How to Develop an Online Banking App to Win the Race: Key Takeaways and Prospects

The broad-based online banking app usage has become the new normal, prompting financial institutions to go digital. Today’s consumers demand a seamless experience 24/7 (in a matter of seconds, too) that traditional banks can hardly deliver so far. Yes, we know that bureaucracy (and of course, conservatism) issues may slow down digitalization. Still, to win the race, you should rethink an old routine and switch to the latest technologies.

How to Develop an Online Banking App to Win the Race Key Takeaways and Prospects

What’s more, millennials, who have long used innovative FinTech products, and Generation Z at their start of entering the market, are spurring industry changes and individual financial institutions’ success globally.

To ease your task, OpenGeeksLab has gathered all the banking app development fundamentals so that you could jump into the financial services industry with no worries.

Why You Should Go for Banking App Development

Why start your own mobile banking application?

Online banking app development niche appears among top-rated modern market segments. Analysts explain this boom by continuous strong smartphone experience incorporation into consumer life, COVID-19 outbreak, and quarantine measures.

As Allied Market Research states, in 2019, the online banking app market revenue reached $11.43 billion. The report claims these numbers almost triple, hitting $31.81 billion by 2027 at a CAGR of 13.6%.

Capital Banking Solution, CGI, ACI Worldwide, Microsoft, Oracle, and other corporate giants have undoubtedly influenced the online banking app market. Still, FinTech always welcomes ambitious newcomers with innovative ideas.

Seize the day to try yourself in online banking. However, so that nothing could hinder you from entering the banking app development niche with ease, you should be aware of current data privacy and security laws for a target market.

Influential Data Privacy and Security Guidelines in Financial Sphere

Now, let's uncover the principal regulations to follow in the FinTech business.

Data privacy and security guidelines resist financial fraud, blackmail, or identity theft. Rules regulating FinTech application development and usage usually differ depending on the location. Let’s go into greater detail.

1. PCI-DSS

The most global law regulating FinTech is the Payment Card Industry Data Security Standard (PCI-DSS). It holds control over card usage and provides instruments for cardholder data protection. All businesses dealing with card processing are subject to PCI-DSS.

2. GDPR

General Data Protection Regulation (GDPR) is the primary data protection guideline in the EU area. It requires all agencies distributing their apps in the EU region to follow prescribed data privacy protection measures, even if the company claims not to process personal and sensitive user data.

3. GLBA and SOX

In the US, data protection in FinTech is regulated by Gramm-Leach-Bliley Act (GLBA) and Sarbanes-Oxley (SOX). Hence, GLBA includes:

  • Financial Privacy Rule (customers should be warned about their private data collected, processed, or shared)
  • Safeguard Rule (FinTech institutions should provide a written data protection plan)
  • Pretexting Protection (FinTech companies should protect their companies from blackmail or manipulations).

SOX, in turn, was launched to protect FinTech investors from fraud in financial reporting.

4. CDR

Consumer Data Right (CDR) regulates financial relations in Australia. From July 2020 CDR covers digital banks as well.

5. CP Act

The Canadian Payments Act (CP Act) sets a legal framework for financial institutions in Canada. It embraces the rules both for traditional and mobile-only banks.

Knowing and obeying the security regulations is only one step towards a seamless online bank app development experience. Proceed with the others in the next paragraph.

Crucial Steps to Incorporate in Banking App Development

Key priorities you should mind while developing a mobile banking app.

Online banking app is a complex process that requires a substantial preparation level. Before jumping into even simple mobile banking app project realization, consider the following:

1. Market Analysis and Project Plan

Market research is a fundamental preparatory stage that cannot be neglected even if you have specific budget limitations. It helps you to identify your idea’s relevance even before you make up a project plan. Market analysis gives an overview of current niche trends and predicts market conduct during several next years. It also provides competitor research so that you can learn from their mistakes.

Based on market research, one should develop a detailed project plan. Mind the niche you enter and specify the target audience to get efficient results. Do not try to cover all segments at once. Choose one aspect and develop a banking app that will tackle the problem.

2. A Killer Business Strategy

Starting an online banking app, a business runner has several opportunities to go for: mobile, client, or Internet banking.

Mobile banking is a smartphone (or other portable iOS or Android-powered device) solution to manage individual bank accounts. It appears exceptionally convenient, as users should not physically visit banks anytime they perform a payment. You can settle complex issues via instant support chat (with a company representative or AI-powered).

