Mobile Banking Application Development: How to Create a Secure App Meeting User Needs

11 JAN 2021
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Over 70% of customers from the four largest US banks use mobile banking apps. One in five people in the United States uses banking apps in general.

Mobile banking app development is quite a promising FinTech branch for today:

  • Bank of America has one of the most popular banking apps in the US with 29M users worldwide
  • 40% of Internet users in France use mobile banking
  • ICBC bank of China grew its mobile user base by 3M in just one month

It’s customer experience and convenience that stands behind the success of mobile banking. You can’t make a competitive app without brilliant interface, simple and understandable interactions, and thought-out features.

In this guide, we’re explaining the basics of banking app development, it’s pros and cons, and the main challenges you’re going to face.

Table of contents

Benefits of Banking App Development

The advantages of banking app development go both ways:

  • For customers, such apps offer convenience, easy access to a bank account, security, and tons of useful features we're going to review next.
  • For banks, having a mobile app means lowering staff expenses, operational costs, and even going paperless and thus environmentally friendly.

Let’s take a closer look at the top benefits for business.

Lower Expenses

Mobile apps save banks a lot of money. Here’s how:

  • Cover a larger area. Your business isn’t tied to branches, regional centers, and so on.
  • Cope with high loads. People can't process requests 24/7. Sooner or later, they get tired and start making mistakes, while automation doesn't have such a problem.
  • Better accuracy. The number of human errors goes down, as do operational risks.
  • Reduce customer services cost. You need fewer employees, no need to rent an office, and bear other related expenses.

For example, mobile transactions are ten times cheaper than ATM transactions, only 0.08 cents per each. Compared to 0.85 cents for an ATM transaction and $4.00 for a branch one.

How much making a transaction costs, by channel

Per-transaction cost by banking channel

High Return on Investment (ROI)

The exact cost of banking mobile app development always depends on the platform, features, and UI/UX design. But there’s one thing for sure: software development costs a lot, especially in countries like the US, Canada, or Australia.

We have a guide listing the average software development cost and the factors that affect it.

It’s natural that banks would love to return these expenses.

There are several ways how mobile banking returns investments—people make transactions more often and become more engaged.

Bank of Ann Arbor, a $1.2 billion community bank in Michigan, managed to return the money they invested in a solution for mobile banking. Within three months of adopting mobile banking, they saw:

  • 90% jump in point-of-sale transactions
  • 23% in ATM withdrawals
  • 56% in revenue from transaction accounts
  • 10% in products held per customer.

There was also an increase in customer loyalty. The bank made a survey, finding out that app customers were 2 points less likely to leave the bank than online banking customers. And nearly 8 points less likely to leave than branch-only clients.

Patti Judson
Patti Judson
EVP and COO at Bank of Ann Arbor

We weren’t surprised at the profitability; we expected it to be more profitable. What did surprise was the outcome and adoption of our customers…more engaged customers with more products. This gives us multiple reasons to sell mobile

Better Customer Experience

Not all banks need banking app development. Some of them may stick to chatbots, web or desktop apps.

Mobile apps just offer more benefits to customers. They're more secure and more convenient: you can't use fingerprint login with a chatbot or carry a PC in your pocket.

One-third of banking app users say that mobile experience is why they stay with their current bank.

Additional Marketing Channel

Whether you're introducing a new insurance package, increased credit limit, or new in-app features, you can notify customers about it right in the app. Most banking apps use personal dashboard, messages, or send push notifications.

For instance, at BNP Paribas saw a 60% increase in App Store rating (from a 2.5 rating to 4 stars) after they added targeted push notifications.

How push notifications look in Revolut

Push notifications with promotions in Revolut app

Main Development Сhallenges

The main challenge of mobile banking application development is connected with security. In some countries, there are laws that regulate user privacy (like GDPR in Europe or CCPA in California) and require very detailed verifications of interactions with users.

At the same time, the service should remain simple to use for your customers.

Security

The banking industry loses $18.37M because of cyber-attacks, which is the highest number among all industries. That's why banking apps come with lots of security features like end-to-end encryption, multi-factor authentication, safe back-end architecture, and so on.

For example, Revolut, a popular British banking app, protects its customers with the Transport Layer Security (TLS) protocol. TLS authenticates everyone involved, checks the integrity of the data being transmitted, and encrypts it at every stage.

How TLS protection look like in Revolut

Revolut banking apps claims to be TLS-protected

Card details in the Revolut app are stored according to strict PCI DSS regulatory standards. There's a limit on contactless payments, and tons of other security measures that keep users safe.

