How to Develop an Online Banking Application: A Complete Guide

Interested in online banking app development? You have come to the right place. Mobile banking applications have truly revolutionized how we interact with our money.

Key statistics regarding the online banking sector:

🔘The digital banking market size stood at $10.9 trillion in 2023 and is projected to grow more than 3% CAGR from 2024 to 2032.

🔘The global digital banking market is projected to reach $19.89 trillion by 2026.

🔘Currently, 1.75 billion registered accounts are handling $1.4 trillion annually or approximately $2.7 million per minute.

🔘Digital transformation can lower banks' operating expenses by 20-40% and unlock multiple new sources of revenue, as reported by Wifi Talents.

🔘60% of millennials, 57% of Gen Z, and 52% of Gen X mainly use mobile banking apps.

Everything is discussed in this article, ranging from the advantages of banking application development to the essentials, to provide you with sufficient knowledge on how to create an online banking application.

You can also find out how much it will cost to develop an online banking application and learn about emerging industry trends. Let's get started!

What is an Online Banking App?

An online banking app, much like online payment apps, is an electronic program that assists clients in handling their account finances.

Its work is checking account balances, making bill payments, and money transfers. The best aspect is that customers can perform everything with just a few touches on their smart devices or tablets.

Online banking apps are on your devices. Therefore, you don't need to go to bank branches physically. In addition, the apps operate 24/7. Users can access them at any time, whereas banks have limited working hours.

Furthermore, check out our article on how mobile banking apps work, where we have unravelled all the necessary aspects you need to know about it.

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Major Categories of Online Banking Applications

The app ecosystem of banking is varied, and it's designed for specific user requirements:

1. Digital Wallets

These keep your information safe and enable the addition of loyalty cards and P2P money transfers.

2. QR Code Applications

Able to create and read QR codes to facilitate quick transactions.

3. Internet Payment Platforms

Ensure safe shopping experiences for the online shopping apps.

4. Peer-to-Peer Payment Applications

Make it convenient to transfer funds between individuals.

5. Bank-Centric Banks

Provide their respective apps addressing various features of online banking.

The selection of an online banking app must rely on user requirements, preferences, and services offered by the banking sector.

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Benefits of Online Banking Application Development

Mobile apps offer various benefits in general; however, let’s take a look at the benefits an online banking app would provide:

1. 24/7 Customer Access

Online banking applications enable customers to access their accounts at any time, anywhere, without having to visit a branch. This enhances customer satisfaction and convenience.

2. Cost Efficiency for Banks

By minimizing reliance on physical branches and manual services, banks can significantly reduce operational costs, maximizing human resources and infrastructure expenses.

3. Improved Customer Experience

Contemporary UI/UX design, real-time transaction notifications, and services such as bill payments and fund transfers provide enhanced user involvement and loyalty.

4. Real-Time Transactions

Immediate transfers, balance refreshments, and payment confirmations are made possible with online banking applications, which provide transparency and speed missing in traditional banking.

5. Advanced Security Features

Applications utilize encryption, biometric authentication, two-factor authentication, and fraud detection mechanisms to provide safe transactions and earn digital trust.

6. Personalized Services

AI and data analytics embedded in apps can offer personalized insights, expenditure analysis, and customized financial product suggestions.

7. Scalability and Innovation

App-based digital platforms are easily scalable and support continuous feature enhancement, integration with fintech products, and incorporation of the latest technologies in the IT sector, such as blockchain or AI.

8. Paperless Transactions

Decreases the paperwork requirement, resulting in environment-friendly banking operations and quicker approvals or verifications for customers.

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

Let's take a closer look at the eight steps of that process to learn more about how to develop online banking applications.

1. Conceptualization

Step number one is all about setting the stage, namely, determining what your online banking app will be capable of.

What features will it provide? Will it serve the needs of basic banking, or will it provide sophisticated features such as investment guidance?

Secondly, you'll need to determine the app's function and goals. Are you looking to make online banking easier for your current customers, or are you going after an entirely new group?

