A complete guide to financial software development for your FinTech business

Sudeep Srivastava May 13, 2024
A complete guide to financial software development for your FinTech business
Table of Content

The financial industry is complex, and that’s where innovative solutions come into play. From advanced analytics platforms to robust accounting systems, financial software development offers a wide range of options to meet the needs of the users.

While the simple definition of FinTech lies in the explanation that it is a model that merges financial services with technology, in reality, it goes much deeper than this. FinTech is about creating an ecosystem where making transactions timely, convenient, and customer-focused would be possible.

FinTech architecture comes packed with elements designed to solve the many age-old problems associated with the sector, giving them a digital-first solution. The offerings that the sector promises and the adoption it is seeing have brought in a sharp increase in the number of businesses entering the space. Chances are that if you are here reading this guide, you are one of those businesses. Well, you are in the right spot.

We have curated this guide to help you get up to speed with what is needed to enter the space and ace it with your model.

Invest in bespoke banking & financial software development today

An Overview of the Growing FinTech Market

The global financial market is expected to reach a valuation of $2.38 billion by the end of 2027, growing at a CAGR of 11.36%. The shift towards digital platforms has significantly influenced the market size. Users are embracing digital solutions such as apps and mobile banking to carry out tasks previously done through physical bank visits conveniently.

Global Financial Market Revenue 2017 - 2027

The revenue of the fintech market has been steadily growing over the years with the increasing demand for digital financial services. Entrepreneurs should consider entering this space due to its immense potential and the lucrative revenue-making opportunities that it offers. Read this blog to know how FinTech startups can prevent their businesses from failing.

Why is Investing in Financial Software Development Solutions Lucrative?

There are a number of reasons that make custom financial software application development investment a good business move for entrepreneurs. Let us list them down.

Investing in financial software development

1. Cash is Turning Digital

Take a minute out and look back at your last five transactions. Did you ever use cash? If you belong to the Gen Z and millennial age group, chances are you must have moved from cash transactions to digital alternatives without even noticing.

For a FinTech agency, this transformation holds the key to the sector’s growth and financial projection.

Also Read: How much does it cost to build a custom cash management software

2. The Massive App Space

Mobile apps have been instrumental in the growth of the FinTech industry. New-age FinTech businesses and traditional banks have leveraged the power of mobile apps to reach a wider audience and provide better customer services.

Today, mobile has become the new wallet – where users store their money and use it for many transactions. It has also become a ledger that contains a history of transactions and a way to keep updated on future expenses. Read to know how banking & financial software development is disrupting businesses.

3. Bank Visits are Becoming Limited

It’s no secret that customers are turning away from traditional banking systems in favor of neobank and FinTech options. These new-age financial service providers offer support that was once limited to banks and NBFCs, including credit and stock investments.

As a result, FinTech firms have a unique opportunity to introduce new marketplaces for customers tired of the old ways of offering financial services. By investing in custom financial software development, these firms can provide the innovative solutions customers seek.

4. Greater Scope of Innovation

FinTech, as a sector, while witnessing new businesses coming up answering age-old issues, is still ripe for innovation. A new use case emerges when you think you have an app or software for every outdated banking process. After all, who would have thought that there would come a time when virtual currencies would become more lucrative than fiat money? When it comes to FinTech, the sky is the limit in terms of new model development.

6 Innovative FinTech Business Ideas to Start With

A key part of becoming a leader in the FinTech space lies in understanding the model with which you would like to announce your entrance. There are a number of FinTech models you can explore for starting your business, and it won’t be a surprise if several more come up by the time we reach the end of this year.

Top 6 FinTech Business Ideas

On a high level, however, the FinTech ecosystem is made up of this array of sub-sectors –

1. Banking

FinTech fills the gap in efficiency, flexibility, and accessibility that banking institutions are suffering from. With several customer-focused tools like app-based money transfer, neo-banking debit, and credit cards, micro credits, etc., under its armor, FinTech has much to offer on the banking use cases front.

