How to Make a Banking App to Win the Game in a Long Run

Banking Apps for Smart Financial Decisions: Market Overview

Let’s start our overview from the banking apps market research. According to Statista, by 2022, nearly 80% of all millennials in the US are expected to become regular banking apps users. This means that the new generation almost cannot imagine its existence without such digital solutions.

As for the benefits for you as a bank or financial institution, you’ll profit from an app as it is clearly visible that the global capitalization of the banking application market is growing rapidly every year. In 2015, it was only $0.6 billion, and by 2020, it reached $3.6 billion. Is this not an indicator of the fundamental need for an application for each bank? The answer is obvious.

So instead of being puzzled by the potential need for such a product, we should rather look at the main trends in this niche.

Trends of Mobile Banking

What are the main trends in the development of banking applications? According to Businessinsider and our research based on top mobile app in the niche (read the Top-tier Examples of Mobile Bank Applications section below), here they are:

• From several functions to a full-on assistant;
• Product for advanced users;
• Integration with mobile payment tools;
• Enhanced cybersecurity;
• Voice payments;
• Chatbots.

Integration with third-party services. Finally, you can offer your clients a flexible system of discounts when using your partners’ services.

What Banks Get from Mobile Application Presence in Retaining Customers

A well-designed mobile banking application will provide your business with many benefits, including:

• Increasing customer value;
• Strengthening the brand;
• Providing fast feedback;
• Providing competitiveness.

Increasing the number of communication channels. The mobile app is another channel of interaction with customers, which, on the one hand, makes banking transactions easier for them and, on the other hand, increases your profits.

Why Building a Banking App May Be Tough: Reasons and Solutions

What are the main reasons why creating your own bank application can be difficult? According to the experience of many of our colleagues, here they are:

• The application interface should have an extremely low entry threshold. Obviously, your application will be used not only by advanced smartphone users but also by those who experience certain difficulties in mastering new interfaces. This is why creating an intuitive one can be a real challenge;
• You have to implement AML and KYC tools. Do you know that KYC and AML fines totaled $10.4 billion in 2020? That’s why you are obliged to exclude the possibility of spoofing the data of your bank's clients and find a vendor that would be able to develop a truly reliable system of authorization and authentication for users;
• You must guarantee the privacy of your customers' data. Banking applications must comply with a much larger number of security certifications than a regular application. Just keep in mind that according to Kaspersky report, the average number of attacks by mobile banking trojans in 2019 was of approximately 270,000 attacks per month;
• You must implement blocking payments. According to this research, 90% of the largest banks in Europe have received sanctions for money laundering-related violations in the past decade-plus. Thus, you need to provide the ability to instantly connect to the customer accounting system to block credit or deposit cards in given situations;
• Your product must comply with all relevant regulatory requirements. In addition to compliance with multiple security policies, you will also have to take care of compliance with many other requirements, for example, the high level of user experience for all user segments, including those with disabilities (for example, 57 million people with disabilities live in the United States, and this is a colossal part of your potential target audience);
• You may need a highly specialized project team. To implement specific functionality, for example, based on blockchain, you may need a highly specialized team of experts.

8 Major Stages to Create a Mobile Banking App

Now is the time to find out how to create a mobile banking app.

Step 1: Conduct a research

Before you start a mobile bank development, it is essential to conduct marketing research that would highlight the leaders and outsiders of the market, as well as identify their strengths and weaknesses. Going forward, this will help you compile a win-win list of specifications for your application.

This stage usually takes a month or two. To optimize it, you can use generally accepted strategies, for example, SWOT analysis - research aimed at identifying and assessing the strengths and weaknesses of the project, its opportunities and potential threats. Opportunity is defined as something that gives a project a chance to achieve something new: win new customers, introduce new technology, rebuild business processes; in turn, threats are factors that can damage the project, deprive it of its existing advantages: the emergence of new competitors, substitute products, etc.

Step 2: Build a prototype

In order for the prototype to reflect the functionality of the future product, you need to conduct a number of primary studies:

• Interview with the product owner. During this procedure, the designer clarifies the expectations and needs associated with the product;
• User story. There should be a lot of them. The standard formula for a user story looks like this: "being <role or user type>, I want to <perform an action> to <get the result>";
• Jobs stories. This is where you have to focus on the needs of the user. To build them, use the formula: "Situation" -> "Motivation" -> "Expected result";
• Jobs-To-Be-Done. This is a comprehensive study that determines the scope of the upcoming work and helps to design a product that meets all the needs of the user.

Step 3: Provide the security

When it comes to mobile banking applications, it is obvious that this type of project should have much more security guarantors than other public applications. So to ensure proper compliance, you need to hire a team that is experienced in creating similar products.

For example, for banking software, the list of regulatory security requirements (such as GDPR, PSD2, PCI DSS, CCPA, etc.) is significantly longer than in the case of ordinary applications. This means that before starting to work on a product, it is important to check whether the planned functionality complies with all these policies.

Step 4: Design the UI UX

Speaking specifically about the design of mobile banking applications, it is very important for them to provide web accessibility, which, by the way, is regulated at the legislative level in some countries. Most web accessibility laws are based on WCAG 2.0 guidelines.

Advanced Functionality

• Artificial intelligence (AI). Artificial intelligence can be used as a basis for chatbots or, for example, for intelligently detecting suspicious activity with a customer card;
• Distributed ledger technology (DLT). It is an information storage technology. The key features of it are the sharing and synchronization of digital data according to the consensus algorithm, the geographical distribution of equivalent copies in different physical locations, and the absence of a central administrator. In a narrower sense, this is a blockchain (which is used by, for example, Wells Fargo bank), which is being actively implemented by many banks worldwide;
• P2P transactions. P2P transactions are the easiest way to send money from one individual to another. Such transactions can be used to pay rent, split a restaurant bill between friends, etc.
• Robotic Process Automation (RPA). RPA is the automation of business processes with the introduction of high-tech approaches and tools, for example, machine learning and artificial intelligence;
• Cloud computing. Cloud computing allows for incremental increases in computing power, provides advanced tools for capturing massive amounts of data, and the ability to quickly scale the environment as it grows.

Related Services That Influence the Cost 

Also, technical support and maintenance services significantly affect the budget of your digital product. In particular, there are a number of applications that need to get back to normal operation as quickly as possible in the event of a problem. Due to the urgency, such support services can be quite expensive.

Total Sum 

So how long does it take to build a banking app, and how much will it cost?

According to the complexity of the final product and the development process, the budget for banking app development can be around $100k-500k. But when it comes to cooperation with an in-house team, it can grow up to $1 million. As for MVPs, they may cost only $100k, depending on the development team you choose. Note that all these rates are applicable to the services of our colleagues from the USA, Australia, Canada, and Western Europe.

If we talk about the time needed to develop an online banking application, in the case of MVP, it can take around 700 hours, and in the case of a full-fledged product — about 1250 hours.

Let's summarize this data again in the table below, focusing on the average developer rates depending on their location (Note that in the case of India, many clients mention the poor quality of the final product and inconvenient interaction with contractors):

Conclusion

As you can see, a multi-functional online bank: 

• is almost a prerequisite for customer loyalty;
• provides competitiveness for a long time;
• opens new channels for interaction with customers;
• reduces the costs in comparison with hiring new staff.

If you want to build your own banking app, please EPAM Anywhere Business. We will create a banking application in Android or iOS platform for your own business needs. Note that our development company doesn’t just specialize in the fintech niche as digital partners of the world's leading financial companies. We are the ones who set new trends in this industry and use the technologies of the future today.