Client banking is a solution for corporate accounts. It is installed on PC and gives wider opportunities like the bank’s system and database access. What limits this online banking solution is the need to have a PC or laptop with pre-installed software to perform some transactions.

Internet banking is a solution running within a web browser. Customers can use bank services 24/7 from anywhere as long as there is an Internet connection. However, one should be careful with it, as website data protection is naturally lower than in other options.

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Choosing a suitable strategy, mind your business objectives and target audience of your future digital bank solutions.

3. Reliable Software Vendor

Partnering with a reliable software vendor makes half of your future success. Do not hurry up to collaborate with the first encountered development team. A careful study of the company’s portfolio helps to understand whether it has the necessary expertise to create a mobile banking app. Look for more ample opportunities, and do not limit your banking mobile app to local software developers as you can partner with development teams worldwide.

4. User-Friendly UI/UX

Providing seamless user experience and intuitive design defines the popularity of your future online banking app. An attractive design is responsible for drawing customer attention, a user-friendly interface makes them stay, so one should keep these two elements in balance. While planning an app’s design, you should consider structure clarity, functional accessibility, and correspondence to your brand identity.

5. Secure Bank APIs

A reliable bank application programming interface (API) is a must-have for any banking app development option. If you create a mobile banking app for an existing bank, API gives you access to the bank system and account management. A secure API supports smooth and functional bank software performance to develop a mobile-only banking app.

6. Advanced Data Protection

Data security should be additionally stressed while talking about fintech. Make sure your mobile banking application corresponds to the security guidelines of the distribution region. Applying additional data protection measures keeps personal and sensitive user data safe and secure. Data security and data privacy cover, including but not limited to:

  • Safe app entrance (two-factor authorization, using biometry, reliable user passwords)
  • Data encryption
  • Secure info storing (reliable servers, avoiding storing sensitive data on the user device)
  • Automatic log-out in case of inactivity for a certain period.

7. Right Monetization Model

Choosing the right monetization model is a step towards your online banking app’s future success. The more suitable your monetization strategy is, the sooner your business bank app will pay off. Business runners commonly choose between modes based on subscriptions, advertising, fee schedules, business cooperation, or API as a product. Each one has its benefits and drawbacks (which we will tackle later on). Consider your business objectives and target audience to understand which models suit your app better.

Apart from the issues listed above, it would be best to build a well-balanced relevant feature set for your mobile banking application.

Vital Mobile Banking Application Features to Mind

Here, you will find out standard features to implement into your online banking app.

Speaking about must-have features, you should understand that a feature set differs from app to app, as mobile apps for banking strive to cover their target audience’s specific needs. The most common mobile banking application features include:

1. User Profile

A user profile should contain private customer data (necessary for an app) to reuse while making payments. It may also provide some additional settings, like saved payment scenarios, priorities, special offers.

2. Instant Transactions

Quick and easy transactions play a leading part in proper banking app development. Make sure your app provides the necessary tools and has an intuitive interface.

3. Advanced Security Measures

Think over app security best practices. For example, you can offer a secure log-in system with biometry or two-factor authentication.

4. User Notifications

Keep users informed about their online bank account app activity by customized push-notifications.

5. Offline Mode Support

Make your app trendy with offline mode support. Ensure users have access to necessary info even without an Internet connection.

6. Peer-to-Peer Transfers

Support card-to-card transactions between various financial institutions to increase user acquisition.

7. Support Chat

Proper support is vital in emergency cases. What’s more, you can enhance your app, for instance, by utilizing an AI-based support chat.

You can also add some extra features like personal financial manager, smartwatch support, Google/Apple Pay integration, QR code billing, repetitive operations, split bills, cashback, and more. All that will help you make your banking mobile app even more personalized to meet your customers’ specific needs, driving in more sales.

Now that you’ve decided on the desired functionality, here’s the time to know how long and how much it may take you to develop a banking app. Well, let’s see. For instance, a mid-sized offshore software development company will create a mobile banking app in three-six months at a rough rate of $40-100/hour. After doing simple math, an average banking app development cost may range from $60,000 to $120,000 (though it may exceed these numbers, depending on many inputs).

Examples of Successful Digital Banking Apps

Let’s take a look at mobile apps for banking that are taking off.

