App Development

How to Build a Mobile Banking App: Making No Mistakes

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Mobile banking applications are gaining massive popularity by offering financial services on the go. According to Statista, the number of active online banking services users reached 1.9 billion in 2020 and is projected to exceed 2.5 billion by 2024.  It’s an opportunity to manage the bank account remotely and 24/7 access that stands behind the mobile banking success. In this regard, creating a banking app is the primary condition for financial institutions to survive in the current digital  age.

Keep reading to know how to develop a banking platform, its benefits, pitfalls, and essential features to implement.

Advantages of Banking App Development

Banking app development brings a lot of benefits both for customers and banks:

  • It allows users to access the bank account easily and offers many useful features and high data security.
  • Using mobile apps, banks can reduce staff expenses, operational costs, and optimize back-office operations.

Let’s consider the core advantages for business.

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Reduced Costs

Mobile applications save financial institutions a lot of money in the following way:

  • Reach a broader audience. Your area of activity isn’t restricted by  branches, regional centers, and so on.
  • Handle high loads. People can’t process queries 24/7. In turn, the service is available round the clock, and there is a tiny percentage of mistakes. 
  • Improved accuracy. The mobile apps eliminate the number of human errors and operational risks.
  • Lower client services cost. You don’t need to rent working space, assemble a big team, and deal with other banking service-related expenses.

For instance, mobile transactions are cheaper than ATM and branch ones. Clients are charged 0.08 cents per mobile transaction against 0.85 cents for an ATM one and $4.00 for a branch transaction.

High Return on Investment (ROI)

The final app development cost varies depending on the complexity of the features, type of platform, design, 3rd party integrations, and developers rates. However, the fact remains that you’ll need to invest a pretty penny to build a mobile application for your bank, especially if you decide to outsource software development to such countries as the US or Australia. 

Indeed, banks intend to return the investments. But how can mobile banking cover all these expenses? Customers make daily transactions and become more involved. 

Bank of Ann Arbor, a US-based billion community bank, managed to return the investment into a mobile solution. Within three months of implementing mobile banking, they noticed:

  • 90% increase in point-of-sale transactions
  • 23% in ATM withdrawals
  • 56% jump in revenue from transaction accounts
  • 10% in products held per client

There was also a growth in customer loyalty. According to the Ann Arbor bank survey, mobile banking clients were 2 points less likely to leave the bank than online banking clients. And 8 points less likely — than branch-only customers.

Improved Customer Experience

Not all financial establishments require a banking app development. Some of them can make the most out of chatbots, web, or desktop applications. But, mobile apps provide more opportunities to customers. They’re more user-friendly and secure: users can’t apply fingerprint login with a chatbot or always keep a PC close at hand. In fact, one-third of customers said that mobile experience is why they continue to be serviced by their current bank.

Additional Marketing Channel

Banking app development is also a powerful channel for banks to distribute their services. Whether you’re planning to present a new insurance package, expanded credit limit, or new in-app functionality, you can inform clients about it right in the application using push notifications, direct messages, or a personal dashboard.

Main Сhallenges in Building Banking Apps

Despite the advantages for users and businesses, mobile banking app development has some pitfalls you should be ready to deal with. Strict security requirements are discouraging entrepreneurs from getting into this niche. For example, there is obligatory compliance with GDPR (Europe) or CCPA (California) regulations and thorough verifications of interactions with users. At the same time, the service has to remain easy to use for your clients.

Security

The banking industry is vulnerable to cyber attacks the most. The study claims that financial institutions lost about $18.37M in 2020 because of cyber threats. That’s why mobile banking applications must be integrated with many security features (e.g., end-to-end encryption, multi-factor authentication, safe back-end architecture, etc.).

For example, Revolut, a famous British banking platform, applies Transport Layer Security (TLS) protocol to guarantee personal data protection. TLS verifies everyone involved, checks the integrity of the information being transformed, and encrypts it at every stage.  

Card data in the Revolut app is stored according to strict PCI DSS requirements. There is a limit on contactless payments and many other security features to keep clients’ data safe.

Biometric login and two-factor authentication are crucial features for banking applications since all the financial operations (money transfer, purchases, etc.) should be tentatively confirmed by the user. 

