Today, new technologies are changing the financial services industry by actively displacing traditional components and business models. The integration of new financial solutions allows us to change the structure of consumption, reduce the cost of certain functions, increase the efficiency and quality of services, as well as significantly influence the sustainability of the core business. As a result, the FinTech software development industry is gradually turning into an independent and actively developing part of the modern economy.
The modern processes in the financial sector offer new ways of implementing new solutions for building activities based on digital mechanisms. Such a transition to a new business concept is becoming very popular among financial organizations. This process also includes the integration of the company's financial technologies. FinTech is a client-centric technology that fills in the gap between what the financial companies have to offer and what customers desire.
A FinTech software development company offers digital payments (PayTech), fully digital insurance (InsurTech), banking (BankTech), asset management services (WealthTech), and/or creating markets for the sale of financial products.
The rise in popularity of FinTech software development services began in 2008 when the global financial crisis made financial companies cut their costs. The mobile technology market started rapidly developing, and the trend remains. Portable gadgets (smartphones, tablets, smartwatches, etc.) made it possible for people to be in cyberspace around the clock. The sales market, education, communication, entertainment, work processes, and many other things have been gradually migrating into our gadgets. New conditions of life require new ways of handling finances.
Today, FinTech software developers are focusing on developing new technologies (digital, telecommunications, biometric, etc.) restructuring the financial services industry, actively displacing traditional business models.
Financial institutions need a high-quality and reliable mobile software solution for processing payments, deposits, opening accounts, and numerous other tasks and financial transactions. Mobile banking apps make it easier for customers to run businesses while ensuring the security of every transaction. More and more companies are investing in the development of mobile banking applications to meet and exceed the needs of their customers.
Online banking solutions allow the customers to get answers to all of their questions without the need to visit a bank. Online banking must provide access to business accounts, tracking, sending, and receiving money transfers, and many other tasks and financial transactions. The process of developing online banking apps is very complex and nuanced, even for an experienced FinTech development company.
Personal banking software allows the customers to keep track of their existing personal accounts and open new ones. Personal banking systems allow their customers to accept any personalized offers, such as loans or mortgages with special personalized terms.
Intelligent banking systems are based on an open and integrated real-time cloud platform that makes it easier for banks to reach out to their customers and partners. Innovative technologies such as machine learning, blockchain, and the Internet of Things must be included in every intelligent financial banking solution.
Financial institutions use all types of corporate financial software including CBS, CMS, and others. Enterprise service bus systems bring all of these systems together to make it easier for the employees to work with them. In addition, the development of an ESB system enables companies to successfully work on many complex projects at the same time.
NFC payment systems are becoming more and more popular as a contactless form of payment. This is one of the main reasons companies are investing in the development of NFC applications. Having a contactless payment solution makes it easier for the customers to make any transactions and give your company a competitive advantage. Currently, NFC technologies are in more demand than they have ever been, as customers want to stop using plastic cards and carrying wallets.
The need for innovative financial technologies and products in the FinTech industry depends on the following customer categories:
The consumer segment (B2C), which consists of the target consumers of FinTech services and products, plays the biggest role in both creating the demand and implementing financial technologies. Millennials make up the group of people with the highest potential demand in this segment.
The corporate sector, which includes companies from various fields. Big, small, and medium enterprises are all interested in solutions for FinTech businesses.
The financial sector, which includes banks, credit unions, and other traditional financial institutions that are interested in improving their services or increasing their operational efficiency.
The public sector, which includes the government, national banks, national currency exchange establishments, or other governmental bodies that are interested in the development of the FinTech market.
The growing demand for innovative financial products and services, in particular, from the population that does not use banking services or is dissatisfied with the quality of services provided by traditional financial institutions, is one of the most significant factors in the development of the financial market.
Small and medium-sized businesses need simple financial solutions and cheap maintenance. In addition, this category of clients usually does not have access to banking services and debt capital in a lot of developing countries, because traditional financial institutions are not interested in their services.