Running on the power of APIs, FinTech companies are closing the gap between traditional banks and new-age app development firms by making it easier for customers to get the data and information they require in real-time.

2. Investment

Investments have always been a key player in the financial world. But what is fairly new is that a trend is emerging where Gen Z and millennials have started investing, focusing on making a wide portfolio of equity, debt, gold, and virtual currencies.

This need to get financially independent is taking them towards several investing-based FinTech applications like Coinbase, Robinhood, etc., which is becoming a lucrative model to enter.

Appinventiv view: There are several ways to add an extra feature to an investment application. It can introduce an in-app wallet, AI-based automatic allocation of funds among different stock options, and even an in-app segregation of purpose or goals from an investment.

3. Insurtech

Emerging InsurTech firms have started providing customers with low premiums, longer repayment times, faster disbursement of funds, and automated claim processing. This makes the insurance accessible to a wider pool of people from different economic backgrounds.

What is new in this sector is that several FinTech firms are emerging that are extending their services to new insurance categories like – pet insurance, insurance for blue-collar workers, car insurance, sachet insurance, etc.

4. Payments

When it comes to FinTech models, payment remains the top choice for many firms. The convenience of making payments, generating invoices, and tracking upcoming payments has made it a favorite among businesses. With its ease of use and efficiency, it’s no wonder why payment solutions are in high demand.

Some businesses even look at everyday struggles, like splitting cash with friends, sending money internationally, etc. The one thing which can be said about this FinTech sub-sector is that it continues to be open for innovation.

5. Lending

Just like insurance, the credit world has also witnessed a massive transformation with the emergence of financial software and solutions. Some firms are offering easy credit facilities with zero paperwork, and then there are also those which are using the analysis and detection abilities of artificial intelligence to gauge borrowers’ ability to pay back, approve, and release the loans – all within 24 hours!

Another model that has recently come into focus in the FinTech sector is the peer-to-peer model. Here, the platform users are able to get loan support from others in the platform or from the company behind the platform. Some examples of these can be seen in names like Zopa, Lendable, etc.

6. Virtual Currency-Driven Platforms

Cryptocurrency is tomorrow’s fiat currency. This is the general consensus people share whenever cryptocurrency is mentioned. For a business, virtual currency comes with various models – cryptocurrency development, crypto exchange, metaverse-focused cryptocurrency, etc.

As you must have guessed, these six are only the surface-level sub-sectors that you can explore. There can be several others; even within those multiple sub-sectors, there could be hundreds of different FinTech business models. What you need to do is find out your area of interest.

Must-Have Features for Financial Software Systems

Before you immerse yourself in this section, we have a disclaimer to share. The features that would ultimately become a part of your FinTech application will depend on the model you picked in the last section. For example, a crypto exchange platform will come with features like live market movement while a payment app will have the facility of a QR code. Between one model to another, the list of features can vary immensely.

Also Read: How to Build an Effective Personal Finance Application?

So we will list down the top features that generally make it to the list of every FinTech app. Here it goes.

Must-Have Features for Financial Software Systems

1. Secure Authentication

Authorization is a crucial aspect of any FinTech app. It is the primary way of securing your application through multi-factor authentications like email, phone number verification, OTP-based registration, biometric authentications, etc. In short, this is the stage where you show your users how tightly knit their experience will be, especially when we consider security.

2. Model-Specific Functions

This set of features will be core to your offering. For example, if you are making a personal finance management app, it will have features like multiple account links, a dashboard with expense and income summaries, AI-based highlights on what can be avoided to lower the expense, a tab on regular payments, etc. Similarly, a stock trading app’s feature list will be something else.

3. Payments

Typically, payment is a common factor in every FinTech software. Whether you look into a B2B vendor management software or something as common as a lending application, every FinTech user would want the feasibility of making secure, real-time payments to others.

