface.
The Benefits of Fintech Software
Fintech app development is the practice of developing a mobile app for financial services. This means integrating technology with traditional finance and banking practices to create new products and services to help businesses access multiple data streams and process their transactions in real-time.
The following are some of the essential benefits of fintech software:
Richer Sense of Satisfaction for Customers
With fintech software development best practices in mind, businesses are changing how people think about banking and finance. As a result, companies have begun investing heavily in customer-centric initiatives. In fact, a recent survey found that 61 percent of consumers claim that financial technology has helped them manage their financial stress while navigating economic issues.
Many companies nowadays are attempting to grow their operations online, and for them to succeed, they need access to more individuals. Through the use of fintech software development frameworks, companies can now access a wider market for its products and services. Mobile apps, for example, offer a convenient option for customers who want to know the latest news about their favorite brands.
Fintech software development tools can also let the team manage the entire business with one platform. This may even result in fewer administrative costs because the software can do all the processing. One of the common ways to improve operational efficiency is by streamlining processes by automating manual steps or eliminating unnecessary steps altogether.
Essential Features of Fintech Software
Financial technology solutions are designed to reduce operational costs by leveraging the latest tech trends, including artificial intelligence (AI), machine learning, biometrics, and blockchain. A fintech software can help your business with:
If you want consumers to subscribe, you must show them how much money they may save on their monthly expenses by choosing your service provider. This is where data visualization comes in handy, as showing a visual representation of savings can help convince more consumers to sign up.
The Power BI integration can help you connect, analyze, visualize and share data in order to make better decisions. It will also allow you to create charts, dashboards, and reports on top of your data. This way, users can get an overview of their data in a way that’s easier to understand.
Fintech deals with delicate business processes, including money transfers, international payments, and financial transactions. Companies can use biometric sign-in to identify customers and provide them with access to their accounts.
Additionally, companies work with third parties who provide relevant services such as payment processing and digital identity verification. These external actors may need to be able to access user data securely and without compromising their security in any way.
The ability to tailor products and services to the needs of each customer is a game-changer for financial services. Mobile banking apps, digital wallets, and self-service platforms are some of the biggest innovations in banking and finance.
Nowadays, a bill payment system can let you enter your information each month and then automatically pay your bills from the site. This can enable you to come up with a budget that is realistic and help you plan for the future.
Speed of Service
Faster, more efficient transactions are driving a revolution in financial services, as the quicker you can provide services to your customers, the more likely they may be satisfied with your product or service.
Fintech software is designed to streamline mortgage lending by automating tedious processes and making data-based decisions. Some companies even offer instant credit decisions based on your financial profile and credit score.
Under the Hood: Technical Considerations
Fintech software development is a long and complex process with the application of various technologies and tools. It includes everything from the design and integration of the fintech platform to testing, deployment, and maintenance. However, there are several technical aspects that must be considered when developing fintech software solutions.
While the widespread adoption of the Internet has provided an efficient platform for fintech technology to thrive on, it’s crucial to employ the proper tools and processes when creating your software.
If you are looking for a programming language for security and scalability, Python offers its libraries for data science. It can be applied to many fields, including trade, regulatory compliance, and marketing.
As for fintech software development frameworks, Ruby on Rails allows developers to build web applications. This framework is typically faster and more user-friendly than PHP or Java.
When storing sensitive information, developers should use strong encryption and different keys for different users. Backups of all data should also be created before encrypting, and the database design should be flexible enough to suit changing business needs without compromising performance or security.
The most popular database for fintech applications is PostgreSQL, renowned for providing quick answers to queries. Both Robinhood and Revolut utilize this database for the app’s extra performance.
Keeping the customers’ data safe during software development is of the utmost importance. Of course, this can be challenging when you have to work with many different types of systems and applications.
To help keep your customers’ data safe, it’s crucial to follow these security protocols:
- Use strong passwords and never reuse them.
- Change passwords regularly.
- Encrypt sensitive files by using encryption keys.
- Ensure users have two-factor authentication enabled on their accounts.
- Keep sensitive data in isolated environments.
In order to be successful in the competitive fintech market, it’s essential that your software is scalable, meaning its capacity can expand as its user base grows. By designing your software for future growth, you can effectively avoid potential bugs or full-on crashes, help loading speeds and cut back on update costs.
Scalability will also ensure that your software can keep up with increased user demand and easily adapt to changing requirements based on consumer data. However, you will need to perform various usability tests to confirm that your software is indeed scalable and able to handle an influx of new users.
Perhaps the best means of developing fintech software that’s scalable is by creating a Minimum Viable Product or MVP. The point here is to initially offer just enough features to be usable by early consumers who can then provide valuable feedback for future developments.
Because the whole aim is to build confidence in your product and increase revenue, an MVP focuses on starting small in terms of development and building bigger – and better – over time. This will help identify your most active users, verify market demand and boost the overall user experience.
The fintech industry consists of companies that provide financial services via the Internet, often referred to as “non-bank financial institutions.” The majority of countries’ primary national financial regulators currently oversee fintech.
Regulation in each sector is more complex and has various restrictions in more than one region or country, given their likely cross-border operations. The Financial Conduct Authority (FCA) in the U.K. and the 6th Anti-Money Laundering Directive (6AMLD) in the EU are two examples of regulators.
Because fintechs find ways to make it easier for consumers to understand how their money works and manage their finances more effectively, regulations have been introduced worldwide to protect consumers from being taken advantage of by unscrupulous businesses.
