Financial Software Development: A Comprehensive Guide for Modern FinTech Solutions

Do you want to outsource the development of a fintech app, but are not sure about the benefits of financial software development performed by a partner company? This article will help you understand how to navigate this complex field.

Global financial services are expanding at an exponential rate, creating a massive demand for finance software development. There are two major sources of this market expansion today. Firstly, many developing countries are now achieving middle-income status, which necessitates IT transformation for further economic progress. As a result, both governments and private companies are making major investments in fintech and other tech-enabled banking services. Secondly, we are now seeing the emergence of the Internet Generation into the workforce. Most young workers in the modern economy have had access to the Internet during their formative years, meaning that they usually prefer Internet-enabled banking software. Considering all these massive shifts, we aim to provide a comprehensive review of financial software development from the perspective of our experience, not only in fintech but also in manufacturing, agriculture, education, and real estate software development.

Defining Financial Software Development

Financial software development is not as simple as the title may suggest. In most cases, one speaks not of software development in isolation, but rather of custom financial software development. So, what does this mean? In this type of software development, a financial firm or nonprofit organization hires a development partner for financial software development tailored to the specific needs of that particular organization. 

This approach is radically different from the traditional model of using partner services and other types of off-the-shelf software. It enables financial companies to have complete control over their software, delivering solutions that fully align with their product vision and strategy. It also has massive positive impacts on security, as it allows companies to create custom protocols for safeguarding financial data. No off-the-shelf software can compete with the level of control that custom software solutions offer.

Why is Financial Software Development So Important?

The importance of financial software development is obvious. Financial software development solutions answer multiple challenges that affect the financial market today. These challenges include the shifts in generational preferences, the unprecedented expansion of the global economy, and the rise of massive international trade networks. 

Younger people prefer using software when planning their financial goals. It allows users to avoid accidental mistakes and automates the majority of paperwork. Banks and other financial institutions that do not adopt fintech innovations are very likely to lose the Internet Generation market entirely. The international nature of the global economy makes the need for investments in finance software development even more urgent. Younger people tend to move frequently in search of better job opportunities, and this means that the financial industry must become similarly international to capture their attention.

The Most Relevant Forms of Financial Software Solutions

Modern financial institutions require several types of financial software solutions. Here are some of the most widely used ones:

Banking Applications

Banking applications are undoubtedly among the most popular requests for financial software development. Many traditional banks need to digitalize today because an increasing number of people prefer online banking, and more importantly, there is a growing institutional pressure to adopt a digitalization policy across most developed and developing countries. Apart from being convenient for users, financial operations supported by software are also more transparent. Thus, fintech development in banking must primarily focus on ensuring an outstanding UI/UX and impeccable regulation compliance. 

We recommend following practices such as the 10 usability heuristics for UI and enabling customers to complete all tasks online, without requiring them to visit any offices. Regarding regulatory compliance, our recommendation is to prioritize a safety-first tech stack, utilize advanced encryption technologies, and implement the most advanced forms of two-factor authentication.

Investment Software

The tremendous development of modern economies enables billions of people to invest in certain assets, thereby raising their net worth even further. These economic advances have led to the rise of a large market centered on investment management software. Financial software development solutions can be very diverse in this case. Some people prefer tried-and-tested assets, such as real estate or precious metals. Others believe that the most reliable investments should target innovations, with fintech solutions like Robinhood allowing users to buy stocks of tech industry leaders. Amazon, Google, Apple, and Nvidia are all present in these innovation-centric solutions. Lastly, many people are interested in cryptocurrencies, which offer an unorthodox but potentially very lucrative way to invest one’s funds. 

Working with a fintech development partner is highly beneficial in such cases because they typically possess insider knowledge of financial regulations and adjacent regulations in fields such as manufacturing or real estate. Our company, Keenethics, maintains advanced knowledge of both fintech and adjacent fields; for this reason, we can be a perfect partner for financial software development.

Personal Finance Management Software

Financial management encompasses not only banking transactions and investments but also includes a broader range of activities. One also needs to be strategic with their finances. For example, even a 20% rate of savings allows for the creation of a reliable financial security net. Personal finance management software exists to simplify this strategic aspect of financial management. In the past, the most effective way to manage personal finances was to manually track every expenditure and then analyze ways to reduce spending. Today, personal finance management software automates both financial reporting and optimization. 