Next, research and determine your audience. Understanding whom you're developing for is important. Are you targeting millennials who are technologically inclined and like digital-based experiences, or are you targeting an older crowd that appreciates simple functionality?

Also, what technology stack will you employ to create your app? Will your developers code in Swift, Java, Kotlin, or something else?

2. Design

Design for online banking app development is not just about pretty looks; it's about creating user-friendly interfaces that provide desired value on iOS and Android platforms.

To begin with, make intuitive UX/UI design your number one priority. The user experience must be seamless and easy, making it navigate the different functionalities without any bumps.

Here, market research in banking can prove to be priceless, allowing you to know what users genuinely desire from their banking app.

Security is another important factor to keep in mind during the app development stage. Elements such as multi-factor authentication and KYC (Know Your Customer) guidelines need to be incorporated into the UX design to provide maximum security for your users.

3. Features Selection

This is the point where you determine what your mobile banking application will do for your customers. The system development life cycle now turns towards choosing the features that will render your application both functional and attractive to users.

At the core level, features such as account management, money transfers, customer support, and mobile payments are a prerequisite. These are the functions that users demand from Internet banking. Functions such as push notifications of transaction history can also be valuable here.

Conversely, however, sophisticated features can differentiate your app in a saturated marketplace.

Consider biometric authentication for added security, chatbots for customer support, and expenditure analysis for improved money management. Certain apps even provide cashback rewards to further encourage users.

Selecting the proper e-banking functionalities will enable you to develop an application that not only serves simple accounting purposes but also makes it a financial destination app for your customers.

4. Security Measures

Your users are trusting you with their banking account details and other sensitive information, so stringent security controls are a given.

For starters, data encryption is needed to safeguard data in transit and at rest.

You can add an additional layer of security via encryption options such as Face ID or some other multi-factor authentication method to guarantee that the account owner is the only one able to use your financial institution's online banking functionality.

Regular security scanning and penetration testing are also a necessity. These actions assist in locating and correcting any security loopholes so that not only the online platform but also ATM transactions and other bank operations are secure.

By adding biometric authentication to banking and other innovative security features, you can provide an app that your users can trust with their financial lives.

5. Development

The product development phase is the heart of the online banking app development process, where all the planning, designing, and feature selection become a working app.

One of the first decisions you might need to make a decision for your development approach. You need to figure out what will best suit your app development project: Native or cross-platform app development.

Native app development is suitable for one platform, like Android or iOS. They offer a greater user experience (UX). Cross-platform development, on the other hand, can work on multiple platforms but may compromise the performance slightly.

During this stage, daily bug and issue testing is essential. Testing on a regular basis ensures that issues are caught and resolved early on, keeping your app on schedule for a successful release.

6. Beta Testing

Beta testing is the time when you remove your app from the isolated environment of your banking software development firm and place it in the hands of end users.

Here, the app (as a minimum viable product or MVP) is released to a small number of users to collect feedback on customer experience, APIs, and functionalities.

It's a chance to discover how your banking app functions in real life and to spot any issues that did not arise during development.

According to this feedback, you will be able to make improvements to your app. Whether adjusting the user interface or eliminating bugs, this is where you get to improve your digital banking software before releasing it to the public.

7. Launch

The launch phase marks the culmination of all your toil in the development of a mobile banking app. This is when your application gets live on the app store (Apple and Google Play) and becomes live to your targeted audience.

Launching the app is not a point of convergence, though; it's actually the starting point of its journey in the fintech world.

Marketing is always significant for any product’s launch, including software or an application. When you build an online banking solution, it is necessary to market it properly.

There are various digital marketing strategies you could choose to target your target audience, ensuring that your app gets downloaded by as many users as possible.

After the app goes live, tracking its performance and collecting feedback from users becomes crucial. This will enable you to know how your app is being used and received and enable you to make any required tweaks.

8. Post-Launch

Once your app is live, the actual work starts. Post-launch is all about refining and keeping up with the times.

