How to Create a Mobile Banking App: Step-by-Step Guide

Since 1995, when Wells Fargo, the first traditional American bank, attempted to shift online, mobile banking has exploded in popularity. Partly, this was due to COVID-19, which required minimizing physical interactions between people, but mostly it was due to the convenience of mobile banking, offering users the ability to access their bank accounts anytime and anywhere, as long as they have Internet access. Today, the number of digital banking users is steadily approaching the forecast threshold of 3.6 billion people in 2024 and, by the looks of it, we’re only at the beginning of tremendous growth. 

As the demand for mobile banking continues to soar, businesses in the fintech industry are investing heavily in banking app development to meet the evolving needs of their customers. You may have heard about the Liv app. This digital bank, a unique product of Emirates NBD, was the first one to allow friends and family to split their bills via social media in real-time. Another prime example worth looking at is the Bank of Melbourne. They quickly recognized an untapped area of the mobile banking market and created their own app for Apple Watch. 

These are just some examples of mobile apps that banks create to appeal to their customers, but their number is constantly growing. Banking apps have long become an integral part of modern banking strategies, helping financial institutions stay competitive and attract new customers, but they also prove to be a great retention tool. Recent digital banking statistics reveal that 82% of customers are unlikely to switch banks if a mobile banking platform is both attractive and convenient. 

This brings us to the main question: “How can you create a mobile banking app that increases customer engagement and helps you stay ahead of the curve?” Let’s examine this in detail. 

Mobile App Development Market Overview

Before we go any further, let’s first recap what we already know about the evolution of the mobile app market. As we’ve mentioned earlier, it’s because of the deadly virus and continued lockdowns that mobile banking splurged in popularity in 2019-2021. If we look at the statistics, we can clearly see that. In 2015, only 9.5% of Americans used mobile banking, while already in 2021, this number jumped to 43.5%, showing the trend for growth. These days, the number of mobile app users hovers around 5.22 billion, making up around 65% of the total population. 

Here are a few more numbers to consider:

  • The market for mobile solutions is expected to grow to $1.82 billion by the closure of 2025.
  • The Bank of America has over 29 million active mobile users, making it the industry leader in the mobile market. 
  • In the US, the number of digital banking users is projected to reach 217 million by 2025.
  • 40% of French people use mobile banking to access accounts and make payments.
  • In pursuit to promote online banking, HSBC Bank in the United Kingdom made a decision to close around 10% of its physical branches. Currently, 64% of the UK population uses mobile banking apps, and 89% are active online banking users. 

In light of these stats, mobile app development looks very promising. 

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Factors driving the popularity of mobile banking apps

The pandemic was one of the main factors that gave rise to online banking, but it wasn’t the only one. Let’s look at other factors that fuel the popularity of mobile banking. 

Instant access to the bank account

One of the reasons people all over the world turn to online banking is that it lifts the limitation of accessing banking services only in physical locations. With a mobile app, they have a virtual bank right at their fingertips, meaning they can transfer money or do whatever else they want in their accounts without having to travel to a brick-and-mortar bank. 

Round-the-clock banking services

Mobile apps remove the need to wait in queues for assistance from banks to carry out transactions. Instead, users can access banking services 24/7, allowing them to conveniently manage their finances at any time of the day or night, regardless of the day on the calendar. For many people, this accessibility has become the decisive factor tipping the scale in favor of mobile apps.

All banking services in one

Another perk of mobile apps over traditional banks is that they offer all of the banking services in one place. Now people don’t need to drive to multiple locations to pay bills, make wire transfers, or get their bank statements. All of these services can be conveniently accessed via a smartphone virtually in seconds without the need to leave home. 

No language barriers

Unlike physical banks, where banking staff might have difficulty understanding a foreign language, banking apps are translated into multiple languages. This opened the door to thousands of users from all over the world to seamlessly use the services of banks they trust, regardless of whether they are located nearby or in another country.  

Better control of finances

With 24/7 access to bank accounts, people can have greater control over their finances. They can track their spending, see how much money they earned and spent – and where exactly this money was spent, and make more informed decisions for future savings. 

Robust customer support 

An equally important role in the rapid implementation of banking mobile applications is played by the customer care service. Not only is there minimized waiting time like traditional bank branches, but there’s also excellent service that can be accessed through any convenient channel, including emails, chats, and calls, saving customers valuable time and effort. 

So, while the pandemic has certainly accelerated the adoption of mobile bank applications, it’s clearly not the only factor driving their popularity. The appeal of mobile apps has always been there, but it was thanks to the restrictions that revealed it and made it recognized by millions of users worldwide. 