Now, how you provide that facility depends on the model. You can opt for the addition of a QR code or bank-to-bank transfer, payment from an in-app wallet, etc. The list of ways to add this functionality is long.

4. Dashboard

Every data-driven app – healthcare, fitness, or FinTech- needs a tracking and management system in place. This is where a dashboard comes in handy. An in-app dashboard helps bring all the income and expense data, market updates, upcoming transactions, etc., in one place, in a format that is easy to digest. Now, a dashboard feature generally comes tagged with the ability to generate and download reports, which helps users get a more detailed view of their finances.

5. Notification

Customized notifications are the most constant line of communication between a FinTech business and its customers. These are sent to update the users on credit or debit, changes in investment rates, new offers, updates in loan application status, and several other reasons.

What is important here is that you plan out a strategy to send the notification so that they don’t seem intrusive or untimely.

6. Integrations

For a FinTech app to be helpful to the users, it has to be integrated with third-party software; in this case, generally, that third-party software is of banks, security software, notification system, and payment software.

When properly integrated with the right APIs, your users would be able to checkout, find the nearest bank location, track the money they have across different accounts, etc.

[Also Read: How to build a loan management system?]

A Technology Trio That Can Make Your Financial Software and Systems Successful

Technological innovation is the linchpin of finance software development, which would continue to create new business models for the sector. According to Appinventiv’s analysis, three technologies drive the FinTech world and should be implemented in your software.

Artificial Intelligence

Any industry that plans on adopting artificial intelligence knows that the technology works only when a plethora of data is available. And when we talk about data-heavy sectors, what can top finance?

AI in financial software development enables fraud detection, advanced analytics, and predictive modeling, empowering businesses to make data-driven decisions in the ever-evolving financial landscape. From the front office to the back office, AI can help streamline processes, improve accuracy, and increase efficiency.

For the customers, the technology can be used to create tailored products, automate transactions, robo-advisors, KYC, chat interface, and much more. Likewise, for the back offices, it can help with creating smart processes like faster claim processing, fraud detection, assessing customers’ lending capability, etc.

The use cases of AI in FinTech are wide-reaching. Our team recently worked on a far-reaching solution for a bank using AI capabilities. Our client – a bank based out of Europe – was losing almost 6% of its home loan portfolio yearly because of a high customer churn rate. Now, even though the bank knew how many customers it was losing, it did not know the reason behind the event.

Blockchain

The technology is ushering FinTech to a new golden era. With use cases like Distributed Ledger Technology, Crypto Exchange, NFTs, Decentralized Finance, and KYC, blockchain makes the financial sector immutable and fast.

The use cases of blockchain in FinTech are typically built to address every persistent issue of the financial sector – the reliance on centralized systems, zero trustability, high operational costs, and slow processes. What the technology is doing to address these is –

  • Enabling faster transactions through consensus algorithms
  • Crypto lending
  • Using its immutability factor to ensure regulatory compliance
  • Creating digital identity
  • Building new funding models

Blockchain is a core banking solution that offers functionalities such as wire transactions with crypto, buying, and selling of cryptocurrencies, wallet recharge, and making payments using Bitcoin and Ethereum. The project validated how we have only scratched the surface of the technology’s integration in software, and there’s a lot more to explore.

Cloud Computing

Cloud computing in banking and FinTech has been a talking matter for a long time now. While on the one hand, the cloud is liberating FinTech companies from non-core activities such as managing data centers, IT infrastructure, etc., on the other hand, it is creating new business models like banking-as-a-service, open banking, etc.

Through its different operative and business end-use cases, the cloud offers a range of benefits to the sector. Benefits around – better security, low infrastructure cost, real-time access to software, enabling usage-based payment, etc.

Between these benefits and the many others on the ground level, it is safe to assume that financial institutions will continue to work on cloud-powered financial services software development. This will not just help them launch new businesses but better their market and customer response time and work on scalability.