Your mobile application development team needs to be in a constant feedback loop and adjust the functionality of the app accordingly. This way, your app remains current with new features and remains useful for your users.

Each stage of the process needs expert knowledge, the latest testing tools, and a committed team. In addition, such an app can take months, if not years, to build, test, and deploy, despite your best efforts to overcome the above challenges.

Luckily, banks can cut the cost, complexity, and project turnaround of such an undertaking by collaborating with the appropriate digital platform that is committed to banks.

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Key Features to Consider for Your Online Banking App

Online banking app development prioritizes major mobile banking features such as account handling and security. There's so much more in store! Let us move on to exploring the primary features driving a bank application!

1. Account Management and Transactions

Account management is a piece of cake using online banking applications. Users are able to quickly check balances, move money around, and set automatic payments. You can read more about account management software in our comprehensive blog.

The transaction history function allows users to easily see and search for past transactions. Due to the stored data, they can control their finances easily.

2. Security Features

Security is a priority in online banking app development. Biometric authentication of users ensures that the app can only be accessed by authorized users. It offers an easy yet secure login process.

For additional protection, you can implement two-factor authentication (2FA) upon login and money transactions.

You can also utilize security measures such as end-to-end encryption and secure APIs. All these utilities prevent hacking and ensure data privacy.

3. Customer Support Integration

In-app chatbots and AI assistants offer customer support in real-time. The tools improve the user experience as they offer immediate assistance. The feature can be useful to both banks and customers.

4. Personalization

People would like something dedicated to their distinct requirements. Banking apps can offer push notifications on account activity status, reminders, and offers.

Gamification serves as an add-on fun quotient by rewarding clients for saving or investing. That engaging feature entices them toward achieving their savings objectives.

Not to mention that the wearable app integration enables consumers to use bank services from the smartwatch or fitness tracker they wear. All of them serve to make banks more convenient to use.

5. User-Friendly UI/UX Design

UX/UI design in software development holds immense significance. Online banking app development focuses on building intuitive interfaces so users can navigate quickly. The app must also have a clean layout and menu so that users can find the main features without getting confused. Quick performance is another important feature. Transactions and actions must load quickly to provide a smooth experience.

6. Digital Wallet Integration

As the use of physical money declines, the incorporation of digital wallets in Internet banking apps becomes prevalent.

By being combined with popular platforms such as Apple Pay or Google Wallet, internet banking apps address changing consumer needs, supporting varied payment options.

The frictionless, contactless payment method supports the prominence of digital wallets, which respond to a fast, hygienic, and secure payment experience.

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Tech Stack Needed To Create a Mobile Banking Application

With the diversity of devices, operating systems, and the capability to use web environments comes the requirement to tailor any software solution for all possible needs. Below are the tech stacks required for native, web, and hybrid app development:

1. Tech Stack for a Native Mobile App

Under native app development, apps are created for specific mobile operating systems, such as Android or iOS, using programming languages suitable for respective platforms.

You’ll be needing the following Android app development languages:

🔘Programming languages: Java, Kotlin

🔘Toolkit: Android Studio, Android Developer Tools

🔘SDK: Android SDK

While utilising these iOS app development languages for iOS development:

🔘Programming languages: Swift, Objective-C

🔘Toolkit: Xcode

🔘SDK: iOS SDK

2. Tech Stack for a Web Mobile App

It requires creating and maintaining websites leveraging programming languages and frameworks optimized for the web. You would require the most effective frontend languages to keep the development process seamless.