The growing popularity of social networks and fast messengers (Facebook, Instagram, WhatsApp, WeChat, etc.) actively contribute to the emergence and development of new financial technologies and services:
Such FinTech technologies provide accumulated information about each individual and corporate user (their preferences, health status, financial position, or counterparties), which are then analyzed to improve decision-making algorithms based on large amounts of reliable information. This will lead to an increase in financial service commercialization, where transactions can be carried out without human intervention.
In addition, the Internet of Things will significantly affect the development of the following categories of the FinTech market:
The growth in B2C e-commerce is affected by:
The growth of global e-commerce leads to an increase in the number of transactions, in particular cross-border ones, which then leads to an increase in the demand for financial solutions that would reduce the time and costs required for proceeding with such transactions. Thus, the increase in online trade turnover is affected by the development of payment services (including digital wallets, in-app payments, and instant payments), and the appearance of customer lending services.
FinTech startups, which have a competitive advantage over traditional banking, attract investors. Let’s now review a list of startups that have changed the concept of managing the finances for individual users and companies.
This service enables you to pay for your purchases using a smartphone. You install the application and connect your credit card to it. The next step is choosing a place to use the application (so far only cafes and restaurants are available) and visiting it. You can invite your friends and pay using Cake. It knows how to split the bill, create group payments, and pay without asking a waiter to bring the bill.
Companies that work with the Cake system get their benefits. They can learn more about their customers thanks to access to public profile information. They can track sales in real-time, freeing the employees from this duty.
The British startup Sthaler went even further. It developed the technology of paying using biometric finger scanning – FingoPay. The application creates an individual "fingerprint" that can be linked to a credit card or bank account. The user can pay for purchases by placing their finger on the scanner.
Sthaler states that there is a 1 in 3.4 billion chance that your fingerprint will be the same as somebody else's. This makes the technology almost invulnerable.
Currency Cloud is another UK-based payment startup. It works with business clients and offers cross-border money transfers, but does it faster and cheaper than banks. This startup was launched in 2012, and already has 125 corporate clients and processes $15 billion in transactions annually. Sapphire Ventures and Japanese e-commerce giant Rakuten invested millions in Currency Cloud.
The British startup WorldRemit is challenging money transfer companies. It enables you to send money all over the world at a very low cost. To do this, you need to know the number of your bank account or mobile wallet. The recipient just needs to create a personal account on their phone and receive transfers without leaving home.
WorldRemit potential clients are two billion people living in developing countries.
The founders of the startup talk about its value for migrants: “This year, foreign workers will send more than $600 billion to other countries. We will try to become a market leader and transfer the most of this amount."
This startup is called a "social trading network". It allows you to follow successful traders, copy their strategies, and successfully invest around the world. The eToro platform supports trading in currencies, commodities, and indices. It is already used by more than 4 million people in 145 countries of the world.
Funding Circle provides loans to small and medium-sized businesses in the UK. “We are committed to creating small business opportunities that have never existed before,” says James Mickings, Managing Director and Co-Founder.
“For so long we all depended on the credit line provided by traditional banks. We are building an infrastructure in which any investor, large or small, will be able to get a loan."
Funding Circle has 48,000 investors, including a government-funded British business bank.
This Swedish startup has the potential to compete with PayPal. Klarna's mission is to make payments easier. Service users do not need to register to make a purchase – they just enter their email and zip code. The order can be paid within 14 days after receiving it.
In 2016, Klarna sold $80 million worth of shares, after which its market value increased to $2.25 billion.
This British startup is a real competitor to Funding Circle. Zopa is a marketplace for finding investors. The company allows you to invest in other people's businesses and earn interest income.
The market for FinTech applications is expanding. Companies are introducing the latest innovations: AI, ecosystems, paperless services. These complex innovations make life easier for people, but if presented in the wrong way, they may seem confusing. We have some recommendations on how to make a technologically advanced and convenient mobile application for FinTech.