To make the info more representative, let us show several examples of banking apps that are booming now in fintech:

1. Ally Bank

Ally Bank, a booming mobile banking application for user account management, offers its users extensive functionality. It includes paying bills, transaction history, ATM map/search, deposits management, and high-yield competitive savings accounts. Ally Bank supports using biometric authorization (fingerprint ID) instead of a regular password. The app owes its popularity to higher rates and lower fees (compared to traditional financial institutions). Ally offers to review current stock market news within the app as a free bonus feature.

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2. Bank of America

Bank of America, a trusted national bank, has made its name out of a positive user experience. Like other traditional banks, it offers regular bank services with no risky rates on saving accounts promised. Bank of America bets on user data protection: it tracks suspicious transactions and informs users about untypical actions. To use Bank of America as an online banking app, one should pay $14 per month.

3. Capital One

Capital One takes high positions among digital banking apps due to its rich functional scope and competitive annual percentage yield (APY). The app offers a profound card management system so you can store, lock, or renew the card directly from your mobile banking application. Capital One also provides a beneficial reward points system for credit cards.

4. Huntington Bank

Huntington Bank is a simple online bank app providing high-quality services to its users. The app was highly rated for its well-balanced look (user-friendly design, intuitive interface, accessibility) and content (provided services, information availability, functional scope). Like Bank of America, Huntington Bank tracks your in-app activity and (if settled) sends push notifications every time you perform a transaction.

5. Wells Fargo

Wells Fargo is another large traditional bank that provides its services via an online banking app. The app offers all the required functionality to manage private financial operations and allows users to waive fees if they have $1500 as a minimum daily balance or $500 as a deposit per month. Additionally, Wells Fargo supports biometric authentication (Face ID, Touch ID) to simplify online bank account app logging in.

Despite the abundance of digital banking apps on the market, you can always change the situation by hitting it with your unique solution.

Best Online Banking App Monetization Strategies in a Nutshell

Finally, let's dive into the most popular monetization models to guarantee your mobile banking application commercial success.

Monetization concerns appear among key ones when one develops their business banking app. There exist five basic strategies that will help your online banking app bring profit:

1. Subscriptions

A subscription plan stands among the most popular monetization options for digital banking apps. Subscription presupposes users are paying money in advance to get access to a service for a certain period. As a rule, the customer pays fees once a month, quarter, or year. Customers prefer subscription plans, as they are flexible, and you should not pay for the period you do not use the application.

2. Transaction Fees

Taking transaction fees stands as another popular way to monetize mobile apps for banking. The application itself is free-to-download and does not acquire any money for account management. However, the platform takes fees for different money operations (money transferring, online payments, currency conversions, and others) a customer performs via it. The percentage varies from app to app, though usually, they do not go beyond 5% for regular transactions.

3. In-App Advertising

An advertising model makes a mobile banking app entirely free for users. Application runners receive profits for showcasing advertisements to users within their app. Ads may be implemented as regular banners, media (image, audio, video), or interactive elements. In-app advertising strategy attracts more customers as service is stated as totally free. However, the retention rate is lower than in previous models because advertisements often appear irritating.

4. Business Collaboration

Business collaboration (while FinTech startups partner with renowned financial institutions) is standard money-making practice. Via business collaboration, mobile apps for banks can establish mutually beneficial relationships without implementing third-party advertisements or charging fees.

5. API as a Product

Using API stands as the most cost- and time-effective way to access required functionality. Without going too technical, using API, customers send requests to certain company services; the services react with a response; customers receive relevant information. API is widely used while banking app development to perform payments, transfer money, whatsoever. Banks may charge fees by providing their API, though the model is not relevant for European banks, as they have to give free access to their APIs.

Being at their rise, mobile apps for banks show no signs of slowing down. Despite the existing solutions, you may always offer customers an alternative that they fall in love with (and boost your business, for sure).

Win the Race with Your Custom Mobile Banking Application

Mobile banking apps are a hot-take now. More and more financial institutions (even large ones and with a long history) switch to advanced FinTech solutions, making traditional banks a thing of the past. When you doubt yourself, your competitors already pick a winning ticket. If you want to win the race, then don’t lose your chance and start custom banking app development right away!

OpenGeeksLab always focuses on safety-first digital banking apps to ensure that the users’ data are safeguarded under every condition.

Our experts have vast experience in providing advanced FinTech software solutions. We can’t uncover the details as these projects fall under NDA. But be sure if you plan to create an online banking app, we can guide you down the winding road. Do not hesitate to contact us or book a 15-min consultation with our lead experts to create a mobile banking app from your boldest dreams.

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