Finance Software Development: The Complete Guide For 2023
Financial software development refers to the implementation of technological systems that aim to enhance employee productivity and automate financial processes within a company using advanced technologies such as artificial intelligence (AI), machine learning (ML), and big data. By utilizing financial software applications, numerous business processes can be simplified and automated, removing any obstacles that employees may encounter during the process.
The finance market is rapidly moving towards digitalization, with an expected global valuation of around $234 billion by 2026. This shift is driven by the increasing use of digital platforms such as mobile banking apps, which have replaced traditional in-person banking methods, reducing the need for long queues and wait times.
This article delves into the various branches of finance, their adoption of the latest technologies, and crucial factors to consider when developing financial software systems.
The different FinTech business ideas
Becoming a leader in the FinTech industry requires understanding the model that you want to employ when entering the market. Currently, there are numerous FinTech models available for starting your business, and it's likely that more will emerge by the end of the year. On a high level, the FinTech ecosystem is composed of several sub-sectors.
1. The Realtionship Between Fintech & Traditional Banking
FinTech addresses the efficiency, flexibility, and accessibility shortcomings of traditional banking institutions. With various customer-focused tools such as app-based money transfers, neo-banking debit and credit cards, and microcredits, FinTech has much to offer in the banking use case area.
FinTech companies are utilizing APIs to narrow the gap between traditional banks and modern technical firms by enabling customers to obtain real-time data and information.
2. Investment
Investing has always been a significant player in the financial industry, but a new trend has emerged where younger generations such as Gen Z and millennials are now investing and diversifying their portfolios with various asset classes, including equity, debt, gold, and virtual currencies.
Their desire for financial independence has led them towards investing-focused FinTech apps such as Coinbase and Robinhood, which have become increasingly profitable.
TPP Software suggests that investment apps can be improved by incorporating additional features such as an in-app wallet, an AI-powered automatic fund allocation system among different stock options, and a tool for setting investment goals or purposes within the app.
3. Insurtech
In the past, insurance companies were often seen as profit-driven organizations that catered mainly to certain socioeconomic classes. However, a new wave of financial technology companies, known as Insurtech, are now offering lower insurance premiums, longer repayment periods, quicker fund distribution, and automated claims processing to consumers. As a result, insurance is becoming more accessible to a broader range of people from various economic backgrounds.
Moreover, what sets these Insurtech firms apart is their expansion into previously untapped insurance categories, such as pet insurance, coverage for blue-collar employees, car insurance, and sachet insurance. This represents a new development in the industry.
4. Payments
The payment sector remains the most popular among FinTech models. Many companies are exploring different ways to simplify payment procedures, such as creating invoices, monitoring pending payments, and more. Some enterprises are even focusing on addressing common payment issues like splitting expenses with friends or sending money abroad. It is evident that the payment sub-sector of FinTech remains receptive to new ideas and innovations.
5. Lending
The credit industry, much like the insurance sector, has undergone a significant transformation thanks to the introduction of financial software development services and solutions. Numerous companies now provide easy credit options without the need for cumbersome paperwork. Additionally, some firms are utilizing the analysis and detection capabilities of artificial intelligence to assess a borrower's repayment ability and approve loans in as little as 24 hours.
Another emerging model in the FinTech space is the peer-to-peer lending approach. In this model, platform users can obtain loans from either other users on the platform or from the platform's parent company. Zopa, Lendable, and similar names are examples of this lending method.
6. Virtual currency-driven platforms
Many people believe that cryptocurrency will become the primary currency of the future, and this sentiment is widely shared whenever the topic of cryptocurrency arises. At present, approximately 50% of people are either investing in it or using it for transactions, while the other 50% are acquiring knowledge and skills to engage with it more deeply.
Businesses have several options when it comes to virtual currencies, including developing their own cryptocurrency, operating a cryptocurrency exchange, or focusing on cryptocurrencies designed for use in the metaverse.
Key Feature For Finance Software Development Product
1. Simplicity of data analysis
Fintech services is striving to achieve simplicity, with the goal of making financial operations easier for users. This is not only intended to create problem-free services, but also to streamline the entire purchase process. New technologies enable smooth implementation processes and provide users with a wider range of possibilities, including financial program creation, transaction history display, and intuitive summaries.
The app is designed to simplify data compilation and become a simple analytical tool. It allows users to track their financial activities from anywhere and access relevant information, including transaction history. As banking applications become increasingly popular, there is a growing need for domestically developed tools to understand different types of transaction activities.
2. Wide functionality and integration
In order to meet the varied needs of customers, a mobile application must be integrated seamlessly with multiple platforms. Fintech services cater to different sectors, which means that specific applications can be designed to provide diverse solutions, such as mobile payments, crowdsourcing, and financial resource management. It is important for these applications to be compatible with one another to enable communication and information exchange.
