How To Build a Fintech App: Types, Cost, Features, and More

11 min read
Frank L.
Frank L.
Published February 16, 2023

Financial technology companies raised $210 billion in financial investments in 2021. This is the second-highest annual total ever recorded. Now is an excellent time to take advantage of the market by learning how to build a fintech application.

In this guide, we outline the step-by-step process you can follow to develop your own app --- starting from choosing the type of financial app you'd like to create all the way to plotting out your launch strategy. 

1. Determine What Type of Fintech App You'll Build

It is important to note that building your fintech app does not mean you've set up a fintech business. While it may be the cornerstone of your offering, you still need to establish your fintech business model as well as follow any industry and digital regulations.  

Recurring Fee-Based Financial Services

This line of products is all about being able to provide customers with financial services in a more user-friendly and cost-effective way, using technology such as APIs and the cloud. These recurring services include payments, currency exchanges, and asset management services, and all generate revenue per transaction.

  • Digital wallets for mobile payments: These are applications that allow you to make digital payments in stores or online using just your smartphone by storing digital versions of your debit and credit cards. Examples: Google Pay, Venmo, and Apple Pay

  • Payment processing products: Also known as payment gateways and payment apps, these make payments between two parties possible. They are typically used by small businesses and startups that require a payment gateway and API to receive payments through their ecommerce platforms. Examples: PayPal, Swift, and Stripe 

  • Neobanks and digital banking apps: These services offer financial products that are typically offered by traditional banks, such as checking and savings accounts, but the service is offered exclusively through a mobile or web app. Neobank customers can carry out anything from implementing online payments to money transfers to opening new bank accounts. Examples: Ally, Chime, Current and Green Dot

  • Asset and data management services: These allow both individual and corporate asset owners to monitor and manage their assets while optimizing their investment portfolios. They also help manage an organization's financial information while helping them remain legally compliant and make financial reporting easier. Examples: Acorns, Morningstar, Robinhood, Asset Class, T-REX, and Arcesium 

  • Alternative credit scoring services These services move away from the traditional credit scoring model and help to assess a customer's eligibility for credit using other sources of data. This includes information on a person's payment history related to things like utilities, telecoms, and rental agreements. Examples: Nova Credit andMoody's Analytics Pulse 

  • Buy now, pay later (BNPL) services: These service providers allow customers to split their purchases into a smaller number of payments over time, interest-free. Examples: Klarna and Afterpay

Do-it-Yourself Products

These services allow customers to carry out services themselves that would have previously required an institution like a bank. These services encompass anything from payments to investments and managing finances.

  • Robo-advisory tools: These are often free or low-priced tools that provide DIY investors with financial and investment management advice. They often take the form of a chatbot. Examples: Wealthfront and Betterment

  • Individual retirement accounts (IRAs): These are personal retirement accounts that include tax benefits and investment options without an intermediary, making saving significantly cheaper. Examples: Robinhood Retirement and Bitcoin IRA

  • Money management apps: Also known as budgeting apps, these help users track spending and categorize expenses to help them better manage their finances and plan ahead. These apps obtain information by connecting with users' bank accounts. Examples: Cash App and Mint

Transactional Marketplaces

These peer-to-peer marketplaces offer a range of services that ultimately make it easy for customers to carry out transactions by connecting lenders and borrowers together.

  • Peer-to-peer lending: These match lenders with borrowers online. Lenders here can be other individuals, cutting out the need for a financial intermediary. Examples: Zopa, Upstart, and Kiva 

  • Crypto exchanges: These are marketplaces that make it possible for people to buy and sell cryptocurrency. Examples: Coinbase, Chainalysis, and OpenSea

  • Blockchain-based solutions: These services use blockchain technology to allow for transparent, secure, and faster sharing of information at a lower processing fee. Examples: Ripple, Circle, and IBM Blockchain

Innovative Insurance Models

These services offer insurance to customers by using a mixture of technology and consumer data. By disrupting the traditional insurance business model, these innovative services can provide consumers with cheaper insurance premiums.

  • Business insurance apps: These are great options for businesses that might not be eligible for insurance through traditional insurers. Examples: Newfront and NEXT

  • Cyber security insurance: This is a sector that traditional insurers do not yet offer coverage for, making it ideal for tech-based innovation. Examples: Coalition and Chubb Cyber

Data Aggregators That Charge Users for Access

These companies collect and cluster relevant financial data across a wide range of users and sources. They then sell access to this information — like income or transaction summaries — to financial institutions that would find it highly valuable.

