How to Develop an Online Banking Application in 2023?

Lately, online banking has become a game-changer. That’s why many companies consider creating online banking applications. They unlock many benefits for business owners, such as convenience, efficiency, and security. But do you know what the whole development process looks like?

There is a lot that goes into it. You have to research the market, understand users’ needs, and come up with a specific set of features. Since money is involved, you must prioritize security measures for your application. Besides, people like having an easily understandable and eye-pleasing interface. And, of course, you can’t forget about tech stack selection and post-release tasks.

Does that sound intimidating? It can be. But no worries – Softermii is going to help you figure everything out. We have had various projects of different sizes but with similar goals. For example, we have worked on ExpediPay for a year to provide a secure mobile banking solution. With our practical expertise in this field, we decided to share our wisdom. So, let's dive in!

The State of Mobile Banking Market

Before we dive into banking mobile app development, let’s see some facts and figures to prove it's a worthwhile investment.

• The market of online mobile banking apps, with a value of $772.96 Million in 2022, is expected to experience a steady annual growth rate of 11.70%.

• 99% of Gen Z and 98% of millennials use mobile banking apps.
• In the US, mobile banking apps were downloaded 34.6 mln times in the last quarter of 2022.
• In 2022, around 35.5 mln customers of Bank of America used mobile banking services. A year before, the bank had 32.9 active mobile banking users.
• Mobile banking apps evolve rapidly. Biometrics, chatbots, and AI in online banking are used more and more often. They enhance security and personalize experiences. The apps now offer P2P payments, helpful budgeting tools, investment services, customer onboarding in banking, and personal recommendations.

Online Banking Apps Development in Detail

To meet the growing need for top-notch online banking apps, learning their purpose is crucial. These apps enable users to access and manage their financial accounts safely.

Let’s review their key features and benefits.

Key features

Key features of applications for online banking include:

1. Account management. Users can check their financial status whenever they need to.
2. Bill payments. The application allows users to pay their bills. No need to write checks or visit physical locations!
3. Mobile check deposits. With many online banking and mobile apps, users can deposit checks by taking a picture with their device. This convenient feature saves time and makes the check depositing process faster.
4. Alerts and notifications. Users have the option to customize alerts and notifications based on their preferences.
5. Budgeting and expense tracking. Some online banking apps offer tools that help users with budgeting. These features enable improved financial planning and management.

Benefits

There are also some benefits associated with developing online banking software.

• Customer convenience due to the ability to perform banking activities from the comfort of one's home or office. Customers quickly check account balances, transfer funds, pay bills, and manage their finances with ease, leading to increased satisfaction and loyalty.
• Cost savings. Firstly, it eliminates the need for physical branches and tellers, reducing operational expenses. Additionally, online banking reduces reliance on printed statements and paper-based transactions, further contributing to cost savings for financial institutions.
• Expanded customer reach. By providing online banking services, businesses extend their reach to a broader audience, accessing new markets, serving remote customers, and attracting tech-savvy individuals who prefer digital banking solutions. This not only helps businesses save costs but also enhances their customer base and overall competitiveness in the market.
• Automated routine tasks. Works for transaction processing and statement generation, improving efficiency, reducing manual errors, and enabling staff to focus on more valuable tasks, ultimately enhancing productivity.
• Real-time access to big user data in online banking, transaction histories, and financial information. This valuable data helps with analytics, reporting, and informed decision-making, empowering banks to identify customer trends, personalize services, and develop data-driven business strategies.
• Enhanced security measures are vital to online banking software, with features like encryption, multi-factor authentication, and fraud detection systems implemented to safeguard customer data and transactions.
• Competitive edge. In the modern digital landscape, online banking has become an expected service. Developing online banking software enables businesses to remain competitive and stand out from rivals lacking similar digital banking capabilities.
• Capability to integrate with various systems, including accounting software, payment gateways, and third-party services, allowing for streamlined data exchange, simplified financial processes, and improved operational efficiency.

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Types of Banking Applications

Different mobile banking applications cater to varying user preferences, offering unique features:

• Digital wallets securely store your information. They also offer integrating loyalty cards and enable person-to-person money transfers.
• QR code apps generate and scan codes for quick transactions.
• Internet payment apps enable secure online purchases.
• P2P payment apps allow convenient fund transfers between individuals.
• Traditional banks and digital-only banks offer their apps for online banking.

The choice depends on user needs, preferences, and financial institution services.