The Stages of Fintech App Development

While it is true that every fintech software is different, the process that goes behind financial custom software development more or less remains the same. Here are the stages that we follow at Appinventiv.

The Stages of Fintech App Development

Requirement Gathering

Our team of business analysts sits with you to understand your requirements and objectives.

We call this process software development consulting, where we brainstorm on the features, technologies whose inclusion will be useful, etc. Once we gather that information, we create a project scope, highlighting the milestones and timelines of the entire financial services software development project.

Software Design

The next stage for us is creating innovative UI/UX design. The intent of our fintech app designers is to ensure that the product is easy to operate with fully functional features. We ensure that your users take minimal time making your application their favorite.

MVP Development

Once there is a go-ahead from your end on the app design, we code the features, add technologies, and integrate the best security methods in the application. The intent here is to provide you with software that is the best representation of the app’s USP.

App Testing and Launch

With the MVP ready, we push your application on the platform it is built for and run an adoption test. The constant feature update starts once we ensure that the market is ready for your product. We, at this stage, build features upon the MVP.

App Maintenance

The last but crucial stage of the financial software app development process is the maintenance of the application. Our team ensures that your app remains hack-proof and glitch-free on the platform it is active on. A key part of this activity is keeping track of the app ratings and reviews.

How Much Does it Cost to Build Financial Software?

The financial software development cost can range anywhere from $30,000 to $500,000. But, the truth is there is no definitive answer to the price of software development for financial services. It would depend on a range of factors like – type of the app, the type of team working on it, and the location of the financial technology company (if you choose to partner with one).

Let’s look at all three one by one.

Typically, in our experience, the type of application and their subsequent pricing looks something like this –

Type of ApplicationCost of the ApplicationReference Application
Banking app$165,000 – $180,000Revolut
Investment app$55,000 – $65,000Acorns
Consumer finance$70,000 – $90,000Finch
Insurance app$100,000 – $120,000Coalition
Lending app$80,000 – $100,000ZestFinance

The next cost-impacting factor lies in understanding who will be working on the project. As a startup owner, you have multiple options to choose from – in-house development, hiring a freelancer, or partnering with an outsourcing agency.Now, if we account for a simple FinTech app with the basic set of features that would take 1,000 hours to develop, the cost table would look something like this –

Team TypeDevelopment Cost
In-house$80,000
Freelancers$30,000
Multi-skilled agency$50,000
The next and last factor determining the financial services software development cost would be the location where the agency is based. Usually, there is a stark difference in the price quote as you move from the USA or UK to India.

For example, an average developer in the USA would charge between $100-$120 per hour on a project, while an Indian developer will charge $60-$80 per hour for the same quality and delivery promise.

FinTech Regulations That Businesses Must Comply With

Irrespective of how expansive or expensive FinTech regulations get, they are necessary for the success of a FinTech application. In addition to helping you avoid hefty fines, compliance adherence helps build trust with users as they interact with your software.

Let’s have a look at those compliances that you need to address.

1. GDPR

It is one of the EU’s most commonly followed data protection regulations. It dictates how businesses gather, process, and store data of EU users. The fine for not complying with the GDPR rule can go as high as €20 million. Similar regulations like Consumer Data Rights (CDR) and the California Consumer Privacy Act (CCPA) work along the lines of GDPR and should be followed by every FinTech brand.

2. KYC

KYC process flow

Know Your Customer is a regulatory requirement every financial firm should adhere to. On the ground level, every financial service provider and bank obliges with it, meaning your business would also need to. KYC aims to verify a user’s identity and risk profile, ensuring minimum instances of money laundering and fraud.

3. FTC

In the US alone, there are multiple compliances that you will have to follow. However, one that you’re most likely to come across is the Federal Trade Commission. For the FinTech domain, there are two of its most relevant regulations – the Gramm-Leach-Bliley Act (GLBA) and the Fair Credit Reporting Act (FCRA).