Biometric login and two-factor authentication (2FA) are must-have security features for banking apps. When it comes to money, every activity—money transfers, payments, purchases—should be additionally confirmed by the user.

Besides, that’s what users want, too. 34% of millennials in the United States and the United Kingdom said they wanted biometrics to make transactions more secure. 36% of Gen Xers said the same.

A few other common approaches to secure mobile banking development:

  • Architecture that doesn’t store user data on servers
  • App infrastructure with reliable protection from DDoS attacks and immediate data recovery after unexpected failures
  • Encryption or double encryption of information in the data transmission channels
  • App testing includes security or so-called pen tests—when the company hires professional hackers to find vulnerabilities
  • QR codes for payments and transactions

Regulations

The current laws, regulations, and guidance apply differently, depending on how a financial institution is involved in mobile banking.

For example, financial institutions that let customers access loan services via mobile apps make sure users can access any applicable disclosure requirements. That includes information like the format, content, timing, and the manner of delivery.

Another example: banks that advertise credit-related products are subject to the Fair Housing Act and required to display the Equal Housing Lender logo and legend.

Best-known financial security regulations:

  • The New Payment Services Directive (PSD2) throughout the European Union (EU) and European Economic Area (EEA)
  • Payment Card Industry Data Security Standard (PCI DSS)
  • Pan-Canadian Trust Framework (PCTF), Canada
  • KYC (Know your customer) Compliance
  • Regulation of data access (GDPR), Europe
  • California Consumer Privacy Act (CCPA)

Before starting mobile banking development, check what regulations are valid for your target country. If you're making a mobile-only banking app like Revolut, it's a good idea to hire a financial consultant who’ll explain all possible pitfalls.

Key Features of Mobile Banking Apps

Here are the most common reasons for using mobile banking apps in the United States:

  • View account balance (90%)
  • View recent transactions (79%)
  • Make bill payments (59%)
  • Transfer funds (57%)
  • Contact customer service (20%)
  • Open a new account (19%)
  • Reorder check (17%)
Popular mobile banking app features

Most popular banking app features in the US (Source: Statista)

But that’s the United States. In your country, the situation might be different.

Before you start mobile banking development, ask your target users about their needs and priorities in operations.

Let’s review the core features most banking apps share:

  • Account creation & account management
  • Payments and transactions
  • Bill payments
  • Push notifications
  • Personal manager/customer support

Nice-to-have features:

  • ATM & bank branch locations
  • Spending trackers
  • QR code scanner
  • Cash back service
  • Money converter
  • Apps for smartwatches

Account Creation/Sign-In

The sign-up process depends on the type of your banking app. In case it's a mobile-only bank, users will need to upload documents like their ID card or a passport scan, take a photo with documents in their hands, and so on.

If users have already visited a branch and opened a bank account, they need to sign-in using their mobile number and a password reset option.

Regular sign-ins should be secure but shouldn’t take too much time. Revolut app asks users to enter a 4-digit passcode, other banking apps either ask to enter a password or use biometric login like Apple Touch ID or Face ID.

Mobile banking app authorization

Revolut asks users to enter a 4-digit password during login

It may be a good idea to add 2FA verification with codes sent to your device via SMS. It’ll make users feel more secure.

Account Management

Account management includes a number of banking features: checking cards, viewing account balance and transaction history, managing cards (replenishing, blocking, setting an online payment limit).

The more operations your banking app includes, the more intuitive and minimalistic it should be.

How added cards look like in Revolut app

Card management in Revolut

Note! UI/UX design is awfully important on this stage. It’s design that helps you win against your competitors or basically make people want to try out your app.

If users can’t figure out how to manage their cards or view transaction history because of the terrible UX, they’re likely to abandon or delete the app. For a bank that means another lost customer and a bad rate on the App Store or Google Play.

Devastating, especially if your bank is fully mobile.

Payments and Transactions

Sending or receiving money should also be simple and secure as users enter lots of data.

Here's how the process usually goes:

  1. User selects an existing receiver from templates or enters the name of a new one.
  2. Specifies the amount.
  3. Adds text with the purpose of the transfer.
  4. Provides their debit card number.
  5. Reviews the details, confirms, and sends money.

Customers confirm transactions either by biometric verification, an SMS with a code, or by entering their password.

Bill Payments

Paying bills offline is time-consuming, inconvenient, and not really secure —checks often get lost or misplaced in the recipient's inbox.

No wonder 59% of mobile banking users in the US prefer to pay their bills online.

