Due to the significant technological advancements in the past 15 years, the financial industry has seen huge shifts in how it engages with, caters to, and retains customers. While nearly every sector has been impacted by the digital revolution, the financial industry stands out for showing how century-old processes can be swiftly replaced by modern solutions.
More precisely, fintech has emerged as a dominant force, making the development of fintech software crucial for financial institutions and brands looking to cement their position in the industry. Learn how you can leverage the power of fintech in this article.
Table of Contents
What Is Fintech Software Development?
Fintech software development involves building applications and digital solutions that enable the delivery of financial services online. Fintech solutions can support a variety of services, including online banking, lending, financial advice, investment, and basic payment processing.
In addition to digitizing financial services, these solutions harness cutting-edge technologies like data analytics, big data, artificial intelligence, and blockchain development to deliver smart, personalized, effective, and highly secure applications that help users manage their finances.
The intricate and highly confidential nature of the services these apps must deliver entails careful and highly professional development processes, from planning and prototyping to building, launching, and ongoing maintenance. That said, we highly recommend finding a team of seasoned experts early on to give your application a competitive edge.
Types of Fintech Software
The fintech industry covers a range of services catering to different markets — from the standard B2C and B2B settings to the P2P (peer-to-peer) landscape. There are also several different fintech products that address the specific needs of their markets and the users involved.
- Payment software
- Fintech banking
- Wealth management
- Personal finance
- Embedded finance
- Fintech lending platforms
Payment Software
Data suggests that the overall transaction value of digital payments will reach $11.53 trillion in 2024. The total transaction value is projected to grow at an annual growth rate (CAGR) of nearly 10%, with the overall transaction value likely to reach $16.59 trillion by 2028. China is spearheading the cashless trend with a total transaction value of $3.7 billion in 2024.
In simplest terms, payment systems like Varo enable users to accept or make payments without the use of physical credit cards or cash. Instead, they rely on digital gateways to seal the transactions. Digital wallets are a great example of these solutions, relying on complex communication systems, payment processors, and intricate financial institution networks to carry out their functionality.
Fintech Banking
Until recently, banking services were associated with waiting, standing in line, and decreased overall efficiency. However, with the rise of fintech technology, many institutions have fully embraced solutions offered by open banking providers.
Fintech banks allow you to carry out standard banking tasks and services online (via mobile apps or progressive web apps), from account balance checking to money transfers and payments. They can also provide other, more sophisticated features, such as AI-powered financial advice. Additionally, fintech banks have introduced mobile point-of-sale devices, making it easier for businesses to accept debit and credit card transactions.
Wealth Management
Digital financial advisory and wealth management solutions are taking over the role of traditional investment experts with the help of complex algorithms. Wealth management and advisory platforms offer a range of features and products to help you track your investments in a centralized place.
Robo-advisors have become more prevalent as the different types of AI have evolved and become increasingly sophisticated. According to expert forecasts and current data, the US is the number one place for this technology, with the highest assets under management equaling $1.4 million in 2024. Forecasts also show that the popularity of robo-advisors will only increase, reaching around 34 million users by 2028.
Personal Finance
PFM or personal finance management enables users to centralize their financial information from different sources into a single database, empowering them to make smarter budget management decisions. These solutions can track spending, help you with budget planning, and may even include specialized features for investment recommendations.
Great examples of such software include Spendee and Mint.
Embedded Finance
These solutions cover financial services that cater to the everyday consumer, simplifying their purchase processes with non-financial providers or businesses. Take Shopify Balance for example — the solution offers users checking accounts they can use to manage their online store’s transactions and payments from a centralized dashboard. Shopify Balance is an embedded financial product into a non-financial platform — Shopify.
Fintech Lending Platforms
Lending platforms simplify the borrowing/lending process for both parties. For instance, they can provide lenders with a better picture of the potential borrowers’ financial information, asset history, and balance. There are also fewer costs involved compared to traditional bank loans, benefiting both lenders and borrowers who receive and repay the amounts.
