How to Build a Digital Banking Platform | The Ultimate Guide

How to Build a Digital Banking Platform
For some people, fintech is related only to digital banking and payment systems. But in fact, it includes all tech innovations for financial activity. At the same time, financial institutions invest in developing apps and platforms for managing customers and relife their communication with banks. This article will focus on building a digital banking platform and outline fundamental steps in creating this product. We will determine when to make your platform, what benefits you will have, and the features you need to include in the software solution.

What is a Digital Banking Platform

Mobile banking apps have become an inherent part of our everyday life. Based on the Allied Market Research, more than 75% of Americans used mobile bank apps to check their balance and manage bank accounts.

Many banking features became familiar for everyone, but they did not exist a few years ago. For example, we can split the bill or send money to our friend using only a phone number or pay in the market with an Apple Watch. It has become a part of our reality, and it means that fintech companies will invest more and more in improving banking apps and increasing clients satisfaction. Moreover, online banking is growing fast, and by the end of 2022, 88% of banking transfers will be done with smartphones.

A digital banking platform is an instrument for providing financial services online. The main goal of such platforms is to manage customers' live circles, because banks used to have different core banking systems for various products, and all the customers' data was duplicated in those systems. That is why it became necessary for banks to build a separate system to manage clients' data. Online banking platforms are built on automation principles and web-based services.

There are a few types of digital platforms that is the most popular in the banking world:

  • megabank API toolkits
  • marketplace platforms
  • analytical platforms
  • business banking platforms
  • integration platforms.

Moreover, all the IT services for banks are focused on customer engagement and searching for the best solution to drive and increase interaction with clients.

When Do You Need to Create Your Own Digital Banking Platform

The next point is to determine when you need to focus on your solution for managing the clients' data and help them to use banking services online efficiently.

As we mentioned already, the growing statistics of mobile banking users require fin institutions to focus on the latest digital trends. It became necessary for each bank to develop an advanced instrument for basic essentialness needs. You can figure out that your bank or company needs to build its platform only after creating a digital banking strategy and understanding how it can improve bank work.

You need to start working to create your product if you find that this product will solve your business's problems and help you achieve the goals more efficiently.

Major Features Every Banking Platform Must Have

The Fintech industry is one of the most influenced by digital trends of the last few years. First of all, it opens new ways for financial operation, protects the data, and provides the best quality of service to the clients. At the same time, there are a set of features that became necessary for digital banking apps. Next, we will outline these features for the successful launch of the banking platform.

  1. Payments. Your clients want to pay for everything from the mobile phone. For developers, it means that you need to integrate the platform with every possible payment system that will allow clients to pay for everyday expenses, send money, or even pay credits with a few clicks.
  2. Balance and transaction management. The first thing your clients will see opening the app is the balance of the bank account and the history of transactions. Your clients need to have the option of checking the balance 24/7.
  3. Push notification. The clients must get a notification about every change in their bank accounts. It allows them not to miss any payment or transaction.
  4. Authentication. It is essential for mobile banking to add users to protect the data and ensure safe login into the account. You can add Face-ID or fingertips authentication. Also, it can be a two-step authorization with sending the security code.
  5. Activity tracking. Almost every banking platform includes a spending tracking tool that allows users to analyze their spending and make accurate finance planning for the future. This feature must be user-friendly and easy to navigate.
  6. Managing the cards and operations. Banking platform users must be able to block the card or change the PIN code with an app. The asses to those operations must be easy to find, as in some cases, it can be critical.
  7. Support. This is an integral part of communication with clients. Ideally, you need to ensure that users can get permission from the digital banking services 24/7.

Those features are standard for almost every online banking app nowadays. At the same time, some advanced functions can make your platform more competitive.

  • Take cash without a card. Some apps allow you to withdraw some money with an app.
  • Access to other bank products. It can be a loan or insurance provided by the same bank. Users of the platform can have special access to those products.
  • Special alerts. You can develop an option to turn on custom clients notification. For example, some clients want to be notified that the balance is low or when to pay regular monthly payments.
  • Cashback. Every time your clients use a mobile app to purchase, they can get a cashback into the card or special bonuses depending on the amount of money they spend.

Benefits and Challenges when Building a Digital Banking Platform

Launching a digital banking platform will benefit your clients and positively influence the business. Most financial institutions develop digital platforms to increase the level of service they provide and to get more clients. Also, there are a few pros of the platforms we suggest paying attention to while developing a product.

Increasing customers’ base. There are 130 million mobile banking users in Europe and more than 50 million in the US. Bank clients enjoy using new technology that makes all their bank operations easier. Every user of your platform is an additional contact in your bank base that you can use in the future to promote new products.

Getting a new communication channel. The banking app is a unique and progressive channel for communication with clients and advertising new products. You can send them special notifications or show new bank features in the user dashboard.

Using data for analytics. Every person who installed the app became a source of information for the analytical department of your institution. This data helps to provide a personalized user experience, identify the platform's weaknesses, and better understand the users.