The frontend of the mobile app development requires the usage of the following:

🔘Languages/ frameworks: HTML5, CSS3, JavaScript

🔘Libraries: ReactJS, AngularJS, or VueJS

🔘Tools: Webpack, Babel

As for the backend development, you would require the following backend frameworks, languages, and databases:

🔘Languages/ frameworks: Node.js, Django, Ruby on Rails, Java Spring Boot

🔘Database: PostgreSQL, MongoDB, MySQL

3. Tech Stack for a Hybrid Mobile App

Hybrid development is designing an application by using the latest web technologies that run on various platforms, wrapped inside a native container. The following languages or frameworks mentioned below can be used:

🔘Frameworks: React Native vs Flutter, Xamarin, Cordova

🔘Languages: Dart (Flutter), JavaScript (React Native), C# (Xamarin)

🔘Tools: Expo (React Native), Flutter SDK

Furthermore, hybrid apps also use a shared codebase wrapped inside a native container to balance performance and versatility.

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Why Should Businesses Build an Online Banking App?

Moving into the heart of our topic, let's break down the top five reasons why mobile banking apps are a must-have for financial institutions these days:

🔘Growing Customer Need for Online Banking Solutions: Today's tech-savvy consumers are rapidly moving towards online banking solutions. A mobile app addresses this by providing the option to operate a bank account, check an account balance, and even make real-time payments without entering a physical branch.

🔘Competitive Advantage within the Banking Sector: Innovative characteristics such as account activity push notifications or instant QR code payments may put you ahead of the rest, who remain stuck on outdated practices.

🔘Providing a Convenient, Seamless, and 24/7 Banking Experience: Since customers can take a glance at their bank account at any time with an app, convenience has been redefined in banking.

🔘Improving Customer Engagement and Retention: An app is not merely a service portal; it's a retention mechanism. Management of debit and credit cards within the app can greatly enhance the user experience, leading to loyalty and long-term allegiance.

🔘Decreasing Operational Expenses and Improving Efficiency: Encouraging customers to use the app for day-to-day tasks can greatly reduce your operational costs. Not only does this reduce the necessity for face-to-face interactions, but it also increases operational efficiency.

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Online Banking App Development Cost Breakdown

Determining the cost and timeframe to create a mobile banking app is an involved process; a number of variables are at work. This is a rough estimate of some of the figures involved:

While developing an online mobile banking app from scratch, you can expect the app-making charges to range between $300,000-$500,000 by outsourcing to a development company. However, the Fintech startup businesses wanting an MVP can expect the cost to be anywhere between $180,000 and $260,000.

Don't forget to budget for annual ongoing maintenance. It can cost around $130,000 for all that has been mentioned. Long-term investment plans could exceed $1 million.

In terms of development velocity, a proof of concept would take about four to six months. On the other hand, putting up a launch-ready MVP with a seasoned team would require 9 to 14 months.

Choosing a medium-size outsourcing company to develop a banking app from ground zero would cost around $50,000 to $80,000.

Keep in mind that these estimates and actual ones may vary depending on many factors. It may be app complexity, cloud services, tech stack, the geography of the development team, and the partnership model.

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How Long Does it Take to Build an Online Banking App?

The duration taken to develop the banking apps depends on several factors, such as the app's complexity, the number of features, the expertise of the development team, and the development method.

However, you can accelerate the development process by availing yourself of custom mobile app development services.

Trends in Mobile Banking Software Development

With time, the fintech sector and online banking, in general, have evolved towards the adoption of new technologies. Some of the latest trends and new technology in the banking sector, which are primarily concerned with security or customer experience, are as follows:

1. Open Banking

This involves the utilization of open APIs that allow third-party developers of mobile banking apps to develop apps and services for the financial institution. For instance, Plaid banking API links bank accounts to fintech apps, enabling secure data exchange between financial apps and user bank accounts.

2. AI and Machine Learning

AI algorithms scan users' behavior to provide customized banking experiences. For example, JPMorgan's COIN employs AI to examine contracts and pull out crucial data points and clauses, cutting manual labor substantially. Furthermore, get the best AI and ML development services in Delhi by Arramton Infotech.

3. Blockchain Technology

Blockchain offers a secure and transparent decentralized ledger for transactions. An example is Ripple, which provides an instant payment system based on blockchain technology that's particularly well-used in cross-border payments.