With this information, companies can surface more targeted and personalized campaigns and product offerings to their clients. Examples of data aggregators include companies like Plaid and Pinwheel.   

2. Conduct Market Research

In finance, consumer needs and industry trends are in constant flux, which means you'll need to understand current and future market conditions to develop a successful app with a good market fit. Fintech is a relatively new industry and can feel like uncharted territory for product managers. It is disrupting traditional ways financial services are utilized, so it is important to stay up-to-date with market expectations through market research.

To understand the industry, stay updated on changing trends, and identify gaps in the market by reading recent articles from industry publications. Sign up for publications and newsletters like FinTech Magazine, Global Finance, and American Banker. Or follow industry leaders like Adina Eckstein, Ghela Boskovich, or Nik Storonsky on LinkedIn or Twitter.

To stand out from other fintech apps, you'll also need to audit your competitors to see what their apps currently offer. Pay careful attention to app features and read user reviews to understand what pain points they have so you can deliver a more competitive product.

Carry out audience analysis to gain a clear understanding of who your real-world users will be. Find out what their pain points and goals are and how they'll use your app. Research shows that only around 25% of consumers believe that financial services brands deliver the experience that they want. So if you want your app to attract and retain users, you need to take time to research your audience and build personas that help you and your development team empathize with users.

With this information in hand, you can build customer personas that make it easier for you to reach out to your target audience. Start by collecting data about your user base to help you develop personas that represent your actual users rather than relying on guesses. Then, identify the different types of users, label roles, and clearly define user goals.

Good personas list details, like a name and photo, to help you visualize the real-world individuals they represent. They also include information such as why the user accesses the app and what their common frustrations are. For instance, a payment processing app can identify ecommerce business owners and their customers' two primary user types.

3. Set a Budget

The cost of your fintech app will depend heavily on the type of app you build and its complexity. To get a clearer idea of how much your fintech mobile app development project is going to cost and set an accurate budget, you will need to consider a number of factors:

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  • The number of different access types that need to be developed. In other words, the different user types and hierarchy of permissions you need to create to carry out different transactions.
  • The number of different functions that the app will carry out, e.g., push notifications, sending emails, automation of specific tasks, etc. The more functions you need to develop, the higher the costs.
  • External integrations with things like payment gateways and analytics tools also drive up costs.
  • The size of the data sets your application needs to work with. An app that will need to navigate large amounts of data will ultimately be more complex and costly since the app will require a greater server storage capacity.
  • The level of security and legal compliance you need to implement into your app. What are the expectations and legal requirements of the industry you aim to enter? Your new application will likely need to comply with anti-money laundering (AML) regulations, know your customer (KYC) standards, contain high-level data privacy features, and more. Apps that require more layers of security and compliance checks will require continuous monitoring and updating after the app is released and throughout its lifespan.

4. Develop a Strong User Onboarding Experience

According to recent research, almost 70% of users abandoned a fintech app in 2021 — and one of the leading causes for app abandonment was onboarding. Mapping out your app's user scenarios in advance will help you design an intuitive onboarding process that helps you improve customer education and retain users.

When a user first downloads a fintech app, they need to provide data and information that is crucial before they can start benefiting from its features. This includes information like AML and KYC that will help you verify the identity of your new users and protect yourself from fraud.

It is only after this information is gathered that users move on to the next step of the onboarding process, which involves familiarizing themselves with the app itself. The extra layers of user data and confirmation required for fintech onboarding make it more involved than setting up an account for other types of apps.

One reason behind the success of many Neobanks is their onboarding process, particularly when compared to the very lengthy process of opening a traditional bank account. Neobank Revolut's onboarding process allows users to open a bank account in minutes through the app. Users input basic personal and tax information, take photos of themselves and their documents, as well as order their first debit card.

5. Define App Features and Requirements

When starting out, it is important to define your minimum viable product (MVP) requirements — the absolute most basic features you need for your app to function and meet customer needs. For Venmo, that's the ability to send and receive funds between friends.

These factors will influence the internal architecture of the app's code and how each feature interacts with the other. But regardless of the specific app you build, most fintech systems have a few of the same basic feature and capability requirements:

  • Data encryption: A vital security feature that protects from cyberattacks. It converts plaintext information into an encoded format called cipher text. 