These apps can analyze your expenditures by connecting to banking accounts and then show ways to cut spending. Apps like Cleo can even offer users personalized criticism to help them quickly adjust their budgets. Fintech apps like these are typically straightforward to develop. What really matters for them is the quality of financial advice and analytics. This means that many organizations in the financial sector have the opportunity to compete in this sector by leveraging their expertise and relying on fintech development partners to formalize the main features in code.

The Most Important Features in Financial Software

Our experience indicates that multiple features in financial software can be game-changing. The more you focus on them, the better:

1. Safe and fast authentication

Most users want two things from a bank: safety of their investments and convenience. For safety, we recommend using two-factor authentication systems, with special emphasis on physical keycards and fingerprint recognition. Mobile authentication is becoming increasingly problematic today. Current reports indicate that criminals can hijack telephone numbers or even send fake notifications to them. All this requires additional precautions from developers and a shift to safer authentication.

Regarding convenience, the best option is to integrate financial services with government authentication systems or general fintech solutions, such as PayPal, Google Pay, and Apple Pay. Users can register in a matter of seconds this way. This is perfect for retention since easy sign-up and authentication are viewed by most consumers as a sign of high quality. This approach also alleviates many security concerns, as it allows for outsourcing account security tasks to governments or big tech companies.

2. Payment management systems

Many apps in the entertainment, education, or e-commerce sectors are shifting towards subscription-based models. While this is usually beneficial for users, as subscriptions enable companies to develop complex products and support them with new features for many years, their payment models can sometimes be confusing.

The subscription-based model is relatively new: many companies do not always manage it effectively. For this reason, modern financial software applications must consider this characteristic of the market by offering advanced payment management systems. Users should have the capability to block subscription payments and remove subscriptions fast and conveniently. Our experience shows that this feature is central for many fintech users, who often complain how difficult it is to cancel some subscriptions or even find the way to disable them in the first place.

3. Reporting and analytics

Current research suggests that consumers tend to spend more when using credit or debit cards rather than cash. In many cases, consumers report that they are unsure what they buy each month. This behavior change creates a demand for advanced reporting and analytics features. Financial software development companies are well-equipped to help you navigate these requirements. Reporting and analytics features usually require the integration of advanced algorithms and high-quality UI/UX. Keenethics developers, for example, know how to design and develop both, and overcome typical financial software development challenges, such as underwhelming performance or unintuitive design by using web-centric tools like Node.js or React.js, and applying 10 usability heuristics or Heuristic Evaluation based on research performed by the Baymard Institute.

Key Benefits of Financial Software Development

Now that you understand the main types of financial software, let’s take a look at the main benefits of custom development that enable the delivery of high-quality financial software:

Improving efficiency through automation

Automation is among the primary reasons why modern fintech organizations are willing to incur financial software development costs. Most users prefer maximal convenience, and this is exactly what financial management software offers. They help calculate expenses and even optimize them. Many apps can even automate investments by using advanced trading algorithms. Financial software development is a perfect time-saving innovation for both large companies and smaller businesses. The earlier you engage in it, the better service you will be able to deliver.

Saving Costs

One more reason to consider investments in fintech is its ability to save costs. On the company side, fintech software allows you to decrease reliance on offices and even automate some basic customer service representative tasks. On the user side, analytics can help users identify problematic spending patterns and enable them to save money instead of relying on credit or living paycheck to paycheck. Finance software development is changing millions of lives for the better today.

Simplifying compliance

Compliance is essential for all companies operating in the financial services industry. Modern governments enforce a diverse set of regulations to protect the privacy and economic interests of their citizens. The problem with compliance is that it is usually very difficult to implement properly. There are thousands of small rules to implement, making the probability of human error quite large. Both companies and individual consumers have to follow these regulations today. Mobile banking applications automate a significant part of compliance activities. They can automatically encrypt sensitive financial information or complete specific official economic reports. All that users must do then is check the final data.