These solutions address these challenges by providing more streamlined experiences and loan choices, eliminating the risks of predatory loans. Great examples of lending platforms include Pipe and Kikin.
Fintech Software Development Technologies
As mentioned earlier, several cutting-edge technologies are integrated into fintech solutions to provide clever and secure services for users from every aspect of financial life. However, two major technologies are shaping the future of fintech software development significantly, introducing new standards regarding security, effective data handling, and personalization. We’re talking about blockchain and artificial intelligence.
Blockchain
Blockchain has been a detrimental player in the field of cybersecurity as the nature of the technology translates excellently into the finance industry, most notably into transaction security.
In essence, the technology works as a decentralized digital record, and each transaction is recorded in every computer system on the ledger. This means that a single person can’t alter transaction information retroactively. Each new data block is linked to previous ones, creating a secure and transparent data chain, and builds transparency and trust among users.
Artificial Intelligence and Machine Learning
Machine learning and AI have also had a profound effect on the financial industry, and it’s not an overstatement to say that their use cases have reshaped our entire world. According to Alejandro Córdoba Borja, CEO of Tres Astronautas, if a business chooses to create an AI-powered fintech product, its main focus should be working with meticulously organized and precise data. The AI system is only as useful as the data it was trained on, and irreverent, outdated, biased, or incomplete information will only lead to useless suggestions and bad decisions.
That said, fintech businesses should prioritize investing in high-quality data infrastructures to ensure the precision of their AI systems. In addition to quality data, financial institutions should also utilize the necessary computing power and storage capabilities to support AI.
The Process of Fintech Software Development
Developing excellent fintech software is a complex process. It entails finding the right experts for the job who understand ever-changing user needs and possess expert knowledge about national and international financial systems and pertaining legal considerations.
- Choosing a sector and researching the market
- Designing the software
- Software building and testing
- Deployment and maintenance
Choosing a Sector and Researching the Market
Fintech is evolving at breakneck speed and if you’re only a startup thinking about carving out a piece of market share, you need to be distinguishable to stand out in the competitive landscape. Chances are, you already have an idea for software development, but you might also need to research trending fintech business models to offer something unique and not rely solely on technology as your unique selling point.
The way you generate revenue from your app should also be addressed right from the start in addition to knowing who your target audience is. Adequate market research can help you better understand the competitiveness of your chosen niche and give you more insight into how people and businesses generally interact with digital solutions within that segment.
Once you have the necessary information, you can define your app’s must-have requirements, basic features, and budget, and determine the necessary milestones in the development lifecycle.
Designing the Software
Naturally, you should specify your requirements together with your chosen fintech software development agency. Together, you’ll design the software with the necessary user experience and technical aspects in mind. This will usually involve creating wireframes and prototypes with limited functions to assess the look and feel of the software before the actual coding starts.
M.R. Tanvir H. from Datazo InfoTech and Alejandro Córdoba Borja agree that during the design phase, user-friendliness should be a major priority. Tanvir H. says that excellent fintech apps can harmoniously merge functionality, visual appeal, and intuitiveness. He also highlights that the app’s main functionalities should be your focus and that you should use the Pareto principle in customer-app interactions, which means that 80% of users typically use only 20% of app features.
“Leveraging this can enable developers to focus on the main and most used features which can translate into a significant increase in user satisfaction. It also saves time and requires fewer financial resources,” he states.
This doesn’t mean that you should ignore 80% of app features, but focusing on main functionalities can allow for faster development and quicker improvements over time, which are key considerations to keep customers truly satisfied in the long run.
Córdoba Borja tells DesignRush that the software should be intuitive and accessible for every demographic, with effortless onboarding and navigation. He also points out that your design should leave space for a robust support system within the app, possibly covering several support methods, from chatbots to email channels, and dedicated support teams.
