Mobile Banking Application Development: Trends, Challenges, Key Features
Just imagine the fact that almost one third (32%) of the global population utilizes mobile banking software. This fact has created a behavioral shift - people have all but stopped using desktop internet banking and visiting local bank branches. Mobile banking development helps to rearrange internal banking processes and operations related to bank clients significantly.
Compared to Internet banking, where users can log into their personal account via a corporate banking website, a banking application is a separate bit of software that is accessible on personal cell devices. This is a far more convenient and user-centric service, while, at its core, this app type demands high security and risk-free functionality.
This article is a guide regarding mobile banking application development. Continue reading to learn about mobile banking features, trends in mobile banking, the target audience, and top banking apps on the market.
Benefits of Mobile Banking Application Development
A mobile banking app is a free tool that can be used by clients at their convenience. Aside from that, investing in mobile banking application development gives a great advantage in cost reduction for banking institutions. This is a win-win situation for both sides of the process. Let's review all the advantages in detail.
The benefits of developing a mobile banking application are as follows:
- Availability 24x7 - clients can perform their usual banking operations anytime and anywhere compared with traditional banks and ATMs
- Variety of services & operations - top banking apps allow users to carry out almost all banking operations. Among these actions are loan tackings, payroll services, mobile check deposit, etc
- Time efficiency - clients do not have time to visit a bank and wait in line to cash checks or for consultation
- Paperless record keeping - by utilizing mobile banking development wisely, a financial institution can communicate with their clients and cover legal issues digitally. On one hand, this reduces bureaucracy and on the other hand, clients do not have to disclose their sensitive information on paper
- Reduction in customer service costs - mobile banking technology reduces the cost of customer services by 50-70% according to McKinsey research
- Increased security - top banks value their reputation and thus want to ensure that their IT infrastructure and client software use encryption and security protocols to protect customer privacy and information integrity
- Personalized user control - clients have the ability to keep track of their expenditures and manage their finances more efficiently
As you can see, mobile banking application development really provides valuable advantages for both the banking institution and the client.
Continue reading to find out the important banking application requirements, top mobile banking features, app development process, and costs.
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Mobile Banking Development: Market Situation
In order to get the best outcome from mobile banking application development, let’s check out the current market tendencies, what customers demand from banking software, and discover the best banking apps.
Mobile Banking Trends
Below are the key findings of various studies about mobile banking development that are useful to pay attention to:
- 1.75 billion users will conduct banking operations via their mobile devices in 2019 (Jupiter)
- The value of mobile payment transactions reached $78.09B in the USA in 2018. This sum is expected to increase to $189.97B by 2021 (Statista)
- The leading global banks have invested almost $80M in, and have launched 606, mobile banking applications (Exicon)
- The top reason for using mobile banking software in the USA is convenience, which is mentioned by 45% of respondents (Statista)
- Competition among financial service providers has decreased since many small US banks merged or closed - 61% decline within the last 30 years (MX, 2016)
- At the same time, the number of total bank deposits has expanded and increased by 300%+ (MX, 2016)
Research also shows the increasing traction of new mobile banking software users in emerging markets. Let’s now check out some insight characterizing these potential mobile banking users as well.
Target Audience of Mobile Banking Development
India and Bangladesh have gained more access to smartphone usage and, thus, to innovative banking services. These markets have started to invest heavily in mobile banking development.
The markets in Asia and Africa have had a boost of 50% among the inhabitants who utilize banking applications. The above mentioned McKinsey study notes that even very poor people in the Philippines showed a surprisingly high interest in mobile banking technology.
These days, the highest growth in acceptance of modern banking can be observed in emerging markets, namely:
- Southeast Asia - the number of users of digital banking has doubled over the past three years here. Countries like Malaysia, Singapore, Cambodia, Laos, the Philippines, as well as Vietnam and Indonesia will definitely adopt more mobile banking services in the nearest future.
- Latin America - the market has not yet exploited the advantages of mobile banking. Banks have only just begun to digitize their services. The number of users of banking apps is predicted to account for 47% of the population in 2019.
- Eastern Europe - the most adoptive market of financial mobile applications at present, and this trend is still growing.
There is often an assumption that the target audience of banking apps are tech-savvy millennials, but you might be surprised by the real result.
Forty-five% of Baby Boomers between the ages of 50 and 60 actively use online smart banking apps. iPads and tablets are their second most used devices.