Fintechs are affected by AMLD (Anti-Money Laundering Directive) regulations, but the extent of their impact varies depending on their area of operation. The most recent revisions were made in 2020 (5 AMLD) and 2021 (6 AMLD).
This directive was enacted to ensure that financial institutions assess the risk of money laundering or terrorist financing in their business relationships with customers. It also provides for strict measures against entities that do not comply with these requirements.
AML and KYC
Fintechs are often targeted by anti-money laundering (AML) and know-your-customer (KYC) regulations. In some cases, these regulations apply specifically to fintech; in others, they are used in conjunction with traditional banking institutions.
They can’t just do business without being registered as a bank or financial institution in various countries. This means they must comply with AML and KYC requirements to continue doing business as usual. These rules are designed to stop financial crimes, including fraud and money laundering.
The Payment Services Directive 2 regulations, implemented across Europe and the United Kingdom, made it easier for non-bank companies to provide banking services. These seek to increase payment security while fostering industry rivalry and development.
The PSD2 mandate requires financial institutions to give customers access to their funds and payment services through an app or website. This has led to a dramatic increase in fintech startups and venture capital investment.
Decentralized Finance Regulations
The decentralization of financial services is a highly anticipated trend in fintech, as it provides the ability to scale up services while removing the need for intermediaries. Generally, it results from the increasing demand for greater transparency and accountability.
In this sense, these regulations are not just about protecting investors or ensuring fairness in the financial world; they also aim to create a more accountable financial system that can work as an incentive for people to participate in it.
Focusing on giving users control over their own data, the introduction of eIDAS ensures that individuals and organizations can access services using their national electronic identification schemes (eIDs).
This means that individuals can access their personal information securely through their mobile phones. The same goes for businesses: they can easily transfer data between countries without worrying about whether they’re doing it correctly.
Building an MVP
Building a Minimum Viable Product (MVP) is a process that helps you test the market demand for your product at a minimal cost. It can be used for building new products and services, but it can also be used for improving existing products and services.
There are many benefits of building an MVP, including the ability to:
- Test your idea before investing time and money into prototypes or development
- Get feedback from potential customers early in your development process
- Identify key problems with your idea so that these issues don’t become apparent later
- Gain potential investors and let them understand how your solution can solve problems
There is also little risk involved in investing resources when building a Minimum Viable Product. Most importantly, building an MVP can give you confidence about whether or not your idea is worth pursuing in the long run.
6 Steps to Develop Fintech Software
Any fintech software development is tricky, but when the time comes to select the finest option for your requirements, you must be ready. You need to know what software platform you are looking for and how it can help you thrive. Read this guide to fintech software development to get started on finding the right solution for your business.
1. Choose Niche
There are many features that you can add to your fintech software that will need to be decided on before building the product. The best way to determine what features to include is by choosing a niche. You will then need to rigorously research this target audience and analyze their needs.
When you know what they need, it is easier to identify which features they would like and how they would use them. If you are creating a social media tool for business owners, they may want a feature that allows them to share content with their followers. They could also want a feature that allows them to manage all of their social media accounts in one place.
2. Research Market
Researching the market is vital when it comes to fintech software development, as it can reveal relevant factors like demand pattern and customer preference.
To make an app, you should research who your customers are and what they want so they can choose your product over others. When it comes to online banking, the platform should be easy to use, fast, and able to give accurate results.
3. Design Software
Wireframes represent your product’s UI (User Interface) and UX (User Experience). They are the skeleton of your product that you can work on before you build it. You can even create mockups with mock data to test various scenarios and see what works best for users.
Wireframes aim to ensure that your website’s design elements are as user-friendly as possible. They are used by designers, developers, and project managers. These wireframes can give you an idea of how the site may function, so you can make changes before the actual development begins.
4. Build Software
After designing your fintech software, the next step is to actually build your product. As the most critical stage of the process, building fintech software will require extensive skills, knowledge and experience. That’s why it may be best to consider hiring an expert developer who can ensure that your software is poised for success. Of course, before hiring a developer, you should always first examine their background and portfolio to confirm that the agency is suited to handle your business’ needs.
5. Beta Test Your Fintech Application
Beta testing is an important element in the development cycle of any product or service. If your app is going to be successful, it needs to have passed through testing. While beta tests can be done in various ways, they are commonly completed through online customer support forums. This will ultimately allow you to collect user feedback and make any necessary improvements.
6. Deliver Product
Finally it’s time to deliver your software to customers. However, even after its delivery, you may inevitably need to make changes to your product as your business grows. You might want to add new features, change the look and feel of the app, or even tweak its pricing. The great thing about building a fintech product is that it’s easy for you to make these changes.
You can always roll out updates in small chunks by deploying them to a small group of users who have signed up for beta testing. This move lets you get real user feedback on what works and doesn’t. After collecting customer input and fixing issues, you can then release a new product version.
Fintech Software Development Cost
The cost of fintech software development varies depending on the type of software being developed, as well as the project’s size and overall complexity. The price also depends on whether you are hiring an in-house team or using outsourcing firms.
Generally, the exact cost depends on the number of developers, their experience level, and their productivity. You may need to hire additional staff or equipment for your project.
Idea Maker’s Experience In Fintech Software Development
Since 2016, Idea Maker has excelled in all areas of web and software development, shifting its focus from small businesses to enterprise-level applications. Our expert designers and developers have created a variety of fintech solutions, including a custom B2B website for the financial planning company Advice Resort.
If you are looking for a dedicated and trusted development agency to build your own fintech software, then schedule a free consultation with us today to learn more about how we can bring your vision to life.