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Home / Corporate Blog / How to Build a Fintech App – Fintech Product Development Guide

How to Build a Fintech App – Fintech Product Development Guide

Published: August 23, 2022
Categories: Industries

Today, the FinTech industry is rapidly advancing in its development. In its recent study, Allied Market Research has found out that the global FinTech market size is expected to grow 6 times in 10 years from $110.57 bln in 2020 to $698.48 bln in 2030, growing at a CAGR of 20.3% in these years.

The main driving factors for the industry growth are the increasing popularity of online financial services among consumers, wider application of innovative technologies across banks and financial institutions, and recent socio-economic changes caused by the Covid-19 pandemics. As a result, more and more conventional financial institutions as well as tech-savvy startups strive to create their own FinTech products to keep the competitive edge in the market.

In this article, we’ve looked into the major recent trends in the FinTech industry and prepared a detailed guide on how to create a successful FinTech app.

Important Trends in Fintech

The fast development of the FinTech industry has completely changed the methods of how consumers manage their finances and various financial institutions provide their services. This has become possible due to the implementation of advanced IT technologies in FinTech solutions. Here are the most important trends in FinTech that have significantly influenced the industry.

Artificial Intelligence (AI) and Machine Learning (ML)

AI and ML are the technologies that are widely implemented in FinTech solutions. They help tech experts to process large amounts of various data from customer preferences to global financial trends. Here are just some examples of how AI and ML algorithms are used in finance:

  • Financial decision-making – combined together with visualization tools, AI and ML provide FinTech app users with deep insights on how to better manage their finance in simple and visual forms. Therefore, users can apply complex data when making their financial decisions.
  • Security and fraud detection – when processing big amounts of data, AI and ML can detect and trace common patterns cyber criminals use to access user financial data. Timely informing customers of suspicious activities allows for preventing many financial frauds and enhances customer safety. Besides that, AI and ML help banks and financial institutions improve their security by automatically applying complex regulations in practice such as Know Your Customer (KYC) and Anti Money Laundering (AML). The technologies quickly analyze massive amounts of data and find connections between globally distributed information sources.
  • Customer service personalization – AI and ML gather customer data and study their behavior just to make banking and financial services more personalized. For example, AI and ML-empowered apps can suggest how to better manage finances or short-cut long operational paths, making them automated. Another practical AI and ML application for customer service is to use chatbots and Robo-advisors when providing customer support. This allows banks and financial institutions to cut down user service costs as well as increase customer service by improving its accessibility.
  • Asset management – AI and ML effectively track world financial trends and make investment predictions. As a result, customers can better manage their wealth and gain more profits when investing. Another valuable feature is that AI and ML solutions remove intermediaries from the investment process, making it more automated and much cheaper. Therefore, a larger number of customers gain access to investment markets.

Blockchain

Blockchain is a rapidly developing technology that has generated much hype in the financial sector in recent years. The two main areas Blockchain is utilized in FinTech are secure transactions and cryptocurrency as an alternative to fiat money.

Thanks to Blockchain’s decentralized nature and encryption, it allows for managing transactions and data safely and efficiently. Meanwhile, using AI and Blockchain together in one app makes data monitoring, processing, and auditing much simpler and far less prone to error. Therefore, more and more companies embed Blockchain combined with AI into their digital apps.

Here is how Blockchain is utilized in FinTech:

  • Secure and swift P2P payments – now, two parties can send payments to each other much faster as all the data is encrypted and checked within the Blockchain and there is no need to turn to a middleman to fulfill transactions
  • Crypto trading – Blockchain allows trading various digital cryptos using just one mobile application
  • Regulatory compliance – with Blockchain it’s much easier to ensure that a financial institution complies with all the needed global and local regulatory requirements. Moreover, regulatory rules can be applied to several Blockchain participants, ensuring regulatory consistency in such complex operations as providing insurance, syndicated loans, transactions with several parties involved, and more
  • Establishment of digital identity – to enter a Blockchain network, each user can be validated to prevent fraud. Moreover, in such networks, it’s easy to trace each participant’s activity from the very first day of registering in the system.

Microservices

Using microservice architecture in software development is a new trend many software developers adopt in their work. That’s because microservices offer more freedom in building small and large applications, allow frequently upgrading the developed solutions with new features, and ensure quick time-to-market.

How do microservices work? Microservice architecture is compiled of small blocks of stand-alone services gathered into one full-fledged application. This way, software developers can add or remove any blocks from the app without disrupting its functionality.

Why use microservices for building FinTech solutions? The microservice architecture ensures:

  • Increased app agility – it’s easy to add, remove, or upgrade the developed solution. This allows effectively adapting to sudden market changes, implementing new technologies, quickly reacting to negative user feedback, and making improvements
  • Simple scalability – companies can adjust their FinTech solutions to their workflow and add more functionality and computing power at seasonal peaks and remove them with the decline in demand
  • Enhanced reusability – once developed, microservice components for one app can be reused in other FinTech solutions. Moreover, it’s easy to upgrade one feature over several solutions where it was implemented
  • High reliability – an app created of several components has fewer chances to break down completely. In case a microservice fails in the app, the system