Managing risk

Risk is, regrettably, an inseparable part of all financial activities. Financial software development certainly does not eliminate all risk, but it can significantly reduce it. Firstly, this software is great for decreasing the probability of human errors. It automates many tedious tasks and can even double-check whether human operators correctly filled in some data. Secondly, a software development partner is essential if you want to deliver an investment app. These apps require advanced algorithms for risk management. Algorithmic bots demand advanced mathematical knowledge and reliable coding skills. While financial companies can usually supply the first element, working with a partner company to deliver the second part of the equation is often very important.

Improving planning and forecasting

Financial planning is the cornerstone of good economic management. The most reliable way to save money is to plan your spending and actively eliminate any random purchases. Modern fintech apps offer this capability to their users. They can track your monthly expenditures and even automatically create financial plans. These features are very useful for everyone: both companies and consumers need to optimize their expenditures. Financial software development offers a way to not only do this fast but also create apps that are optimized specifically towards your needs. 

Supporting decision-making

Obviously, automated financial plans are typically suitable only for small companies and individual consumers. Bigger companies usually require more complex plans that can’t be automated as easily. Nonetheless, it makes sense to work with a software development partner in these cases as well. Financial software can also assist with drafting and double-checking complex plans. For example, modern generative AI is good at spotting human errors. You can create a preliminary decision-making plan using an AI tool, brainstorm and complete it with your team, and then utilize a machine learning tool to double-check the information. This approach is ideal for both saving time and minimizing errors.

Simplifying auditing and reporting

Auditing and reporting are essential for all firms. IT firms, for instance, must undergo security audits to ensure the safety of customer data. Financial auditing and reporting are often integral to these broader accountability efforts. Protecting economic data is essential for maintaining consumer privacy. Modern fintech software offers advanced instruments for streamlining this process. Using it, you can automate most reports and safely check the ones that require manual input.

Enhancing data security

The shift towards Internet transactions is inevitable today. Increasingly, people are buying everything online. In the early days of the Internet, this shift was creating rather significant security issues. Banks had no way to verify Internet stores. Transactions themselves had to be done via mail or makeshift online payment platforms, exposing many customers to potential data leaks or even fraud. 

Financial software solutions effectively address this problem. They allow banks and other financial organizations to process Internet transactions on their servers. As a result, the overall safety of consumer data is likely to grow significantly in such cases. Banks can verify online stores and process all sensitive data independently, preventing its exposure to third parties.

Improving customer and vendor relationships

One more reason to consider fintech software is the potential to enhance customer and vendor relationships. Before the emergence of fintech applications, most transactions were conducted on paper. This medium was not effective in establishing trust between consumers and vendors. Checks are easy to lose; writing can sometimes be difficult to read. All this was leading to major problems with transaction transparency. 

Modern financial software solutions remove the majority of those problems. They provide all transaction information and store it in a convenient dashboard. Today’s improvements in transparency are so significant that many people even buy groceries online. If you want to participate in this digital transformation, Keenethics is here to help. We have developed multiple solutions for finance, manufacturing, real estate, and education, utilizing our tech stack centered around JavaScript and no-code solutions.

Fintech Software Development Challenges

There are also multiple challenges you need to consider while developing: 

Maintaining security

The first challenge encountered by the majority of financial software development firms is undoubtedly security. Those firms need to ensure that the information uploaded by their customers to the company’s servers is secure and protected. They often work with highly sensitive data types, including transactions, financial decisions, and personal information. In practice, this means that financial software development must integrate advanced security measures. Good practices include the usage of two-factor authentication, security-first programming platforms, and high-quality encryption frameworks.

Ensuring compliance with regulations

Software solutions tailored towards the needs of particular companies offer significant benefits for financial organizations. They allow companies to use only the features they need. However, this approach can also pose substantial challenges in certain cases. One needs to ensure proper compliance with regulations established by various government agencies or professional organizations. For this reason, the best option today is to work with custom software developers who understand how to navigate regulations. Our company, Keenethics, has already helped dozens of business partners not only develop custom software but also ensure its compliance.

Integrating legacy systems

Legacy systems play a crucial role in most banking and financial systems. For example, benefits in the US are still calculated using 1970s-era hardware and software. Government organizations prefer them for their reliability, security, and relatively low development cost. In practice, this means that many organizations need not only to develop their own software but also to create compatibility layers that ensure the smooth transfer of data between new and old systems. This is often a major challenge because legacy systems can sometimes be up to 50 years old. You should search for development partners that not only know how to develop new systems but also how to interact with code from the 1990s and early 2000s.