This trend is based on the analysis of personal data about each user’s behavior. This does not just mean collecting basic characteristics of the users – it is about getting cyclical information about their actions, when someone transfers money, pays a loan or utility bill, etc. Artificial intelligence analyzes the actions of each user and offers relevant services to each of them.
The user’s account in any application is particularly important in hyper-personalization. This tool facilitates an increase in the target audience, controls the time spent by the user in the application, and makes an analysis of purchases.
Customized for each user, such personalized content provides various information: personal messages, offers, promotions, bonuses, etc. Hyper personalization provides users with quick and convenient access to the desired functionality, which will always be at hand. As a result, the users become more loyal and there is a high probability that they will use the application regularly.
The linking of a card is a must-have for any application that sells products or services. A user is more likely to purchase if they do not have to search for a card number or access third-party mobile services. In addition to well-known Apple and Google pay systems, another form of payment has appeared – various systems of instant payments using a phone number.
This payment method can be in demand for both online and offline stores. The system of instant payments allows self-employed people to instantly receive money to their cards without paying tax penalties. This could also make it possible to pay utility bills using a QR code in any user-friendly mobile bank that has an instant payment system.
This is not just an application, but an entire ecosystem with every possible service - from financial to lifestyle. Such a complex IT structure operates through numerous interactions between the services supported by the application.
One of the advantages of such an application is that it offers a low price for attracting users. However, to attract third-party partner’s services to your ecosystem, you need to integrate with them. This is not an easy thing to do for small companies, because their development budget is very limited and they are less interesting to partners than large competitors.
If we are talking about a giant service for millions of users, then developing a super application will be commercially justified. But if we are talking about small companies, then it is better to create several simple applications.
If something goes wrong in the process of testing business ideas, it will not affect the main application and the company's work in general. Dealing with UX/UI will be easier when you create some simple apps and this set of apps will still perform all the required targeted actions.
A banking mobile application can perform several thousand functions, but if you add sales of products or logistics to it, it will become more difficult to maintain a single design and transition screens. Therefore, it is recommended to release separate applications for different types of services with carefully designed point functions.
Keeping users entertained and getting them to stay in the app is not an easy task. It requires professional product development. Due to the high competition in the market, companies try their best to make their customers feel special: loyal customers are assigned the premium status and personal managers who are in touch 24x7, bonuses and cashback are provided, concierge service is offered.
This personalized approach increases customers’ loyalty and creates an image of a caring company. In addition to traditional services that provide users with comfortable conditions, you can implement some interesting and original ideas.
Don't forget about gamification – game animation mechanics, quests, badges, etc. For example: buying certain brands and getting points, cashback, rewards.
In addition to having some advanced services, do not forget to add some esthetics: screensavers, animations, icons. A FinTech app doesn't have to be dull just because it only deals with financial transactions.
Which one is better: cross-platform applications or native ones? We focus on f native applications. Native apps are more functional and flexible because they are custom-created for each platform, taking into account its specifics. There are much fewer restrictions on developing native services, which is their main advantage.
Custom widgets in cross-platform apps can lag and tend to take more time to be fixed. The speed of animation and special effects are worse than in the native apps. Hence, cross-platform services have a lot of limitations.
There have been cases when security updates for cross-platform applications were released much later than for native ones. This is a big business risk for FinTech, where safety is the top priority. It makes sense to have a cross-platform application if you need it to be created fast and cheap or to test a hypothesis. If the task is to become one of the first companies that launch services such as gestures, swipes, or face biometrics, then you should opt for a native app.
Even though this is our last point, it is the most important one. Experienced professionals are a key part of creating a successful application. By turning to professionals, you insure yourself against endless alterations. Product managers and UX/UI designers are especially important for developing an application – the client's future depends on them. The main question is whether people find a certain service convenient to use.
As financial institutions are trying to find new ways to simplify banking operations and make day-to-day transactions more convenient, FinTech development can bring any of your ideas to life.