For both individual and business customers, the integration of various applications and functions into one is crucial. This includes the ability to combine all bank accounts and collect different data in one place. Additionally, the usability of the application across different platforms is essential for a seamless business integration, which is what customers expect.
3. More possibilities
Fintech may have changed the financial landscape, but the fundamental needs of customers remain the same. To meet these needs, Fintech applications should not only offer existing functionalities but also add new system improvements to enhance their services. For instance, applications should allow users to manage expenses, savings, and loans more easily. An intuitive interface is also critical to saving users' time while using the application. Moreover, Fintech should focus on expanding the old functions with newer ones to improve the user experience.
Innovation is the key to success in Fintech, and the use of artificial intelligence (AI) is a prime example of that. Complex algorithmic processes can help users explore a wide range of possibilities with ease. Additionally, Fintech should monitor and detect any inappropriate consumer behaviour to prevent any negative impact on the user's financial well-being.
4. Blockchain allows new business models
The use of blockchain technology is increasing in various Fintech applications, even though it has not yet been widely adopted by retail users. A blockchain is a chain of blocks that stores data using hash functions and timestamps to prevent tampering. This technology allows for trust to be established through automated algorithms and protocols secured by cryptography, rather than costly and subjective regulatory bodies, which can result in significant cost savings.
Additionally, reliance on blockchain technology can lead to the development of new business models that were previously unattainable due to technical debt and other obstacles. Examples of such models include peer-to-peer micropayments and retail insurance or loan products that bypass rating agencies and other intermediaries. Central Bank Digital Currencies (CBDCs) are also gaining traction, with some countries considering the implementation of stable crypto-secured digital currencies on a national level.
5. Personalisation
In today's global marketing, it is essential to understand the preferences of customers, which also applies to mobile banking technology and Fintech. To make Fintech apps stand out, they need to be personalized to create a sense of uniqueness for customers. Traditional banking solutions often ignore this aspect, but Fintech start-ups can provide the answer to customers' needs by tailoring their range of products to the individual customer and presenting them in the best possible way. By integrating Fintech apps with personal applications, including social media, a strong relationship can be established between the user and the app, resulting in a more enjoyable financial experience and bringing people closer together.
Financial Technology and Emerging Innovations
Innovative technologies such as machine learning/artificial intelligence (AI), predictive behavioural analytics, and data-based marketing are set to revolutionize financial decision-making. These "smart" apps have the ability to not only identify and learn from users' unconscious habits but also employ interactive learning games to enhance their automatic spending and saving decisions. Furthermore, fintech companies are adopting automated customer service technologies like chatbots and AI interfaces to reduce staffing costs while assisting customers with basic tasks. Additionally, fintech is being utilized to combat fraudulent activities by using payment history data to flag unusual transactions.
How to develop financial software?
Although each financial software development project may have unique characteristics that depend on the features and tools employed in the solution, there are certain common stages in the development process. The primary stages of this process are illustrated below.
Planning: This stage involves the period before developing a solution, during which the team devises a development strategy and gathers relevant data to compile specifications for the future project and create a detailed business plan.
Analysis: At this stage, the team collects and analyzes business requirements and determines how to implement them in the solution. The team also discusses the set of functions, tools, and technological stack.
Design: During the design stage, the financial solution interface elements are created according to the approved visual style.
Implementation: The development team constructs an application using the most appropriate technology stack to ensure that the financial software application maximizes its potential and has cross-platform support for customer service provision.
Testing and Integration: Quality Assurance engineers examine whether the solution adheres to business requirements, troubleshoot technical specifications, create test documentation, and perform manual and automated testing to minimize bugs.
Maintenance: Once the product is tested, the project is delivered to the client for further deployment. The team of financial software developers continues to participate in the application's life cycle by providing support and fixing bugs if they arise.
Wrap-up
Fintech has emerged as a major force in the financial markets, creating significant opportunities for application developers. Regardless of the type of software being developed, whether it involves financial solutions or integration options for external applications like mobile wallets, investments in this technology are currently yielding high returns. To ensure that your Fintech app stands out from the competition and captures customers' attention, it is important to follow certain guidelines during periods of downturn.
TPP Software has been working with various organizations in the finance industry, as well as others, since its inception. Our software solutions are tailored to meet the unique needs of each client and are of the highest quality. Our experienced finance software developers have successfully managed, developed, and launched multiple FinTech projects using tried-and-true and innovative methodologies. As a result, our global clients have achieved increased business efficiency, higher ROIs, and greater customer satisfaction. We have perfected the formula for fully secure, profitable, and user-friendly financial technology solutions that are customized to your specific needs. Contact us if you require our services.