Establishing scalability

Scalability is also a major concern for the majority of organizations that fund their own financial software development. Business growth is often imagined as a straight line; however, linear growth is not as common as many people think. In most cases, it tends to be exponential. Services tend to start slow at first and then face a massive expansion. Suppose software and hardware infrastructure are not prepared for this rapid expansion beforehand. In such cases, users may encounter persistent access issues that last for months. Keenethics developers understand this, so they utilize frameworks like Node.js, which are designed with scalability in mind. Fintech software development must be centered around scalability from the get-go, and our knowledge of advanced web-centric instruments is vital in this regard. 

Delivering a high-quality user experience

The final challenge you need to solve to deliver successful financial software is UI/UX design. A famous saying says that we never get another chance to make a positive first impression. In the world of online banking, where hundreds of firms compete for customer attention, establishing a good first impression is the key to success. User interface and user experience are usually the best way to develop a positive impression. Your app should be as intuitive as possible. Keenethics developers achieve this intuitiveness by using 10 usability heuristics, empirical research from leading experts in UI/UX design, and analyzing the most popular consumer requests for your type of financial software.

5 Generation-Defining Fintech Trends

While this list is far from exhaustive, it should give you a more or less coherent understanding of the main trends in the fintech market:

Open Banking

Open banking is a tech trend enabled by the rise of the Internet and the improvements in its security standards. In the past, most banks withheld customer information from other financial organizations. Modern APIs now enable the secure transfer of this information between multiple banks. In this way, it is possible to expedite transactions and provide exceptional service to customers. This partnership with other organizations via APIs is beneficial for everyone on the market, as it allows banks to operate truly internationally today.

Neobanks

Neobanks are banks that do not have physical branches and typically rely on the infrastructure of established financial organizations. They function online (usually via smartphones) and provide lower fees and better integration with Internet services than other banks. In the US, Chime is a leader in this market. Chime attracts many younger users because it allows them to manage their finances online, without having to visit a bank. Many countries still don’t have their dedicated neobanks; for this reason, this field is among the most promising today. 

Artificial Intelligence

The generative artificial intelligence developed by OpenAI in November 2022 continues to transform the market at an ever-increasing pace. Today, this technology is likely to have positive impacts in two key areas: enhancing customer service and providing more accurate analytics. AI is adept at answering common user questions and can tailor its responses to meet the specific needs of individual users. It is a great way to offload some routine tasks from customer service representatives. More importantly, generative AI is also great at presenting analytics and offering advice. You can set it to scan analytical data provided by your algorithms and then offer financial advice. Today, apps like Copilot Money and Cleo are actively using AI to deliver user-friendly analytics.

Buy Now Pay Later (BNPL)

The modern world has an unending abundance of consumer goods that help people be more productive or enjoy better rest. However, the frenetic pace of everyday lives means that consumers don’t always have the disposable income to buy those products immediately. Buy Now Pay Later apps solve this problem once and for all: they allow consumers to immediately purchase some products and then pay for them at minimal interest. For instance, if your money is tied up in investments but you need some productivity tools now, BNPL is a perfect solution. As a result, BNPL services are now among the most popular features added to financial services: you can find them in top banks and fintech apps like PayPal.

How Much Does Financial Software Development Cost?

In our opinion, exact estimates should be made only after a thorough assessment of development requests. Financial software development usually costs differently depending on a large variety of factors. For example, various financial processes are involved in different types of apps. Some require integration with APIs, others a focus on security. The scope of features tends to differ significantly as well. A full-scale banking app is not equivalent to a small web app for financial planning. The best way to learn about pricing is to contact our team: our experts can review your product request and provide a realistic estimate.

Final Thoughts

To summarize, fintech software development is very important for modern fintech firms. It offers them tools that were previously unavailable to most companies. Innovations like generative AI enable banks and financial organizations to deliver customized analytics and provide international banking services. The future of banking is digital. The earlier you digitalize, the better. Keenethics can be your proactive software development partner in this digitalization journey.