Fintech apps are those that support banking and all other financial services such as insurance, investing, cryptocurrency, lending, and financial management. In addition, fintech app development plays an important role whenever there is a marketplace, e-commerce, or SaaS service. For these businesses, embedded finance functionality is a must-have and it is also provided with fintech app development services. Embedded finance is often used for BNPL (buy now, pay later), payment processing with automated payouts, tax handling, and currency exchange.
And even though, one can, for instance, make a DIY connection with Klarna API for BNPL on their marketplace, that would be basic functionality. Startups in most cases need customization. A SaaS service might find Stripe API accessible, but when it comes to custom billing processes, different currencies, and automated invoicing, there is again the need for custom fintech app development services.
All in all, one-size-fits-all solutions in finance will not take any startup far. DIY integrations with APIs like Klarna or Stripe are often sufficient for basic operations. However, more functional solutions require a custom approach. Moreover, in finance, there are always issues of compliance, reliability, scalability, processing speed, and security that can be well taken care of by a fintech app development company.
Why Invest in Fintech App Development
Overall, using online financial services is commonplace today. According to McKinsey:
“Digital adoption is no longer a question but a reality: around 73 percent of the world’s interactions with banks now take place through digital channels.” But banking is only a fraction of fintech services, and according to the same McKinsey research, other fintech services are expected to grow three times faster than banking.
And users are expecting a variety of convenient payment options while also being easy and frictionless. Long gone are days when a marketplace would send an email with bank details for making a payment manually. A fintech software development company these days implements:
- one-click payments,
- voice-activated payments,
- BNPL, virtual cards, and
- AI fraud detection among others.
Most importantly, a lot of fintech expertise is often centered around checkout UX. Numerous studies analyzed by the Baymard Institute of UX Insight average a cart abandonment rate of around 70%. It can well be argued that perfecting the checkout process can be the ultimate advantage.
In addition to a frictionless and smooth checkout process, custom fintech software development is something to invest in because of a variety of fintech-specific functionalities and requirements gathered in the table below.
Table Reasons to Invest in Fintech App Development
| Reason | Description of fintech software development services | For which startup | Competitive Advantage |
| Embedded finance | Integrating payments, insurance, etc directly into non-finance startups | E-commerce, SaaS, Marketplaces | Direct payments and other financial services, frictionless payments |
| Automated regulatory compliance | Automating KYC compliance (Know Your Customer/Client) is mandatory for identity verification. Automating AML (Anti Money Laundering) legislation compliance that prevents criminals from hiding their money and other financial crimes through monitoring of suspicious financial activity. Other compliance depends on business and preventing fraud. | Fintech startups, Banks, Insurance platforms, Fintech platforms, Neo-banks | The apps are made secure and trustworthy which is fundamental for any fintech business; reducing costs and risks related to compliance. |
| Decentralized Finance with Blockchain | Utilizing Blockchain technology for decentralized lending, tokenization of assets, and other financial services that are enhanced with Blockchain technology | Crypto platforms, DeFi startups | Creating unique financial services and strengthening a competitive advantage with technologically advanced solutions |
| Digital wallets & API-first development | Creating digital wallets for instant transactions, introducing platform-specific currency, offering different ways of payments | Payment platforms, E-commerce, Gig economy apps | Frictionless checkout, seamless payment, a variety of payment options for customer convenience |
| Advanced Security Standards | Encryption. two-factor authentication, voice-enabled payments, silent authentication, passkeys with FIDO2/WebAuthn. | Digital wallets, Payment processors | Increasing the security of sensitive customer data |
FinTech App Development Trends
- Artificial Intelligence powered by Machine Learning is still leading trends that reshape the way fintech approaches traditional and new challenges. For instance, traditional challenges involve compliance with financial regulations such as GDPR, PCI DSS, AML, and KYC protocols.
- Banking software development services can help implement automated regulatory compliance.
- AI/ML technology handles sensitive data mapping and classification by using machine learning to mask, encrypt, and anonymize sensitive client data to protect it in case of a breach. DSR powered by AI automation is the use of software to process individual requests for access, retrieval, modification, or deletion of personal data in compliance with GDPR or CCPA.
- Also, traditional challenges like scoring benefit from AI. It is known that traditional lending services relying on traditional scoring systems exclude people without a credit history. AI makes it possible to calculate credit scores using alternative data such as income patterns or phone bills. Lending models such as Upstart and Tala are one of such examples that employ AI to provide services to underserved consumer base.
- In terms of new trends, companies like Wealthfront and Betterment are leading the robo-advising industry. Financial management underpinned by AI technology helps clients to create their investment portfolios. AI accounts for client preferences and risk tolerance.
Conclusion
Fintech services are varied and growing at a fast rate. While banking is a fundamental fintech service, other fintech services are predicted to grow three times faster. Fintech app development services are invested in by a variety of startups starting from crypto platforms to DeFi startups to neo-banking and up to non-finance startups. For the latter, embedded finance powers the payment process to ensure a variety of payment options, instant payment, and frictionless user experience. Custom fintech software development leverages emerging technologies and the latest trends to ensure automated compliance for reduced risks and costs, improved security for trustworthiness and reliability as well as enable new industries such as robot-advising and neobanking.
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