As the traditional financial system actively adopts technology, cash inevitably becomes outdated. We’ve seen solutions like Apple and Google Pay, smart contracts, and cryptocurrency emerging in recent years. The popularity of cashless payments is rising. So, banks have no other choice but to consider the innovation and digitization of their services.
There are an increasing number of convenient banking apps on the market, which are very much to the liking of modern users. Statista says more than 65% of Americans already use digital banking services. According to another study, the highest adoption level of online banking is in the Asian market, with more than 800 million active users.
"65% of Americans already use digital banking services. The highest adoption level of online banking is in the Asian market, with more than 800 million active users."
Such demand for cashless payments resulted in the rapid growth of digital banking. If in 2020 this market amounted to $12.1 billion, by 2026, it will reach $30.1 billion. It is an annual increase of over 15%!
As banking platforms continue to be popular with users, creating such software is a promising endeavor. So how do you build one?
Drawing on Arounda’s experience with FinTech solutions like BlocFX and Gigzi, this article will be a guide to creating a digital banking platform. We will use our practical knowledge in creating the mentioned products to make this guide as informative as possible.
We’ll also explain what a digital bank and banking platform are, discuss their types and features, and show you some of the best examples of banking software available on the market.
What Is a Digital Banking Platform?
We’ll be talking a lot about digital banks and digital banking platforms. Let’s go over these concepts one by one.
A digital bank is an organization that provides online banking services. Simply put, this is when a traditional bank undergoes a digital transformation to extend its services to Internet users. That is, digital banks are largely dependent on traditional ones.
They provide users with the following functions:
- Money deposits, withdrawals, and transfers
- Account management
- Credit management
- Bills or invoices payments
- Accounting services
A digital banking platform is a broad concept that refers to software that allows users to conduct financial operations online. Their main benefit is keeping all customer data in a single system.
There are two main types of software for digital banking:
- Online banking software is a web-based platform for delivering financial services.
- Mobile banking software is a mobile banking app that enables users to access financial services via their smartphones.
We also want to highlight neobanks. These solutions are one of the main trends in financial technology. According to Statista, the number of Americans with at least one open neobank account will reach 39.1 million in 2025.
Neobanks are Fintech organizations that offer mobile or web applications for online banking only. That is, unlike digital banks, they do not have physical bank branches. They are also called internet-only banks.
Main Features and Challenges of Digital Banking Platform Development
No matter what digital banking software you want to create, whether it’s a money transfer app, a bank app, or another FinTech platform, you should consider the following features:
Payments
How can a digital banking platform exist without a payment function? It is the core banking app feature. Integrate all possible payment systems into your platform, and don’t forget about QR code payments for mobile users.
Quick and Secure Signup
Make registration on your platform as easy and secure as possible for users. For example, you can reduce the data customers must submit when creating an account. At the same time, take care of security features such as verification or security alerts.
User Verification
The security of banking platforms is of utmost importance. Therefore, adding a user verification feature would be a good idea. You can do this through biometric technologies such as Face-ID or fingerprint verification. Also, add the option of two-factor authentication.
Balance and Transaction Management
Adding users’ transaction history and bank account balance to your digital banking platform is a good idea. This way, users can keep track of where their money is going.
Push Notifications
Keep your platform users up to date with all the changes in their bank accounts. Thanks to push notifications, this becomes possible.
Activity Monitoring
Another feature that is also popular in finance apps is activity tracking. Thanks to it, your users will keep track of expenses, plan future investments, or manage their savings.
Card Management
Give your users the ability to manage their bank cards. In particular, allow your customers to open/block the card or change the PIN code.
Customer Support
The round-the-clock customer support function is mandatory for digital banking platforms. Thanks to it, your users can get help with financial matters anytime.
Additional features for your digital banking platform may include:
Cashback
This feature allows users to receive a percentage of money from each purchase.
Find ATM
With this feature, your users can find the nearest ATM on the map.
Personalization
This feature has a variety of uses. For example, you can allow users to change the application’s look: background color, font size, etc. Or you can add special offers for each customer.
Referral Program
This feature will allow your customers to receive bonuses or rewards for inviting new users through the referral program.
Accessing More Financial Products
This feature involves giving your users access to financial products such as loans or insurance.
Now let’s look at the main challenges you may encounter when developing your banking as a service platform.
Obtaining a Banking License
Before you can even start developing a digital banking platform, you need to get permission to deliver financial services. To obtain such a license, you will need to go through many legal inspections and provide a detailed business plan with information about all stakeholders in your company.
Regulatory Compliance
When developing a platform for online banking, you will need to consider the laws of your country or region. These laws concern data privacy and user protection.
Data Security
The digital banking platform is a big responsibility since users trust you with their sensitive personal data. Therefore, another challenge in the development will be to create a product that meets the highest safety standards.
Best Examples of Digital Banking Platforms
We believe that you must study your competitors well to create your own BaaS platform. So let’s learn from their best and discover more about the top digital banking platforms.
Chime
Chime is a FinTech company founded in San Francisco in 2013. It positions itself as an alternative to traditional banking and provides free mobile financial services.
Chime does not charge an overdraft fee, does not demand a monthly maintenance fee, and does not require a minimum balance. This mobile application offers secure transactions, a credit history builder, and automated savings.
The Chime platform is in high demand among American users. In 2021, it became the most downloaded digital banking platform in the U.S., with 6.4 million installs.
Monzo
Monzo is a British neobank founded in 2015. The platform currently has over 5 million users. Monzo offers such features as budget management, savings, abroad transactions without commissions, instant notifications, and advanced security features.
Revolut
Revolut is a FinTech online banking company headquartered in London. Like Monzo, this company is an internet-only bank.
Among the features offered by Revolut are currency exchange, stock and cryptocurrency trading, and low exchange fees. The application can currently use crypto like Bitcoin, Ethereum, Litecoin, Bitcoin Cash, XRP, and 29 fiat currencies.
How to Create a Digital Banking Platform?
Now let’s look at building a digital banking platform from scratch. To set up this process, you will need to go through several stages:
Stage 1. Market Research
In this step, you need to study your target audience and competitors. As a result, you can choose the best features and technologies for your platform, ensuring that your customers are satisfied and that you stand out in the market.
Stage 2. Planning
Once you have studied the market and analyzed the results of your research, you can begin to create a strategy for growing your business. So, at this stage, you need to develop a business plan.
Stage 3. UI/UX and Prototype
The main requirements of this stage are to create a user interface and provide user-friendly navigation on your open banking platform. As a result, you will have a ready-made prototype.
Stage 4. Security
At this stage, your team should take care of your banking platform’s security and consider what measures to take to provide it. For example, this could be data encryption or two-factor authentication.
Stage 5. Development
In this step, your developers begin to build your digital banking platform. They will develop an MVP at the end of this stage. Your team must also implement the third-party integrations required for your product.
Stage 6. Market Launch
This step involves launching your digital banking platform. Here, your team analyzes users’ acceptance of your product and thinks about improving it.
Stage 7. Improvement
It is the final and never-ending stage. Here you need to implement updates to your platform, offer new features, or improve existing ones.
Final Thoughts
Finance apps are gaining popularity due to the digital transformation of the traditional banking system. Online banking sees a steady influx of customers and tries to offer them user-friendly mobile and web solutions.
Creating platforms for online banking is a promising but challenging idea. Here you need to take care not only of software development but also of various legal issues. If you need someone to take on these tasks, you are in the right place.
Our team is ready to create a platform for digital banking for you using our profound experience in the field of FinTech. So, if you are interested in our offer, feel free to contact us anytime.
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