At the same time, you need to consider some challenges that every financial institution and team will have during the design process.

  1. Provide data safety. Security issues became the most important in the case of operating the banking data. There are many risks in using the mobile app for banking operations, but the DevOps goal is to protect the users from emerging threats. You need to ensure money protection. In the case of security, it is necessary to focus on the network architecture and the choice of cloud data storage. In some cases, you can use the transport layer security (TLS) protocol for clients' authentication.
  2. Know your client. The KYC principle is fundamental for preventing terrorism financing, money laundry, or corruption scheme. The KYC process needs to identify your clients and ensure proof of identity (POI) and Proof of Address (POA). It can be additional documents (ID, military ID, passport, student ID, etc.). Users need to submit the documents the bank requires. Following the KYC regulation is vital for each banking platform, as it is a part of anti-money-laundering law.
  3. Follow regulation. There are a lot of other rules you need to follow in developing a digital banking platform. It can be general regulations for all the countries or some local laws. For example, GDPR protects personal data in the EU, PSD2 for secure payments across the EU and EEA, CCPA to enhance privacy rights, and users' protection for California, the USA, and others. It would help if you researched what regulation you will need to follow with your platform.
  4. Ensure payment blocking. You also need to ensure that all suspicious transactions can be blocked to protect clients' money. At the same time, it's critical to unblocking those transactions in a short time, in case it was a mistake.

After evaluating all the challenges of building digital banking apps, you can focus on a development.

Building a Digital Banking Platform: Step-by-Step Guide

Banking software development is a complicated process, but it can be divided into a few primary stages. Each stage has its steps. Next, we will share our best step-by-step practice to create a successful mobile banking solution.

The main stages are:

  • pre-development
  • prototype building
  • platform coding
  • platform launching

Pre-Development Stage

Step #1. Do research. It is one of the essential parts of financial software development. First, you need to delineate the business goals you are going to solve with a new product. Next, you need to focus on a target audience, define their needs and pains. You need to learn from the competitors, analyze their offers, and find the best tech stack for your app. Market research will include many indexes that will help you to create a strategy for launching the app.

Step #2. Make a plan. After you analyze the data from the research, you need to focus on your objectives and create a valuable and detailed development plan. It will be the primary document and a business model for the team.

Prototype Building Stage

Step #3. Create UI/UX design and prototype. After delineating the app's idea, you can start working with a future app interface UI design. It's essential to understand the navigation, functionality, tech stack, and fintech specific of the product before beginning design. This prototype will illustrate the logic and architecture of the platform.

After creating a prototype, you can test it with a target audience and fix the app's weaknesses. Also, you will try the design and improve its usability based on users' behavior.

Step #4. Ensure app security. This is the time to introduce the DevSecOps team to ensure that the platform will be protected and safe. Professional teams know about the most common threats in the fintech market from their experience. It would help focus on security measures in the pre-development stage, influencing the future coding process.

The goal of this step is to protect the app and the user's data in the future. There is some essential advice for this step:

  • use data encryption algorithms,
  • allows verification of transactions by generated codes,
  • apply two-factor authentication.

Step #5. Choose a tech stack. The stack will depend on the goals you need to achieve. The next important step is to choose what technical tools you will use to create the platform.

Platform Coding Stage

Step #6. Coding the digital banking platform. The most significant step in the whole process. The process of frontend, backend development, data integration, and others are similar for the same types of apps. The success of this stage will depend on the team you will decide to work with. Best of all, to cooperate with studios that provide a whole spectrum of services, not only testing or coding the product. Ideally, to have a team with experience in creating banking software. Building MVP will stanch this coding work a lot.

Step #7. Integrate the platform with third-party solutions. The software you are going to lunch must be easily integrated with other solutions the financial institution uses. It can be a bank website, HR software, banking program you need to work with an app. Ensure that the new platform will work appropriately with integration.

Platform Launching Stage

Step #8. Release the platform. The final stage starts with launching your product and sharing it with your customers. It is also essential to understand how to maintain the platform and optimize it for the searching-systems. Moreover, you need to tell the world about the benefits of your product, and the best way is to launch a marketing campaign. It will be better to work with an agency that already has experience in marketing banking apps, as this industry can have many restrictions and features.

Step #9. Improve and update the platform. There is the last step in this process to monitor the product and to improve it. It is crucial to get feedback from users and make unnecessary changes they require. This is the basic principle of efficient communication with clients. Do not forget about improving the app after the launch and learning user experience after operating the platform.

Conclusion

Cprime Studios created this guide based on our broad experience in developing mobile banking solutions. As we mentioned in the article, it is essential to start with research and define the strategic goals for your business. Those basic steps will ensure that you are going in the right direction in designing your digital banking platform. After you have the whole picture and the structure of the future app, you can begin working with DevOps, DevSecOps, and other teams. The entire process is quite complicated and can take a long time. We recommend working with IT companies that ensure the whole spectrum of services and manage all the fintech software development stages.

If you still have questions about developing a digital banking app or need a consultation, you can contact Cprime Studios specialists.