The younger generation is pretty demanding of technology and, at the same time, the most engaging group. In 2016, a poll conducted by MX Technology identified that 60% of users are prone to switch to another bank if a mobile banking service is inefficient.
So, what do users actually expect from mobile banking application development?
According to a Federal Reserve Board report in 2016, the most common operations performed with apps for banking are as follows:
- 94% of users check their account balance and recent transactions
- 61% transfer money between bank accounts
- 57% receive alerts from their banks
- 48% deposit checks electronically with the help of a device’s camera
- 48% use an app or banking website to pay their bills
- 40% find the closest ATM or bank branch
- 25% transfer money to another person’s account
All in all, by 2017 the number of clients engaging with apps for banking or online banking had increased from 27% to 46%. This means that the financial sector has definitely undergone changes characterized by the reduction in human interactions like visiting a branch or contacting a call center.
Best Banking Apps
The most rated and best banking app, as defined by Retail Banker, is the IKO app. It is Poland's Bank PKO app with 5.0 and 4.7 ratings for iOS and Android platforms respectively. This application offers the functionality to check account balance, transfer funds, and withdraw cash without a card.
The most highly rated app in the USA is Capital One, with 4.7 ratings both in the Apple App Store and Google Play. Among other top-rated banking apps just behind the rating of 4.6 are apps from Chase, Bank of America, UBS, Emirate NBD, Sberbank, Barclays, Lloyds Banking Group, and Garanti.
The illustration below shows the most well-known financial establishments and evaluates each on two axes - agility to the modern technologies and the level of mobile banking app innovations.
As you can see, the biggest reaction to changes and greatest technology adoption are observed in Bank of America, JP Morgans, Wells Fargo, Banco Santander, and HSBC.
The table below includes the list of mobile banking apps and describes their functionality.
|Mobile Banking App Name||Mobile Banking Features & Unique Aspects|
Bank of America
App rating: 4.7/4.5
|Recognized as the best mobile banking app for its security
- ability to notify the bank easily about your travel and location for necessary account
- ability to activate & replace card directly from the app
- proactive contact from the bank in case of suspicious action
JP Morgan Chase
App rating: 4.8/4.6
|Best banking app for prepaid cards in the US
- ability to reload the debit card easily
- ability to access most of the accounts including checking, savings, credit cards
- easy online payment management
- bill payment option
- transfer money via Zelle (US-based digital payment network)
- ability to schedule payments, loans, mortgages
- ability to view and redeem rewards with Chase rewards credit cards
App rating: 4.7/4.7
|Best banking app for customer service in the USA
- ability to view all bank accounts (incl. home & auto loans)
- ability to keep track of purchases & credit history
- ability to redeem credit card rewards
- instant push notifications
- easy card lock in case of loss or theft
- fraud reporting directly from the app
- account access via Apple Watch
- fingerprint login
App rating: 4.8/4.4
|Awarded as the best banking app for monitoring investments in the USA
- offer accounts for savings
- investment in a range of securities (stocks, mutual funds, etc.)
- ability to track and monitor investments
- offer real-time quotes, market data, and graphics for a better decision-making process
- ability to set notifications via text messages or email
App rating: 4.8/3.5
|HSBC, the UK-based mobile banking app
- quick and secure login with Face ID and Touch ID
- ability to check accounts, transactions, standing orders, and Direct Debits
- ability to view and download personal statements
- quick card blocking
App rating: 4.7/4.6
|Mobile app with the best user experience and a banking service with online presence only started in the USA
- ability to access funds via 30,000+ fee-free ATMs (in national MoneyPass network)
- ability to set up daily balance alerts
- ability to set up real-time transaction notifications
- ability to earn cash back using the service
- ability to send money to family & friends instantly with the Pay Friends option
- ability to pay with Google Pay, Samsung Pay, Apple Pay without your card
- EMV chip card security
Mobile Banking Application Development: Functionality
Key idea: For efficient mobile banking application development, the majority of users (86%) are interested in two features - checking balances and exchanging funds between accounts.
Essential Features of Mobile Banking
The general features used in mobile banking development that are hard-to-avoid are as follows:
- Account creation
It is highly important to build a secure and quick authorization process. Multi-factor authentication is a secure sign-in option, but takes some time to fill in the necessary information.
Alternatively, biometric authentication using physical user metrics (appearance, voice,even gestures) is far quicker and even fun.
A MasterCard study indicates that users have become more willing to use personal biometrics as their passwords. The Wells Fargo app has a verification feature that scans the iris of their corporate customers.