Users can schedule one-time or recurring payments in the app or pay when they're alerted by a push notification or an email. For example, if users deal with utility bills and varying amounts, alerts will do fine. While recurring payments are great for fixed amoung like mortgages.

By the way, if there are lots of details or huge forms to fill in, UI/UX designers would probably split this action into smaller steps. This makes the process less scary than filling in a giant form all at once.

How bill payments look like in a banking app

Bill payments in a banking mobile app

Customer Support

Banking app development is all about automation, but that doesn’t mean that human aid can be fully skipped. Some operations may require staff assistance or additional verification. For example, when you need to unblock a card or change your credit card limit.

Users should be able to get in touch with a bank representative or a personal manager, ask questions, and get their requests processed.

In case your customer support team isn't available 24/7, you may use an AI-powered chatbot or at least add a FAQ section.

Push Notifications

As we've said, reminders and alerts are great for customer engagement and for promoting your services. They can:

  • Make your customers aware of relevant offers and discounts available as part of particular account privileges
  • Let them know about interest rate information, increased credit limits or a paycheck hitting their account

As well as they work for security purposes like spotting a fraud the minute it happens.

How push notifications look in a banking app

Example of a push notification in Revolut app

Additional Features of a Banking App

We’re done with the basic banking app features, so let’s review the nice-to-haves:

ATM & bank branch locations

Consider adding an in-app map to help users locate the nearest ATM or bank branches. It’s very helpful when your customers need cash or want to pay your bank a visit.

In-app map with ATM locations

In-app map with ATM & bank branch locations

Spending trackers

For example, in Revolut, there’s an option to set limits in the budget to control spendings. The app also helps to calculate the daily limit. Users can track their spends with automatic categorization and the app gives predictions to help users plan ahead.

If you're planning to add such a feature, consider integrating budgeting, saving and expenditure tracking tools.

Revolut allows users to track their spendings

Spending tracker in Revolut app

QR code scanner

Over 27% of respondents in the US and UK had used a QR code as a payment method in 2020.

Still, not many banks offer QR codes for payments which may be a lost opportunity. QR payments are quite secure due to their unique design and easy to set up: users only need a smartphone with a camera and a QR code to read.

Cash back service

Cashback involves earning a small percentage on the amount customers spend. People love this feature and many banking apps offer automatic cashback on various brands or services like entertainment, groceries, car maintenance.

Revolut cashbacking

Revolut offers its users various cashbacks, including groceries

Money converter

The number of tech-savvy foreign exchange companies is growing fast, and banks need to keep up. Some banking applications only show in-app exchange rates, while others go further and make a fully-fledged in-app converter.

For example, combining multi-currency spending and money transfers in a simple app is what made Revolut app popular.

Currency converter in Revolut

Revolut has an in-app currency converter

Apps for smartwatches

Smartwatches remain the most popular wearable device, but only a few banks make apps for wearables. Offering such may be a competitive advantage.

The Australian Bank of Melbourne was the pioneer in creating a banking app for smartwatches. Customers could pay for goods and services, get push notifications, check their balance, and find the nearest ATM right from their smartwatch.

How a banking app may look like on smartwatches

Example of a banking app for Apple Watch

How to Get Started

Finally, let’s see how banking mobile app development goes in case you’ve decided to cooperate with a third-party vendor.

  1. Research and Planning

Start with market research. Here are some questions to answer:

  • Who’s your target audience?
  • Who are your competitors?
  • What banking apps are popular in your region? Why? How would you improve them?
  • Are there any great UI design solutions you can refer to?
  • What do your users actually expect from banking apps?

For example, tech-savvy millennials aren't the only audience of banking apps as you might have thought. 45% of baby boomers (50-60 years) actively use banking apps on their iPads and tablets.

Another example: your banking app may not turn out great if customers need it to pay bills while you’re focusing on debit or credit operations.

Thorough research prevents such situations from happening and saves your money in the future.

If you're working with a software development company, they will provide a Business Analyst who could help you with the market research and SWOT analysis. While a solution architect will align business aspects with tech implementation—app architecture, tools, programming languages.

  1. UI/UX Design

Customers want to use simple and convenient apps with clear navigation and design elements (buttons, icons, and forms).

Still, one of the main issues with banking apps is that users have difficulties understanding the out-of-date designs.

For example, people get mad entering the payment data each time they need to transfer money between accounts. They may also get frustrated or demotivated when seeing huge forms to fill in while paying household bills.

Most development companies start designing the app from low-fidelity wireframes. They show how users can interact with the app and don’t take too much time to create as they’re not detailed.