4. Voice-activated Banking

This enables customers to control their banking with voice commands via smart devices. Bank of America's Erica is a voice-controlled financial assistant that assists customers with activities such as balance checks or payment scheduling.

5. Chatbots and Virtual Assistants

These offer immediate customer support without the need for human intervention. For instance, Wells Fargo's Facebook Messenger chatbot provides immediate account information and assists in answering questions.

6. Personal Finance Management Tools

Apps that assist individuals in their financial planning by examining their spending behavior and providing tips on savings. Mint is a well-known app that keeps all your financial information in one location, monitors spending trends, and provides personalized budget recommendations.

7. IoT Integration

With increasingly intelligent devices, they can be connected to cloud-based banking apps to enable effortless financial transactions. The case is smart vehicle systems connected to banking, which can include paying tolls or gas automatically without any need for manual intervention.

8. Strong Cybersecurity

With increased cyber threats, sophisticated security features such as biometrics and multi-factor authentication are being implemented.

Most banking apps, such as those of Chase or Citibank, now have fingerprint or facial recognition as an extra security feature while logging in to empower the future of cybersecurity.

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Create a Scalable Online Banking App Easily with Arramton Infotech

An online banking app facilitates easy management of accounts and finances for customers, enhances operational efficiency for banks, and provides more value.

As we saw previously, creating such an app the conventional way (doing it internally) can be time-consuming and error-prone.

This is where Arramton Infotech's software development services step in.

Arramton Infotech provides innovative solutions such as artificial intelligence and strong authentication techniques to simplify online banking app development. As an added benefit, you also have a responsive interface filled with the must-have features of a banking app.

Ready to take the next step in your digital transformation journey? Request a consultation by contacting us today and discover how easy it is to build a state-of-the-art mobile banking app.

Wrapping Up!

In effect, creating an online banking application is a chance for new players to enter the market using either an all-encompassing or a niche fintech product. And existing strong corporations can also further strengthen their market position with such an intervention.

Still, the issues of deciding the scope of the features, quality development, and opting for a reliable vendor to take care of all the technical aspects are crucial.

In reality, developing an online banking application is a way for new companies to enter the market with either specialized or full-cycle fintech products.

And on the other hand, long-existing companies are able to gain considerable market influence through such an initiative.

However, the selection of a range of features, qualitative development, and a reliable vendor to deal with all the technical aspects are crucial.

Furthermore, connect with Arramton Infotech to get highly scalable, feature-rich applications via the ios and Android app development services in India.

FAQs Related to the Online Banking App Development

Q. What are the requirements of a mobile banking app?

Ans: While developing a banking app, you must adhere to these requirements:

🔘Core Features: A successful mobile banking app should have basic banking features like account management, transfer of funds, bill payments, and wallet integration.

🔘User Experience: The app must contain a user-friendly UI, accessibility features, personalized recommendations, and push notifications. All of these work towards better financial choices.

🔘Advanced Features: To remain competitive, the app must include AI chatbots, wearable support, gamification, and voice banking.

🔘Technical Essentials: The banking app must support native or cross-platform frameworks. Additionally, the app must contain a scalable backend to manage increasing user traffic and utilize secure APIs to enable smooth functionality.

🔘Testing and Maintenance: Frequent functional testing, periodical updates, and immediate bug fixes will ensure the app's reliability.

Q. How can AI be used in mobile banking?

Ans: AI in mobile banking can be employed for personal financial advice, fraud detection, customer support by chatbots, predictive analysis of spending patterns, automating repetitive questions, and improving efficiency and customer experience.

Q. What are the key features to include in an online banking application?

Ans: Major features to incorporate in a digital-only banking app include account access and control, mobile deposit, transfer of funds, payment of bills, transaction alerts, card control, budgeting facilities, biometric login, and customer care.

Q. How do I design a banking application?

Ans: An intuitive bank UI should be easy to use, simple to navigate, and visually pleasing. They value simplicity and make it convenient for customers to view their accounts, control their finances, and make transactions.