- Account management
This point may include a range of mobile banking features. Users can check their cards, bank accounts, review account balance and record history, etc.
It is even possible to implement some additional functionality. For instance, the ABN AMRO bank in the Netherlands included a unique feature of mobile banking for personalized account management. This allows users to set a savings goal, create investment plans, and perform repeat payments.
- Customer support
This is one of the core mobile banking features, as the client should be able to address a bank representative and ask questions 24/7. Alternatively, it is possible to advance and personalize the user experience by using Artificial Intelligence in the form of a chatbot.
- ATM & bank branch locations
This basic feature of mobile banking services should not be abandoned. In order to advance the experience, it is possible to apply VR technology. This is a unique feature of mobile banking implemented by RBC. It allowed the bank to increase the number of its app downloads tremendously.
- Secure payments and transactions
P2P transactions, payments for services, and fund exchanges should be processed securely and conducted anytime and anywhere with the help of a banking app.
An alternative variant of this feature in mobile banking application development is using QR codes for goods and services payments. Scanning of QR codes is a fast and easy way to conduct these operations inside the app. Only a few banks have offered this mobile banking feature to their clients.
- Push notifications
Mobile banking application development should utilize reminders and alerts to increase customer engagement and app promotion. It is necessary to control this aspect and plan the communication strategy with your client in advance.
Keep in mind that users hate receiving intrusive notifications.
Extra Mobile Banking Features
The app features mentioned earlier create the core of mobile banking application development. In order to increase user traction and interest, you should be thinking about some innovative mobile banking features, like:
- Spending trackers
Mobile banking development should focus on user needs, even if they are not explicit. This functionality can control personal budgets and set some goals for desired purchases. The system can create a customized dashboard based on user information, give necessary motivation, and inform users regarding progress.
Alternatively, users can set some scheduled payments and bills in advance in order to not miss an important transaction. This mobile banking feature is utilized in a great way in the Simple App. The app is used to track spending habits, plan budgets, and save on each expense.
- Cash back service
M-commerce sales increased to 300M in 2017 and the sum is expected to more than double in 2019. Therefore, with the cash back possibility users are stimulated to use your bank account to pay for services and goods. This can be a great foundation for your loyalty program. Soon, this mobile banking feature will be included in the majority of banking apps.
- Personalized offers
It makes sense to create special offers, discounts, or coupons with the help of a mobile banking app. The opportunity lies in partnering with restaurants, cafes, coffee houses, and so on, for the provision of particular discounts or coupons. This stimulates sales and, at the same time, engages the user with your mobile banking software.
- Unique services
Mobile banking application development can include other non-traditional services. These services can include purchasing tickets, ordering a taxi, reserving a table, delivery, and more.
For example, a Polish bank (Zachodni WBK) reached out to new users with the functionality of paying for public transport, shopping, and taxi-hailing directly from its mobile app.
- App for smartwatches
Smartwatches have begun to substitute smartphones in many operations. Why not consider developing a banking application for these wearables?
The Australian Bank of Melbourne was the first to create a banking app for smartwatches. The functionality included payments for services and goods, receiving notifications, balance checking, and finding ATMs.
- Finance sharing feature
Visa research indicates that in order to attract Millenials, it makes sense to concentrate on mobile banking application development for budgeting. This may include sharing finances and splitting bills.
For instance, the app from Emirates NBD has a bill-splitting feature where each user has to include some sum and indicate the number of people participating in the operation via social networks.
Final recommendation: It is better to develop a couple of apps with distinct mobile banking features rather than complex software with lots of operations, details, and data. Try to ask your target users about their priorities in banking procedures and focus on providing a solution for them first.
Challenges in Mobile Banking Application Development
According to a poll conducted by Nielsen, the main barrier to mobile banking usage is an inability to trust a transaction made via this channel both among more affluent boomers (67%) and millennials (71%). This survey has been supported by Statista, which indicates that 72.7% of residents in the USA did not use any mobile banking app due to their worries about its safety.
The main risks and challenges for mobile banking application development are connected with security concerns, protection of user privacy (e.g. GDPR in Europe), very detailed verifications of user input, and at the same time keeping the service simple to use.