How to Make a Banking App: Detailed Instructions

Now, let's move on to the process of creating an app after understanding the types of tasks they can accomplish.

Set a Goal and Choose Key Mobile Banking App Features

In banking mobile app development, starting on the right foot is essential. It's crucial to define the objectives, features, and target audience. Here are some key features to consider:

• Authentication and Authorization:
• Consider using biometrics or two-factor authentication.
• Ensure authorized access to different functionalities and data.
• Transaction Management:
• Enable fund transfers between accounts, including internal, external, and recurring ones.
• Enter scheduling of future payments with payment confirmation and receipt generation.
• Add transaction history and real-time notifications for enhanced financial tracking.
• Customer Support:
• Consider in-app customer support and chat functionality.
• Add an FAQ section or knowledge base to provide self-help resources.
• ATM & Bank Branch Locations:
• With integrated geolocation services, users easily locate nearby ATMs and bank branches. This feature provides directions and operating hours for added convenience.
• Improve filtering options based on ATM features or branch services.
• Gamification:
• Add fun elements to the app to motivate users to adopt positive financial habits. Try savings challenges, goal-setting, and rewards for reaching financial milestones.
• QR Code Scanner:
• Enable a QR scan for seamless payment initiation, bill presentation, or information retrieval.
• Alerts and Notifications:
• Personalize push notifications. Receive updates regarding your account activities.

This will help you in the process of mobile application development for banking.

Learn more: Key Tips to Successful Financial Literacy App Development

99% of Gen Z and 98% of millennials use mobile banking apps.

Research the Market

Thorough market research is vital for these reasons:

1. You can see what users prefer, allowing you to align your app with their needs and provide an excellent user experience.
2. Analyzing competitors helps you differentiate your app and identify opportunities to stand out.
3. Research reveals emerging Fintech trends and allows you to capitalize on new opportunities.
4. Understanding user pain points helps you create a seamless and user-friendly interface.
5. Research helps define and target your desired audience effectively.

Create a Prototype

Building a prototype of an online banking app is crucial for several reasons:

• Creating a prototype helps to attract support and investment.
• Catching and resolving issues early saves time and money in the development process.
• Prototyping refines the UX/UI, creating an intuitive and user-friendly app.
• A prototype aligns stakeholders and facilitates effective collaboration and decision-making.

Design the User Interface

This step is crucial for providing an intuitive and visually appealing user experience. Create wireframes and practical UI designs for banking apps to communicate the app's structure.

Focus on creating a clear and organized layout. Ensure the navigation is easy. Your design should work well on different devices. Conduct usability testing to gather feedback and ensure an engaging and user-friendly UI.

Choose a Tech Stack

When choosing the technology stack for a mobile banking app, it's essential to consider several key factors:

1. Scalability. When selecting technologies for your application, it is crucial to consider its future growth and increasing user base. Ensure that the chosen programming languages, frameworks, and databases can handle large transaction volumes and user activity.
2. Security. When selecting frameworks and libraries, prioritize those that support encryption, offer secure data storage options, and protect against common security vulnerabilities.
3. Performance. Consider factors like response times, data processing capabilities, and efficient algorithms. Look for frameworks and tools known for their performance optimization features.
4. Development Speed. Assess the development speed and ease of use of the chosen tech stack. Look for frameworks and libraries that offer rapid development capabilities, code reusability, and a strong developer ecosystem.
5. Platform Considerations. You need to choose between developing a native app for iOS/Android or using cross-platform development frameworks like React Native or Flutter. Consider the pros and cons of each approach, such as performance, user experience, and development cost.
6. Regulatory Compliance. Consider the rules and regulations specific to the banking industry, such as data privacy (e.g., GDPR) and compliance with online banking financial security standards (e.g., PCI DSS). Ensure that the chosen tech stack provides the necessary tools and features to adhere to these regulations.

In the US, mobile banking apps were downloaded 34.6 mln times in the last quarter of 2022.

By taking these factors into account, you can choose a tech stack that meets the specific requirements of mobile banking application development.