  • User authentication: The way a user identifies themselves when requesting access to your app or when carrying out an action such as a money transfer. This could be using a password, PIN, or a step further with two-factor authentication.

  • Live chat and chatbots for support: Adding this to your app allows customers to obtain real-time support without having to wait for an email response or get on a call. Research shows that 79% of businesses that implemented live chat and conversational banking into their apps have enjoyed more revenue, sales, and customer loyalty.

  • Payment integration: An API that connects your payment system with other important platforms, such as an ecommerce website. 

  • Push notifications: Pop-up messages used to communicate with your users when they're not using your app. Give users the ability to control what sort of notifications they want to receive, and how many, to avoid annoyance.

Beyond the basic features listed above, there are five features to help ensure app safety, security, and usability. Implementing these features will add value to your product and make you more competitive.

  1. Multi-user collaboration: This is particularly important for users who need to carry out actions that require more than one person. For example, most businesses require more than one person to sign off on a transfer.

  2. Biometric authentication: A highly secure form of user authentication that uses a person's unique characteristics to access an application or carry out an action. Examples include fingerprints, voice, or facial recognition. 

  3. Credit score checking: A feature that checks and evaluates a user's credit score by analyzing data such as loan statements, utility bills, and bank accounts. 

  4. Cross-platform integrations: These make it possible for users to carry out an action that requires your app to connect to other apps or platforms. An example of this could be a personal lending app that allows users to check their credit through a credit reporting company without having to switch screens.

  5. AI for analytics and data visualization: Artificial intelligence can provide users with in-app data analysis and visualization based on personalized requirements and market trends. AI can analyze stock trends and make data-backed investment recommendations or create easily digestible reports by examining your financial data.

Once you've identified the features you need, you can identify the tools you need.

6. Select a Tech Stack

Your technology stack will include the tools and software you use to build your app, but also your programming language and development frameworks.

  • Operating system: In other words, are you building an Android or iOS app, or both? This very much depends on your audience. Globally, Android enjoys the vast majority of the market share, but that is not the case in places like the United States and Australia.

  • Programming language: Python and JavaScript are the two most popular programming languages. While JavaScript is easier to use, Python allows for more complex development and is generally a better option for building a fintech app.

  • Framework: You'll need front-end and back-end frameworks for both mobile and web development. And you'll need to choose frameworks that are compatible with your chosen programming language and match your development skill set.

  • Database: Relational and ledger databases are the most common types of databases for fintech apps.

  • Fintech APIs: Using fintech APIs can streamline your build process more than relying on your internal development knowledge alone. For instance, APIs can help you enhance features like payment processing, stock trading, and chat support.

7. Check Compliance

Before sending your new fintech product out into the world, you must ensure that your app ticks all of the relevant regulatory boxes. Whether or not your solution is compliant with these laws could ultimately be the difference between profitability and liability.

For instance, to build a personal finance app or mobile banking app, you'll need a banking license before any app users can make deposits, withdrawals, or transfer funds.

If you're looking to create a chat experience for your fintech app, you need to ensure that you comply with the Payment Card Industry Data Security Standard (PCI DSS). This is required of any company that accepts, processes, stores, or transmits cardholder data (CHD).

Other important regulatory frameworks to look into include:

8. Carry Out a Soft Launch 

Once you're approaching the end of development and compliance checks, you need to start thinking about rolling out your product. The best way to do this is by planning a soft launch that will put you in a better position to gain rapid growth and traction.

Your soft launch will help set you up for success by enabling you to make improvements that help drive product adoption. Soft launches give you an opportunity to test for bugs, collect data to improve your marketing spend, and make improvements that drive app downloads without committing to a full launch.

The location or market you carry out your soft launch through is an important determining factor on the scale of your launch. More competitive markets are particularly good places to test out your product. Europe is an especially competitive market for fintech, particularly in countries like the United Kingdom, Sweden, and Malta

Build a Real-time Communications Platform Using Fintech APIs

A major way that fintech apps have managed to disrupt the finance industry is by drastically improving the way customers communicate with financial entities. Fintech apps have given users the ability to communicate with advisors, customer success teams, and account managers from the comfort of their own phones.

You can use fintech APIs to lean on conversational banking tactics to improve the user experience by offering easy-to-access live support when customers need it.

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