The GLBA is a regulation that calls for financial software development services institutions to protect customer data and be transparent on how it gets processed. While on the other hand, the Fair Credit Reporting Act (FCRA) covers consumer credit information. This will apply to you if the FinTech app deals with lending or works around processing a user’s credit scores.

4. PCI DSS compliance

PCI DSS compliance

PCI DSS is a regulation that governs credit card payments. It ensures that the transactions are processed securely. The standard highlights six areas businesses need when preparing their app to meet PCI DSS compliance. The non-compliance fees can be between $5,000 to $100,000 to be paid every month.

5. EFTA

The Electronic Fund Transfer Act is governed by the Consumer Financial Protection Bureau, which looks after electronic money transfers via ATMs, POS terminals, and debit cards. This compliance aims to protect users in case of transaction errors like funds getting transferred to the wrong account.

Appinventiv worked on an AI-enabled spending management tool, Mudra

Custom Financial Software Development Challenges to Prepare for

A crucial part of establishing a FinTech business empire is to foresee the challenges that it can face and prepare for them. It is how you make your FinTech application future-ready.

Let’s look into what those challenges can be.

Custom Financial Software Development Challenges to Prepare for

Finding a Gap

Best product ideas are those which address a problem that the masses are facing. Regarding FinTech, it can get overwhelming to identify which sub-sector to bring under the microscope. At Appinventiv, we advise our clients to look into the most revenue-friendly segments of the industry and enter that. In this case, it would be either digital payment or the second most profitable – personal finance.

Once you have finalized the sector, the second step would be to do market research and identify the blind spots you can explore as a prospective business idea.

Planning Out the App Features

As an entrepreneur, you may have a clear vision of the problems you want to solve with your app. However, determining the MVP features that will test the market and make your app stand out from the competition can be daunting. That’s where expert help comes in. With the guidance of professionals, you can ensure that your app has the necessary features to succeed.

Typically, an approach we follow when deciding the MVP features is listing the market problem areas and the proposed solutions. From there, we do reverse engineering on preparing the features list.

App Security

There are ‘N’ number of vulnerabilities that can occur in an application. Making the app hack-proof becomes critical for a sector that deals directly with money and sensitive data. The only solution to this lies in working with a team that follows a security-first development approach; they will not just follow the best practice during development but will also make you a data governance framework to follow as an in-house standard measure.

Following Compliances

There are hundreds of compliances across the world. Finding the ones that you need to address is crucial. Additionally, you must make your app work and features to meet compliance regulations– which can be challenging for uninformed entrepreneurs and developers.

Leveraging Next-Gen Technologies

Adding technologies like Blockchain, IoT, AI, etc., is exciting for any future-forward FinTech business. But the actual incorporation of these technologies is what becomes challenging. After all, you cannot call yourself an AI-powered FinTech firm because you have an AI chatbot. True integration of technologies in any software requires subject matter expertise that only a few in-house developers carry.

Top Groundbreaking FinTech Trends That Will Revolutionize the Industry

For the world that thinks FinTech innovations have hit the bubble, they are in for a ride. Several new trends are emerging in the space, focusing on making the sector accessible and convenient at the back of innovation. Here is a peek into some of those FinTech trends.

Embedded Finance

The FinTech model enables companies to offer their consumers credit without them leaving the platform. For example, when you have to buy a high-cost item like a refrigerator on Amazon, it gives the option to buy it on credit with x months EMIs plan. That is what embedded finance stands for.

A key feature of this trend has been the Buy Now Pay Later (BNPL) model. While it sometimes leads to a low credit score, the financial impacts created by the pandemic have pushed it. So much so that it is poised to become its market with an accumulated $680 billion in transactions in 2025.

2023 and Beyond will be the Year of Blockchain

FinTech firms are drawn to blockchain’s impossible-to-hack or breach security systems. What it does for identity management, maintaining financial records, and tracking transaction history has not gotten unnoticed by banks and FinTech firms.

