If there ever was a time to build a fintech app, that time is now. The market is ripe, the problems to solve are plenty, and the tools and resources are readily available.
- Now is the perfect time to build a fintech app. VC investment in fintech reached $52.3 billion in the first half of 2021 compared to only $22.5 billion invested in the second half of 2020.
- The answer to “How to develop a fintech app?” lies at the intersection of integrating with third-party financial services that provide payment, banking account info, security, and cloud services for your fintech application.
- A smart approach to fintech app development includes creating an interactive prototype that allows you to verify your assumptions with real users and invest only in coding features that make sense for the target audience.
Table of contents
- Authenticate and Manage Users
- Get Secure Hosting
- Integrate Credit Score Checking
- Access Bank Account
- Setup Payment Gateway
- Implement Chat
- Add Bonus Plugins
- Consider Legal Obligations
Fintech Industry Overview
Before we delve into the exciting world of fintech apps, let’s recap what fintech really is.
What is Fintech?
Fintech is the glamorous new-age term for anything that has to do with finance and technology: from platforms for money transferring to budgeting apps.
In fact, fintech has become so ubiquitous, I guarantee you use it more often than you know. We buy stuff using virtual cards on our smartphones, take cash from ATMs, send mobile payments, and do a lot of other things that together make up fintech.
And because money is so interwoven with everything we do, as you’d expect, the fintech market covers quite a few areas of our lives:
- Wealth management
- Personal finance
- Cryptocurrency-based solutions
- Money transferring
- Trading solutions
- Regtec software
- Mortgage solutions
Just like many other major markets, fintech has been hit by COVID-19. In Q1 2020 fintech funding dropped 19% to $6.1B compared to 2019.
At the same time, the virus has given enough momentum to such fintech areas as contactless payments and branchless banking. Some say digital competition may win more than 40% of revenue from traditional banks.
Investment apps like Robinhood are also seeing an influx of new users. E-commerce has been on the rise, obviously, as businesses closed stores and consumers got under stay-at-home orders. At the same time, companies like Toast, serving restaurants have been hit particularly hard (e.g., Toast had to cut their staff by 50%).
As the world is slowly surfacing after the pandemic we can see the following fintech trends starting to shape:
- Digital will become essential for all financial services, as a means to cut costs and remove inefficiencies
- Lending will suffer the most and is likely to spur a merger mania
- Robo-advisory services will gain more popularity
Related Article: How to Build a Robo-advisor
So before you create a fintech mobile application you should really carefully consider its category.
Types of Fintech Apps
As we’ve mentioned, financial technology is very prolific. Fintech apps fall into several major types. Let’s review the most prominent types.
Wealth and investment apps
These mobile apps let you buy stock and ETFs from the comfort of your home, sitting on a couch. They can also suggest investment options based on studying your preferences.
If you’d like to learn more, we recommend reading our article about creating an investment app.
The classic payment apps, like Paypal or Venmo, were made to make and accept payments. Must-have features include history of transactions, currency conversion, etc. Apps for mobile payments grow in popularity as cross-border money transfers increase in volume.
Just like other types of fintech apps, lending apps allow removing a lot of manual work from lending. AI capabilities, that are often built into lending apps, ensure that the app offers optimal loan options.
Insurance apps gather lots of information from customers. So having a streamlined process with clearly visualized steps and a polished UI becomes a necessity. There are also appearing interesting p2p insurance apps where users insure each other.
Related: Insurance App Development Guide
Personal finance apps
Just a few years ago, budgeting apps used to dominate the app stores. The main idea behind every personal finance app is to give the user a bigger picture of their spendings. If you’d like to learn more, check out our article on how to make a budget app.
There’s a standalone class of fintech apps that stands on its own while resembling other fintech apps: investing, payments, insurance, wallets, etc. The only difference is that these apps work with cryptocurrencies.