Software Building and Testing
Once the design and all the necessary functionalities have been approved, it’s finally time to build the software with the help of the required tech stacks, databases, AI training, and so on. During the development phase, experts will also address security, most likely at every major step of the process, as cyber threats are a concern in fintech. This means that both design and development will happen with security in mind. Developers will use the latest systems and best practices to ensure data security.
They will also test each component of the software with the help of various methods to verify whether the product has been developed according to plan and validate whether it meets the necessary business and customer requirements.
Deployment and Maintenace
Once the app is ready and functional, you must ensure it reaches your target audience. For this, you can always reach out to a digital marketing agency to raise awareness about your brand and application and get the ball rolling.
However, our advice is to partner with a full-service agency that can develop, market, and maintain your app too. The latter is especially crucial. Ongoing maintenance ensures your app keeps performing optimally, adheres to the latest security trends and protocols, and eliminates potential glitches and bugs. Furthermore, with the help of maintenance and app performance monitoring, you can identify crucial areas of improvement and roll out new features that further boost app functionality and value for your users.
Crucial Fintech Software Development Considerations
In addition to the core functions of your app, there are other pivotal elements you will need to implement into your application to improve user experience, user-friendliness, and security.
Enhanced Security
Finance firms are the primary targets for cyber attacks. Because of this, app security should be a major concern throughout the lifespan of your software. The sensitive financial and personal data should be protected by cutting-edge security protocols and systems that also adhere to the necessary international and national compliance and regulations.
Ensuring that your app is always protected by the latest security measures and conducting regular system audits are paramount to guarantee data safety. Implementing comprehensive encryption systems and biometric recognition systems, along with two-step authentication protocols, and/or fingerprint identification can maximize user security.
When it comes to safety, Alejandro Córdoba Borja suggests app owners and developers include data protection and privacy features from the get-go instead of adding them as additional features at a later stage. According to him, AI can also be leveraged to promote security, as machine learning algorithms can analyze historical transaction data and identify potentially suspicious attempts.
User-Friendliness
Our experts have already discussed the importance of intuitiveness and user-friendliness when it comes to designing successful products. Incorporating specific levels of customization can additionally boost user experience and engagement. Simple features like available dark mode, push notifications about important financial updates, and system information updates can also increase user-friendliness.
AI-powered solutions can be trained to offer more relevant financial suggestions or services for users too.
Fast service speed can also be a game-changer in achieving success with your applications. Choose an infrastructure (like cloud-based services) that lets you scale your operations and your user base without running into functionality crashes. Using different APIs can also streamline communication between different software systems, making transactions and other financial processes quicker.
Lastly, having a complete dashboard with different data visualizing features could be a fine addition to your solution. B2B organizations usually organize a huge amount of financial data. Having the tools that help them manage and structure data into actionable recommendations can be an excellent way to make your financial software even more valuable and useful. Pie charts, heat maps, and comprehensive reporting tools can all be great additions.
Wrapping Up Fintech Software Development
The financial industry is blurring the line between digital and physical interactions, but there’s still a lot of room for improvement and untapped potential to create revolutionary software in the industry.
However, navigating between user and business needs, legal regulations, and different technology stacks can be a tough undertaking, even for a seasoned fintech company. As such, we highly recommend finding an expert development partner to get started with your upcoming project.
Fintech Software Development FAQs
1. What is the most challenging aspect of fintech software development?
Different businesses will probably face different challenges, however, adhering to all national and international regulations can be the most complicated part of the development process, especially if you don’t have a deep understanding of the finance system and its legal regulations.
2. Is investing in crypto exchanges worth it?
Investing in crypto exchanges can be a profitable endeavor, especially if you have a thorough understanding of the market and blockchain technology. The growing popularity of crypto and changing governmental attitudes around the globe towards these assets can validate the idea of creating a crypto app.
3. What’s the most important aspect of fintech software development?
From the standpoint of building user trust and brand reputation, the most crucial aspect of development is app security. Fintech systems are common targets of cyber criminals, so ensuring that you have the latest security protocols in place is paramount for the success of your app and even your business.