Benefits of Banking Apps for Business

The popularity of mobile apps is like an arrow: once it’s shot, it cannot be called back. But why did traditional banks choose to move online instead of sticking to traditional account management in the first place? To answer this question, let’s look at the benefits mobile banking app development provides for businesses.

Maximizing customer engagement 

The predominant group of mobile banking users are people aged 16 to 40. These are the people who use mobile banking solutions as their primary means of accessing bank accounts and are also the most economically active people, either working or running their own businesses. Mobile applications allow banks to effectively engage with this demographic. Serving as a direct channel between banks and customers, they facilitate personalized interactions, targeted promotions, and real-time notifications. 

Reducing overheads 

Managing brick-and-mortar branches and call centers is quite expensive. In addition to paying salaries, you also need to rent an office and pay for other operational costs associated with maintaining physical bank branches, such as utilities, security, maintenance, insurance, onboarding, and so on. Internet banking with its self-service channels solves this problem. It provides customers with 24/7 access to financial services while requiring fewer employees to do the same work.

Expanding reach with mobile banking

With banking apps, finance institutions aren’t tied to regional centers or branches. They can reach a broader audience, including tech-savvy millennials who prefer online banking services over traditional methods. In addition, they can expand to customers from other countries of the world, tapping into new market segments and establishing their influence on the global scene. 

Leveraging data for better business decisions

Another advantage of mobile banking applications is that they allow banks to use technology to better understand the behavior, preferences, and needs of their customers. Like web apps, they provide data analytics that shed light on client interactions and transaction patterns, empowering banks to optimize their banking services and personalize marketing efforts. 

Competitive edge through mobile banking innovation

According to Extractable, there are around 44,000 banks and finance institutions around the world, which all compete for the attention of users. That’s where mobile banking application development comes to the rescue. By investing in an innovative mobile banking app with high-end features like biometric authentication, AI-driven personalized recommendations, and integration with third-party services, banks can set themselves apart from the crowd and attract tech-savvy consumers. 

Streamlining workflows and operations

Mobile applications also help streamline internal business processes. Instead of spending time manually opening accounts, verifying documents, giving loans, and so on, which takes a lot of time and resources, these processes can be digitized and automated. This not only helps financial institutions cope with higher loads but also eliminates the risk of errors that can arise from manual intervention, resulting in increased accuracy in internal workflows. 

Enhancing regulatory compliance

Finally, banking applications help facilitate compliance with regulatory requirements by providing secure channels for identity verification, transaction monitoring, and reporting. Banks can take advantage of app functionalities to ensure anti-money laundering (AML), Know Your Customer (KYC), and data privacy regulations. 

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Types of Mobile Banking Software

The development process and the cost to create a mobile app can vary based on the type of the mobile solution being created. Here is a brief overview of the most common types of mobile banking applications. 

  1. Banking apps

As it comes from the name, these are the apps that provide users with access to banking information such as transaction history, bank account details, balances, and various banking services directly from their smartphones. Typically created by banks and credit unions, these apps provide convenient ways for users to pay bills and manage their finances on the go.

  1. Digital wallets

Digital wallets, or payment apps, are one of the most popular applications these days. They allow users to store their payment information on their mobile devices and make purchases both in-store and online. Most of these apps support various payment methods, including credit cards, debit cards, prepaid cards, and even cryptocurrency. 

  1. Investment apps

Investment apps are the apps that help you make money. They offer features to buy and sell stocks, mutual funds, exchange-traded funds, and other investment products from users’ mobile phones or smartphones. If integrated with AI, these apps can also analyze your overall financial situation and goals you want to achieve and provide you with personalized advice on how you can get where you want to with the right investments.

  1. Finance apps

This group encompasses a broad range of applications designed to assist users in managing their personal finances. They offer a range of features and functionalities to help users track expenses, create budgets, monitor investments, apply and receive loans, and achieve any other financial goals.  

  1. Money manager apps

Manager apps are specifically designed to help users track and manage their finances (hence the name). These apps have many features and tools to help you plan budgeting, categorize incomes and spending, track investments, make savings, and many more.

Aside from these five, there are also apps that combine different kinds of services from banking, finance, money management, and more into a single platform, offering users a comprehensive solution to take their financial life under control. Popular examples of all-in-one banking applications include Mint, Goodbudget, Rocket Money, Personal Capital, and more. 

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Key App Features

When it comes to mobile banking development, the types of features that can be added to an application may vary greatly depending on the app type. That being said, some of the mobile banking app features are essential for any digital banking product. Let’s take a look at them.