These are swift little apps with banking features offered by non-traditional digital-only banks. These target the underbanked and target niches such as e-commerce, immigrants, freelancers, etc.
Related: How to start a Neobank
The Most Successful Fintech Apps
If we look at App Annie, Sensor Tower, or similar services looking for the most popular fintech apps, we’ll immediately notice that the finance charts are ripe with apps for mobile payments, banking, and investing.
Venmo — a popular payment app that makes it easy to split the cost of almost anything. It’s a sibling fintech app targeting millennials that are bored with the traditional PayPal app. Venmo, like all major fintech applications, works on the iPhone and Android phones.
Robinhood — an app that brought investing to the masses with zero commissions. They also added a savings account recently, which makes the app even more tempting.
Chime — is a mobile banking app that has all the features you would get from a typical banking account, plus some more, including paychecks up to 2 days early and fee-free overdraft.
3 Reasons to Develop a Fintech App
If there ever was a time to build a fintech app, that time is now. Let’s review these three compelling reasons why you should consider building mobile apps for fintech before we answer how to build a fintech app.
Financial illiteracy is on the rise
One would think that with the growing student loan crisis, and international economic warfare between the US and other governments, people are now more educated about how to manage their money.
But the opposite is true. A 2015 S&P Survey showed 57% of Americans were financially illiterate. The problem is actually getting worse as revealed in the 2019 report by the Financial Industry Regulatory Authority. Some of the shocking findings in the report are that ” the financial literacy rate among Americans has decreased from 42% to 34% since 2009; nearly eight in 10 Americans have some kind of debt, 37% feel that they have too much debt; more than half of Americans feel that their personal finances are a source of anxiety and stress.”
The numbers are more shocking among millennials – 76% of millennials lack basic financial education, 54% worry that they’ll fail to repay their student loans. Among Americans between the ages of 18 and 26, only 16% reported being optimistic about their financial future. Yet this is the generation that will soon be in charge of our economy.
Picture all this with the backdrop of the growing distrust of human financial managers. People, even though not fully informed, are desperate to take charge of their finances. And they are hungry to learn fast.
If you came up with a creative fintech app that helps ordinary people to effectively take control of their finances without having to know all the financial jargon, you’d hit gold. The demand is high.
Mobile Phone Penetration
There are 5.13 billion unique mobile phone users in the world today. That is equivalent to 66.6% of the planet’s total population. Ericsson estimates that in 2019 there are 5.5 billion smartphones in the world.
Apps are everything on a smartphone and most of them require having an internet connection, so we can safely assume that a large number of these smartphone users have internet access.
Related Post: The 6 Most Important Metrics For Mobile Apps
There is a strong appetite for automation due to the availability of mobile solutions for almost everything. Going to the mall, the bank or library is not imperative anymore. We have apps for those things.
But fintech apps are still lagging behind in functionality when compared to apps for shopping, education, healthcare, and other categories. They are usually limited to managing bank accounts, online payments, transfers or making budgets. But there is so much more than can be done a little creativity. This a gaping hole in the market.
Take home rental management, for example, a large part of it is still done offline. A fintech app solution that combines tenant screening, rent collection and other aspects of rental management could be very successful.
Since the earliest civilizations, to access banking services, people have always had to go to the bank. But now, banks are bringing their services to the people by going digital. Open banking is the driver behind this new approach.
Today, banks understand the importance of being interconnected. By incentivizing their data, they remain relevant to their customers in this digital age. They’ve invested millions of dollars into developing APIs that enable third-party entities to create and serve value-added banking services like mobile credit score monitoring, loan processing, real-time capital management, treasury management and much more.
Thanks to open banking, you can now rapidly build and deploy complex fintech solutions without spending years on development or needing to undergo lengthy certification for you to directly manage financial data. The sky’s the limit.
When you want to make a fintech app, one of the things you worry about is how well it will be received. Make sure your application has these features before releasing it to the wild.