Here are some preventive measure to make your app secure:

  • Architecture that doesn’t store sensitive information on servers.
  • Robust app infrastructure capable of combating DDoS attacks and immediate information recovery after sudden system failures.
  • Encryption or double encryption of data.
  • App testing contains so-called pen tests — when an organization cooperates with experienced hackers to detect vulnerabilities.
  • Implementing QR codes for payments and transactions

Regulations

Regulations, rules, and guidance applied, depending on the banks’ scope of activity. For instance, financial establishments that enable clients to access loans through mobile apps ensure that customers can access relevant disclosure requirements. That contains information like format, timing, content, and way of delivery.

Another example: banks that offer credit-related products are liable to the Fair Housing Act and are obliged to display the Equal Housing Lender logo and legend.

Well-known financial security regulations:

  • The New Payment Services Directive throughout the European Union and European Economic Area; 
  • Payment Card Industry Data Security Standard; 
  • Pan-Canadian Trust Framework; 
  • KYC (Know your customer) Compliance;
  • Regulation of data access;
  • California Consumer Privacy Act. 

As you can see, there are various financial regulations to comply with. Thus, before initiating banking app development, check what standards are legitimate to your target country. If you intend to create a mobile-only banking app like Monobank or Revolut, it’s better to work with a financial consultant who’ll clarify all possible pitfalls.

Technical Side of Mobile Banking Apps

It’s time to consider the basic features needed to build a banking application. 

Account creation/sign-in

If you’re planning to create a mobile-only banking app, users should be able to upload documents, take a photo with their passports in their hands, and so on. In case clients have already visited a bank department and opened a bank account, they should be allowed to log in using their mobile number and a password reset option.

Account management 

This feature allows users to control their bank accounts, namely, check the card, view account balance and transaction history, and manage cards. The more operations customers can perform, the more intuitive UI/UX design should be.

Payments and transactions

Money transactions have to be secure and straightforward as it’s connected with processing sensitive data. Commonly, the users go through the following stages: 

  • The user picks an existing recipient from the template or enters the mane of a new one.
  • Indicate the amount.
  • Include the purpose of the transfer.
  • Submit their credit card number.
  • Examines the details, confirms, and transfers money.

Customers can confirm the transactions through biometric verification, obtained code, or password.

Bill payments

Mobile banking apps are convenient, especially for modern people. Instead of finding a time to pay bills offline or waiting in the long line, customers can schedule one-off or recurring payments in the application or pay when they’re informed by push notification.

Customer support

Even though banking app development implies that all financial operations are automated, it still requires human involvement. For instance, when a client wants to unblock the card or modify the credit card limit. Customers should be able to reach the personal manager to ask questions or get their requests processed. If your support team isn’t available around the clock, you can implement an AI-powered chatbot or FAQ section.

Push notifications

Push notifications are an excellent way to notify users about upcoming discounts, relevant offers, interest rate data, or paycheck getting to their accounts. Moreover, they’re applied for security purposes like detecting a fraud the minute it happens.

ATM locations

Consider adding an in-app map to help users locate the nearest ATM or bank branches. It’s beneficial when your customers need cash or want to pay your bank a visit.

QR code scanner

Not many banks provide QR codes for payments; however, it’s a great way to improve customer experience. QR payments are easy to integrate and secure due to their unique design. The only things users need are a smartphone with a camera and a downloaded QR code. 

Banking App Development Process

Now, let’s disclose the steps you should take to make a successful mobile banking platform.

Research

Start with market research to ensure you know who you’re going to build the app for. Here are some questions to ask yourself:

  • What characteristic features can I add to stand out?
  • What are applications popular in my region? Why? How can I overcome them?
  • Are there any appealing UI design solutions I can consider?
  • What does my audience actually want from banking apps?

Without in-depth research, you won’t know what functionality to focus on. For example, your clients need a banking app just to pay a bill while you concentrate on debit or credit operations.

UI/UX Design

Users expect a clear and intuitive design interface with easy navigation. Unfortunately, the common problem of most banking apps is that customers face problems understanding the outdated designs. For example, people go crazy entering the payment details each time they want to send money to another user. They may also get disappointed when required to fill in an extensive form while paying household bills.

Here are some hints to deliver eye-catching design for banking apps:

  • Ensure that all design elements (typography, icons, color palette, buttons) align with your corporate style and brand.
  • Navigation should reproduce the logical architecture of your application.
  • All the design components should be simple and clear without distracting users’ attention.
  • Take into account cultural differences if you’re planning to enter the global market.
  • Your mobile solution should correspond to iOS and Android guidelines.
  • Consider adding extra bonuses like sticker packs for messengers.

For instance, Revolut applies colorful illustrations to introduce the application to new clients.