Build an App

1. Backend Development: Setting up databases, servers, and APIs. The backend development handles crucial aspects such as user authorization and authentication in banking apps, encryption of sensitive data, requests for banking services, and managing the secure storage and retrieval of user information and transaction data.
2. Frontend Development: This includes creating interactive screens, navigation flows, and user input forms. Developers use HTML, CSS, and JavaScript to create a visually appealing and responsive user interface (UI) that works well on different devices and screen sizes, providing a smooth user experience.
3. Database Development: Designing and implementing the database architecture for the mobile banking app. To handle data effectively, developers create tables, establish relationships between different entities, and prioritize data integrity and security. They rely on database management systems (DBMS) like MySQL, PostgreSQL, or MongoDB to securely store and retrieve user data, transaction information, and other relevant data.
4. Integration of Banking Services: Integration with banking services is critical to mobile banking app development. Developers use banking APIs from financial institutions to enable features such as checking account balances, transferring funds, paying bills, and accessing transaction history.
5. Testing and Quality Assurance: Testing plays a crucial role in ensuring functionality, performance, and cybersecurity in banking. Developers conduct unit testing to validate individual components, payment gateway integration testing to check the interaction between different modules, and user acceptance testing to verify if the app meets user requirements.

To achieve a successful mobile banking development process, effective collaboration among the development team, including UI/UX designers, backend developers, frontend developers, and testers, is crucial at every stage.

Release Your App and Keep It Up-to-Date

The app release typically involves several steps to ensure a successful launch. First, it has to be tested by a selected group of users. Then you’ll have to submit it to the respective app stores, so they can review it and check if it meets their quality standards. As soon as it’s approved, it gets published. Then you can start promoting it, for instance, with social media.

The next step would be gathering feedback and monitoring performance.

Upon the app's release, important tasks ensure success and improvement:

• Check and address user feedback and reviews for app enhancements.
• Analyze metrics to optimize stability, response times, and user engagement.
• Resolve reported issues as soon as possible and release updates with fixes and new features.
• Stay updated on security threats and comply with regulations.
• Implement strategies to keep users engaged and encourage long-term usage.
• Optimize app store listing to increase visibility and downloads.
• Plan enhancements based on feedback, trends, and business goals.
• Regularly test for stability, security, and compatibility across devices.

Performing these tasks ensures user satisfaction, app stability, and ongoing development.

How Much Does It Cost to Create a Banking App

Estimating the cost and timeline for developing a mobile banking app depends on many factors. However, here is a breakdown of some estimated numbers mentioned in the text:

1. The cost to build a banking app from scratch with an in-house development team can range from a couple of million dollars to $300,000–$500,000 with a contractor team. For Fintech app development companies focusing on an MVP, the cost may be $180,000–$260,000.
2. Annual maintenance costs can be around $130,000 for both variants, and the long-term investment strategy may exceed $1 million.
3. The development timeline can vary, but typically a proof of concept takes around four to six months, while a releasable MVP with a dedicated team can take between nine and 14 months.
4. Building an online banking app from scratch with a mid-sized outsourcing company can range in cost from $50,000 to $80,000, providing excellent value for a reasonable price.

These numbers are rough estimates and can vary based on factors like app complexity, cloud banking solutions, chosen technology stack, development team location, and type of collaboration.

How to Build a Banking App: Our Experience

Since this isn’t the first time we’ve been dealing with online banking platforms, we know how to create a mobile banking app, and we’ve decided to share our real-life experience with you.

While working on the ExpediPay project, we developed a fintech mobile and web application. To make the application more secure, we implemented a user-friendly and highly secure user authentication system that incorporates eKYC integration. This ensures that the application is protected against fraud.

We added a live chat feature for users to easily access support for their money operations whenever they need it.

The app's main feature is a secure and user-friendly peer-to-peer money transfer. Users can easily make instant transfers with just a few clicks.

As a result, there were 13,000+ downloads and 1,350,000+ money transfers in the first three months.

During our work on SmartStart, we aimed to develop a comprehensive financial app catering to users with limited knowledge of wealth management. We encountered four key challenges: intricate architecture, smooth API integration with banking systems, AI/ML credit evaluation, and designing a user-friendly interface.

The app consisted of spending monitoring, financial portfolio management, and loan opportunities. In the first two months after release, we experienced 1,296,000 transactions, connected 3,000 properties, and gained 24,000 users.

We also know how to create an online payment platform.

Conclusion

So, how to build a mobile banking app? It requires careful planning, user-centric design, and robust security measures. Regular updates are vital for functionality and user satisfaction. By following the recommended steps and best practices outlined in this article, businesses can create a secure and user-friendly online banking app that meets the needs of their customers and drives their financial success in the digital age.

Partnering with an experienced development team like Softermii can ensure high-quality results. Contact Softermii today to discuss your project and build a secure, user-friendly banking app.

Unlock the potential of your online banking business with the unparalleled expertise of Softermii specialists.