Any fintech app must comply with security requirements protecting users’ financial information. To achieve this, a fintech developer implements blockchain, encryption, biometric and two-factor authentication, data obfuscation, and other security measures.
Payment gateway integration
The majority of fintech apps have to do with payments. To enable the payment functionality, you may choose to integrate with services like Stripe, PayPal, Zelle or work via bank APIs.
By now, AI has become a necessity rather than extra functionality in fintech applications. Machine learning algorithms take data from various inputs, analyze it, and provide advice.
As the saying goes, everybody loves a dashboard, aren’t they? Today, it’s hard to imagine for someone to make a fintech application without a visual representation, whether it’s spending, payments history, or stock charts.
Fintech apps may choose to surface their most frequently used features to customers via voice assistants: Siri, Google Assistant, and Bixby. That approach keeps customers using the app without actually opening it.
8 Steps to Create a Fintech App
In case you are wondering what the steps for custom mobile app development are, let me walk you through the steps of building a simple fintech app.
Let’s say you want to build a rental management app. Your app will enable users to check prospective tenants’ credit scores, accept leasing security deposits, place them in escrow, and manage their release at the end of a leasing contract to eligible clients. Your app also allows an easy contract renewal process for your chosen tenants.
Your value proposition is streamlining the application process for applicants and increasing ROI for landlords, the sort of win-win that fintech should be able to accomplish.
We’d need several functions to make this application:
- User authentication with encryption
- Secure hosting with multiple failover redundancy
- Credit score checking
- Access to banking data and real-time transfers to an escrow account
- A payment gateway
- Chat to communicate with users and provide support
If we were to do this the hard way, we’d have to hard-code each of these functions ourselves. It would take forever and you would spend a fortune on app development costs. Fortunately, there are APIs for each of them, which makes developing a fintech app easier.
Step 1: Authenticate and Manage Users – Firebase
Think of this like the skeleton on which to hang the muscles and organs of your app. It is the scaffolding tool of choice for app building. It also provides secure user authentication, management, and crash reporting. Firebase integrates with a host of other Google services that create a rich user experience.
Step 2: Get Secure Hosting – Cloud Firestore
Your engine room. This is an encrypted cloud-hosted database solution for app development. It’s a Firebase product and integrates with all other Firebase products for seamless development and user experience. It has automatic scaling, is capable of high performance and simplifies the app development process.
Step 3: Integrate Credit Score Checking
Experian offers a consumer-facing API that pulls credit scores and credit reports. The credit report can also be shared online to third parties.
With ACS (American Credit Systems), you can generate full credit reports, FICO scores, public records and make credit inquiries.
The Universal Credit Services API generates credit reports from 3 credit bureaus – TransUnion, Equifax, and Experian. UCS consolidates this data into a single unified credit report file. They also support bulk requests.
Data accessible using this API includes:
- Pre-Employment Credit Reports
- 4506T IRS Tax Transcripts
- Social Security Number Verifications
- Criminal Searches
- Eviction Searches
- Decision-only Credit Reports
- Motor Vehicle Records
Step 4: Access Bank Account – Plaid
Plaid connects your app to bank accounts. This a major API in the fintech industry. Plaid makes many things possible that are otherwise very difficult to achieve. It’s very agile and consolidates your users’ financial data on a single platform, minimizing risk and speeding up development.
Another financial data aggregator is Yodlee, but they have fewer capabilities compared to Plaid.
Step 5: Setup Payment Gateway – Stripe
Stripe is a global payments processor. Stripe combines many payment service providers into one solution that frees you from needing to store credit card details and comply with PCI certification. It integrates with Plaid.
Step 6: Implement Chat – Chatbot
Using Natural Language Processing and machine learning, Chatbot’s API automates your customer service. Because this is powered by machine learning, you can develop it to handle more complex tasks like tenant pre-approval processing using open source libraries like python scikit.