Security should be synonymous with your app. The general security recommendations to utilize in mobile banking application development are as follows:
- check and review the security policies and align them with mobile banking development and device specifics
- set up server infrastructure properly and select reliable data storage
- include the technology of digital signature and multi-factor authentication in a mobile app for more secure transactions
- include high-end encryption in mobile banking app software and card storages to avoid access to the data from another device
- include inactivity timers for each session of app use
- build a checker of password strength
- verify the user’s device for security breaches before app installation
- educate your client regarding the best security practices with some kind of guide (e.g. not storing sensitive data, credentials, and transaction-related information on the device)
Stages & Cost of Mobile Banking Application Development
In this section, we will tell you about a two-step process we use for mobile banking application development that also includes some information about the costs.
In general, mobile banking development can be split into two stages, Discovery and Development.
The discovery stage includes all the preparatory work for the project performed by a business analyst, who is responsible for the development of your app from a business perspective, and a software architect, who aligns business aspects with technical implementation.
The deliverables after the Discovery phase include:
- Finalized app concept
- Product backlog
- Project architecture plan
- Product design (UX & UI, clickable prototype)
- Market and competitor analysis (optional)
Once these materials are ready, it is possible to better define an accurate development budget and project delivery date.
During mobile banking application development, a cross-functional team is allocated. This usually consists of developers that implement the client-side (iOS and/or Android platform), back-end developers, and quality assurance engineers. The whole process is controlled by the project manager who ensures that all the arrangements, agreements, and budget goals are met.
Regarding mobile banking application development cost, 15 global banks spent, on average, $132,000 per app. The total expenditures constituted almost $80M and included 606 different apps.
Another study conducted by Clutch indicates that the cost of complex solutions including mobile banking application development ranges from $200,000 to $500,000.
Worth mentioning: There are two methods of mobile banking application development, depending on your strategy. If you are interested in testing some innovative functionality, a wise approach is to divide the full banking software into a few logical app versions. This will help you to launch the app more quickly and to test these unique features of mobile banking with a real user.
This first app version of mobile banking application development may take approximately 3-5 months at a cost of $50-$80k per platform (iOS or Android). You can then proceed with building the subsequent app versions after gaining feedback from the market.
Another option is to plan and build an app with a fully-fledged set of mobile banking features. In this case, the process of mobile banking development will take much more time and a larger budget, depending on the required scope of work.
You may wonder why banks are investing in mobile banking application development. This is the most efficient method of customer engagement, which definitely outweighs the traditional methods that still involve resellers, support staff, and agents. As well, mobile banking development acts as an effective communication point with the possibility to get up-to-date market insights and improve banking services.
Generally speaking, development costs are unpredictable during the early stages. This is due to the following, and other, possible factors:
- Vendor type and location
- Complexity and the number of app features
- Back-end infrastructure and connected APIs
- Complexity of UX/UI design
- Inclusion of additional branded visual elements
- Development approach (native, mobile web, hybrid, etc.)
- Number of platforms to be developed (iOS, Android, web, etc.)
If you would like to understand the exact cost formation for mobile banking application development, read the following guide specifically created to educate on this topic: App Development Cost: Understand Your Budget To Build Powerful Apps.
The major factor influencing mobile banking development cost is the hourly rate of specialists in the global arena. Eastern Europe, especially Ukraine, is a well-known offshore development region characterized by reasonable pricing and high quality software development.
Would you like to know how to find a reliable software development partner?
Check out the following guide that includes tips, processes, and a solid checklist for hiring development specialists: How to Hire an App Developer for Your Project.
How to Create a Mobile Banking App Project Successfully
It is absolutely certain that the banking sector will only become more and more digital. Mobile banking application development allows the industry to increase efficiency in operations, reduce bureaucracy, and enhance customer experience while promoting banking services.
So what makes a good banking application?
1) Applicable and user-friendly functionality that is secure and easy to access
These can include, but may not be limited to:
- checking the account balance without login
- integrations with device info and tools (e.g. address book)
- user customization based on recent actions and regular transactions
- customizable offers
- creation of personalized and useful notifications
2) Application of advanced, innovative technologies like AI, Big Data, AR, VR, and Blockchain to enhance the user experience
3) Adding new functionality and scale software in accordance with upcoming mobile banking trends, namely:
- use of voice user interface (VUI) to increase customer engagement
- use of artificial intelligence and machine learning for self-service in banking industry
- use of advanced verification technology with biometrics to avoid data breaches
All this shows that mobile banking application development offers many opportunities to create a customer-centric experience in the banking sphere. This niche still has room for good banking apps, so it is time to plan yours today.
Interested in knowing how much it would cost and how long it could take to implement your mobile banking app?
Our team is ready to consult you regarding the detailed development process and present preliminary project evaluation with an approximate app budget.