Authentication

This is the primary feature users come to expect from financial applications. Banking applications deal with sensitive data, and it’s important that they have strong security measures in place to prevent this data from getting into the wrong hands of unauthorized users. Common methods of authentication include passwords, PINs, facial and fingerprint readings, and two-factor authentication. 

Bank account management

The second most important feature of a mobile finance application is the bank account management feature. Users need to have a convenient way of viewing their account balance, see transaction history, make bill payments, and move funds between different accounts. You can also allow users to automate some of their fund transfers, set up recurring payments for bills, and receive alerts for specific account activities to offer personalized banking experiences.

User profile

Obviously, no banking application can exist without a user profile. It’s a must-have feature, enabling users to manage their personal information such as their bank account details, contact information, communication preferences, currency preferences, security settings, and so on. And though a user profile doesn’t hinder the app’s functionality, its role in user experience is paramount. The more straightforward and user-friendly it is, the more likely users are to engage with the app and trust it with their financial information. 

Transaction history and expenses dashboard

Furthermore, it’s important to provide users with a feature that allows them to view their money transfers. By tracking transaction history, including payments, deposits, expenses, and withdrawals, users can not only have greater trust in the system but also quickly recognize any fraudulent activities and have proof in case they need to dispute a transaction. 

24/7 support

The main reason people use banking apps is because they provide 24/7 access to banking services. Therefore, it’s vital to ensure that customers can seamlessly manage their accounts at any time of the day without being tied to traditional banking hours. If running an in-house team of customer support agents isn’t an option, investing in multi-channel support can help alleviate this strain. By incorporating virtual assistants, chatbots, in-app messaging, and help center, you’ll ensure that your users can get help round-the-clock and have their questions answered independently, without the need for live interactions.  

Integration with digital wallets 

No matter what type of application you want to create, it’s a good idea to ensure it integrates with third-party applications like digital wallets or smart and wearable devices. While the smartphone remains the most popular gadget across the globe, millennials are increasingly relying on smart watches and digital wallets to manage their finances, and ignoring this fact is a surefire way to fall a few steps behind your competitors. 

ATM and bank branch locations

Depending on the type of app, you may want to add a feature of the ATM and branch office locator. This feature can greatly enhance your app’s appeal by letting your customers easily find banks and ATMs located near them.   

Push notifications 

Finally, any mobile application will benefit from push notifications. Push notifications are a great way to keep users informed about bank account updates, transaction activities and confirmations, security alerts, promotional offers, reminders, and other important information related to banking activities. 

Additional Mobile Banking App Features

In addition to critical features, there are also features that are desirable to have. Usually, they aren’t added at the step of developing an MVP. Developers add them later, when the product is validated and stakeholders make a decision to proceed with full-fledged mobile application development. 

  • QR code scanner
  • Gamification elements
  • Savings goal tracker
  • Integration with digital document storage
  • Localized language support
  • Social sharing options
  • E-signature
  • Cryptocurrency support
  • Dynamic currency conversion
  • Peer-to-peer lending platform, the list goes on.

How Much Does it Cost to Develop a Banking App?

The cost to develop an online banking application depends on the complexity of the app, as well as a number of other factors, including features, technology stack, hourly rates and geographical location of the development team. Whether you choose to hire an in-house development team or delegate the application development process to an outsourcing company will also affect the cost. Let’s take a look at how the cost of fintech app development may vary by complexity, OS, and region.

If you choose to build a rather simple app, something like Mint, that offers basic account management features and can be built in less than six months, expect the cost to range from $50,000 to $100,000. For a more feature-rich application with additional functionalities and advanced security measures, the development cost can be anything from $100,000-$500,000. And something as large and complex, for example, as Capital One, with a full suite of banking services, can cost you $700,000 and more. 

With regard to operating systems, the development of applications for iOS tends to be more expensive compared to Android. This mainly boils down to the fact that the iOS platform has more strict design guidelines, a fragmented device ecosystem, and an app review process in place. 

Cross-platform applications are usually even more expensive, though creating a cross-platform solution helps reduce the project budget, making it a better investment in the long run. 

Here’s a quick comparison of the cost of cross-platform and native app development for a banking solution. We’ve taken average prices without taking into account the team’s location, their level of seniority, and the app’s complexity on the whole. 

In general, building a cross-platform application is more cost-effective, but there are situations when companies choose native technologies. For example, if you’d like your app to have a different design for Android and iOS, you’ll need two separate versions. Also, you may simply not need a solution with iOS and Android compatibility. We had a client from Fiji who asked us to build an Android-based application for them. They didn’t need an app for iOS, because in Fiji, the majority of people use Android, which has a market share of 87.02%