Step 7: Add Bonus Plugins
If you want to include financial management for the landlord’s dashboard, the Intuit API has tools to show the financial health of a business. They own Quickbooks and Mint.
Step 8: Consider Legal Obligations
Remember, we are talking about very sensitive data. This is data that hackers would love to access at your expense. So here are a few extra steps you need to take:
- Understand the legal agreements associated with accessing users’ financial data using these APIs.
- Create a data privacy and management policy.
- Secure an insurance policy so you are covered in case of a breach.
- Have a disaster recovery and business continuity plan in place.
Your responsibilities go beyond just providing a service.Your users are placing their life’s savings in your stewardship. Taking these extra steps will go a long way to enhance their trust in you as well as the reliability of your app.
Cost to Build a Fintech App
The cost of developing your app will totally depend on how many features you envision, whether you do a mobile web or mobile app, whether your app will involve blockchain development. The more integration it will require, the longer it will take to develop and the higher will be the development estimate.
At Topflight Apps, we’ve worked on fintech apps that took up to $160,000 to develop (including iOS and Android), start to finish. But we also developed nifty MVPs for $30,000. If your fintech app does not include an AI component, the biggest impact on its development budget will be one of the following or a combination of:
- Tying together all APIs integrations with the app’s business logic on the back end
- Implementing highly interactive dashboards with animations
We always suggest starting with building a prototype to verify your app concept before developing it in the flesh. Many of the features may be replaced once you have feedback from real customers who have used the prototype. And that gives you the upper hand in keeping the control over the development budget.
Our Experience in Building a Fintech App
Our experience in fintech app development includes a smart budgeting app, an AI-powered loan issuing platform, investment solutions, loan tracking apps, and cryptocurrency apps.
With each fintech app we’ve built we take the project start to finish: from a prototype to an app uploaded to App Store and Google Play. We also develop the back end part of the app and feel comfortable working with ready designs. However, our choice is to always validate the designs before the development starts. How long it will take to develop the app will completely depend on the specific features it needs.
The process of building a successful fintech app with Topflight often includes the following steps:
- Designing wireframes — rough imagery for what the app will look like
- Putting together an interactive prototype using the wireframes
- Testing the prototype with users
- Applying user feedback to the prototype
- Designing the actual graphic UI of the app
- Putting together a high fidelity prototype using the UI
- Verifying the prototype with the user base
- Developing an app and the back end
- Testing the app
- Making the app available to the public
It’s Time to Start a Fintech App
At Topflight Apps, we turn disruptive fintech ideas from concepts to real-life products, then add rocket fuel to help these products reach millions of users. We’re app developers in NYC, LA, Miami, and if you have a fintech project and would like to discuss it with us, you can reach us here.
- How to Create a Loan App
- How to Start a DAO
- Building a Mobile Wallet for Digital Payments
- How to Make a Blockchain Payment System
- Guide to Building a Neobank
- P2P App Development Guide
- Build a Cryptocurrency Exchange
- How to Make a Banking App
- Build a Cryptocurrency Token
[This blog was originally published in July 2020, and has been updated for more recent data]
Frequently Asked Questions
How much does mobile application development for fintech cost?
Our mileage says the average application costs anywhere between US$40,000 to $125,000 based on the specific features it needs. Maintenance would be an additional 15-25% of the total app development cost.
How do I optimize the cost of development?
Utilize rapid prototyping, i.e., build a clickable prototype that you can share with customers for feedback. We can create a prototype in under 4 weeks.
Do you work with blockchain, smart contract, and crypto?
Yes, we have certified blockchain developers.
Do you recommend native or cross-platform app for fintech app development?
Native apps support 100% of the platform hardware and require less effort with security enhancements. So we recommend native.
Do you have real-life experience in working with Plaid APIs and similar other banking services?
Yes, we worked with Plaid, Stripe, Ficinity, and other services.
How long does it take to build a financial app?
Depending on the team composition, it may take from three to six months.