Another key element of blockchain, digital assets, is believed to be a strong alternative to fiat currencies in the coming 5 to 10 years. Read to learn more about asset tokenization on blockchain.

FinTech Might Get Its Super Apps

Remember to GO – JEK? The app brought an umbrella of services ranging from on-demand rides, medicine delivery, messaging, digital payment, buying events tickets, etc., in one place. If the model sounds similar, you might be thinking of PayPal, which offers a similar set of functionalities under its one app.

We are entering a time when a finance super app also exists. It can be expected to offer seamless access to multiple financial software & systems and tools like managing insurance, paying bills, keeping track of invoices, record keeping, etc. for consumers, it would offer a much-necessary convenience and ease of doing financial transactions.

Open Banking

Open banking enables the banks to commercialize the infrastructure by moving it into the BaaS model and offering core services to FinTech firms. The trend eliminates the pressure of banks being replaced or forced into competition from FinTech firms by bringing them closer to becoming their partners.

Things to Consider Before Hiring a Financial Software Application Development Company

Your success as an entrepreneur depends heavily on the financial software development solutions provider you partner with. The quality of the app and the scale of market readiness it is engineered on will be directly proportionate to the experience of the FinTech development partners.

Here are a few things you can keep in consideration when hiring a FinTech software development company

Expertise 

The first thing you should check when hiring a financial software development agency is their expertise in the model you want to enter. The more aligned they are with your business model, the more they will know the limitations and strengths of entering the space digitally. A validation of this can be gathered from their past works’ reviews, case studies, and testimonials.

Understanding of Compliances

In a data-heavy sector like FinTech, it is critical that financial software development consultants should know the compliances inside out. They should know how to build features, run integrations, and design specific to the compliance requirements.

Price Quote and Delivery Timeline

In the search, there will come a time when choosing the right financial industry software development firm would come down to the price they are quoting and the delivery timeline. While it might seem lucrative to go with the agency that is quoting the least price and the fastest delivery timeline, tread cautiously and go with a firm that promises quality.

enhance security with our tailored financial software

How can Appinventiv help with your FinTech project?

Appinventiv, a top-notch financial software app development firm, has a history of building 12+ FinTech software with a combined user base of 5+ million users.

We offer the best-in-class software development outsourcing services for financial services and have helped various businesses. With their multitude of use cases ranging from different models to advanced feature sets and next-gen technology combinations. This multi-range experience that we carry makes it easy for our financial software developers to face every challenge and still ensure a successful app delivery.

What makes us truly valuable as a financial software development company is that we step into your users’ shoes and build the app to ensure it aligns with their individual requirements. To get started with your financial services software development project, get in touch with us right away. 

FAQs

Q. What are some of the best FinTech app ideas?

A. The trends for finance app ideas keep on changing. But with how the sector is moving today, we can say that payment and personal finances software is here to stay as good models to start your journey in. However, we recommend doing thorough market research to understand what the users need and then pin down an idea.

Q. How is the FinTech industry regulated?

A. Governmental entities across countries and regions control compliance in the financial technology sector. It also often depends on the area, service type, scale, and revenue business. Some of the most followed compliances of the sector are – GDPR, PCI DSS, FTC, etc.

Q. How to choose a financial software application development company?

A. When looking for a financial services software development partner, you should consider these factors –

  • Company’s experience in the financial domain
  • Past work on the software products
  • The kind of technology they work with
  • Price quote

Q. How long does it take to develop financial software?

A. The length of time needed to develop financial software might change depending on the project’s complexity, its scope, and the level of customization necessary. When considering the analysis, design, programming, testing, and deployment phases of the development lifecycle, it is possible that developing financial software can take anything from 4-5 months to a year or more on average.

Sudeep Srivastava
THE AUTHOR
Sudeep Srivastava
DIRECTOR & CO-FOUNDER
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