Example of a mobile banking app UI/UX design

Example of a mobile banking app design by Cleveroad

Once the team gathers your feedback or gets approval, they start designing the app screen by screen. Including graphics, icons, buttons, and other UI elements.

Here are some banking app designing tips:

  • Make sure that typography, icons, color palette, buttons, and forms of your solution match your corporate style and brand.
  • Navigation should reflect the logical architecture of your solution.
  • All the design elements should be clear and comprehensive.
  • Consider cultural differences if you're going to operate globally (e.g., right-to-left localization for Arabic users).
  • Adjust your app according to iOS and Android guidelines.
  • Think about extra bells and whistles like sticker packs for messengers.

For example, Revolut uses colorful illustrations to introduce the app to new customers.

How a banking app tutorial looks like in Revolut

Revolut tutorial for new users

  1. Tech Stack

The choice of the technology stack—programming languages, libraries, APIs—depends on your requirements like the project scope, complexity, scalability.

As you’re making a stance on security, app developers would probably choose native languages—Swift for iOS app and Kotlin for Android banking app development.

  1. MVP Development

MVP development stands for creating a very basic solution. It helps you to test the market and avoid spending much money on something that may not turn out great.

An MVP is focused on:

  • Testing a product’s viability at low costs
  • Spending less money on product development
  • Faster delivery of a product that solves at least one problem of a user

Nothing too fancy like gamification, AR/VR technologies, AI-powered chatbots as they take time and money to develop. Only the basic functionality like payments, transactions, account management, push notifications, and a couple of unique features you may want to add.

  1. Launch and Feedback

App stores have specific requirements for all apps that get published there. Your app must meet those requirements to get published.

For Apple, it’s App Store Review Guidelines, while for Android—Developer Program Policy and Launch checklist.

But even after your app is published, the work is only beginning.

The first thing to do is to start collecting feedback:

  • What extra features do users ask for?
  • Are there any troubles with the UI/UX design of the app?
  • Can the app cope with a high load?
  • Are all the features working as expected?

Look through comments on both app marketplaces, use in-app questionnaires, and analyze the user behavior. Notice how users move through the UI, how much time they spend in the app, their click-frequency, and periods of activity.

Once you get the feedback, make a list of weak and strong aspects of your app and, together with your tech vendor, decide on how to make it better.

How We Can Help

Cleveroad has been providing full-cycle software development services for more than six years. We help our clients make native mobile and web applications from scratch—or any stage the project is currently on.

We know that bank app development requires top-notch security, compliance with regulations, and intuitive UI/UX design for users. That's why our Business Analytics pay huge attention to our clients' business and tech requirements, while solution architects choose up-to-date tools and programming languages. And DevOps work on secure infrastructure you can scale up as your business grows.

Need help with your banking app?

Our managers will help you choose a solution that meets your tech and business requirements.

Frequently Asked Questions

Users love banking apps because they're convenient, secure, have tons of useful features, and make it easy to access a banking account—anytime, from anywhere.

For banks, having a mobile app means lowering staff expenses, operational costs, and even going paperless and thus environmentally friendly.

The core features most banking apps share:

  • Account creation & account management
  • Payments and transactions
  • Bill payments
  • Push notifications
  • Personal manager/customer support

Nice-to-have features:

  • ATM & bank branch locations
  • Spending trackers
  • QR code scanner
  • Cashback service
  • Money converter
  • Apps for smartwatches

In general, banking app development goes in five stages:

  1. Research and planning. Market research, SWOT analysis, checking on competitors, and so on.
  2. UI/UX design. From wireframes to screen by screen UI design, a thought-out UX.
  3. Choosing the technology stack. Depends on the platforms you want to cover, features, and functionality.
  4. MVP development. Creating a very basic solution with must-have features only to test the market.
  5. Launch and gather feedback. Release the apps on the App Store and Google Play, start collecting feedback from users, make improvements.

To create a secure financial app, developers combine a few approaches:

  • Architecture doesn't store user data on servers
  • App infrastructure with reliable protection from DDoS attacks and immediate data recovery
  • Encryption or double encryption in the data transmission channels
  • App testing includes security or so-called pen tests—when the company hires professional hackers to find vulnerabilities
  • QR codes for payments and transactions

Banking app development cost = the number of hours developers require to build your app x hourly rate.

The number of hours and the cost depend on factors like the features, functionality, platforms (Android, iOS), UI/UX design, and a few more. Software development rates also differ: in the USA, developers charge ~$100-150/h, in Eastern Europe - $25-50/h.

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