Fintech is associated with something complex. However, it has already become an integral part of our daily life. Remote loan processing, transferring money with the help of a fast payment system, investing in the online stock and shares market are all successful examples of financial technologies. A lot of people make use of fintech technologies and don’t understand them.
In reality, now it is difficult to imagine a successful mobile payment app without applying to fintech. To give you insight into these technologies our team has written this article. If you are serious about building a fintech app it is a must-read. Below you will find pivotal information about the fintech tendencies, peculiarities, development cost, etc. So, let’s get down to business!
What does fintech mean?
In simple words, the term fintech stands for financial products built with the help of innovative technologies. Fintech innovations include artificial intelligence, blockchain technology, cloud storage, biometrics, Big Data, and many others. The notion of fintech was first used by Peter Knight in an article for the British newspaper The Sunday Times.
It is difficult to define a particular inventory of things belonging to fintech technologies. The reason is rather simple: advanced technological innovations appear regularly. For example, in the 16 century, the introduction of a payment card system was a real breakthrough. In 2003, the introduction of PayPass contactless payment became a new popular fintech technology. In such a way, this notion isn’t stable and depends on the historical period we are taking into account.
Currently, the significance of fintech is increasing rapidly. Well, even the fact that now everyone can easily order a taxi and pay for it online proves that fintech technologies influence and improve our lives considerably.
Fintech or financial technologies – technologies that help financial services and companies effectively manage the aspects of their business.
Nowadays among these aspects are software, applications, a range of operations, and business models. Fintech is also an industry where companies make use of new financial technologies and solutions to leave behind competitors with traditional financial models. In most cases, tech startups and companies apply fintech tools to improve the quality of rendered services.
The events that boosted the development of fintech
The real fintech revolution began in the second half of the 2000s. In the UK and the US, the first peer-to-peer (p2p) lending platforms have appeared. At the same time in Africa there was a sensational breakthrough in mobile payments.
Another powerful driver of the fintech development was the financial crisis that occurred in 2008. Many employees of financial corporations have lost their work. Because of it they started the development of projects that could become an alternative to banks. Among such initiatives was the creation of bitcoin in 2009.
Bitcoin – is a digital currency that turns around without the participation of large banks.
Bitcoin and other cryptocurrencies emerged as a separate markets. This industry was developing extremely fast, but suffered a devastating crash in 2018. Anyway, the basis of the bitcoin currency is still one of the important drivers of the fintech revolution. It is a blockchain technology. According to the world’s leading analytical companies’ calculations, the implementation of blockchain technology by the providers of financial services can reduce their expenditures on financial reporting, compliance and business operations by 30-70%.
The strongest impetus to the development of fintech technologies was the rise in the popularity of smartphones and the launch of digital wallets by leading digital corporations. In 2011 appeared a Google Wallet and 3 years later an Apple Pay was presented. They began to make use of data management to create a personalized user experience.
Today, fintech technologies develop faster in developing countries, where Western banking systems have not had time to take root. According to the EY Fintech Adoption Index, Chins is a leader in using fintech. It is reported that 70% of the population benefit from these technologies. According to The Matrix Fintech Index, the fintech industry has grown by 95% in 2020. The experts believe that fintech technologies will continue to dominate the online payment market and revolutionize traditional banking services.
The fields of fintech application
Fintech technologies are used in a range of spheres. The main aim of fintech is to satisfy even the most sophisticated requirements of the customers. Below you will find a list of the most popular areas of fintech application.
- Payments and transactions
With the help of fintech technologies, companies create convenient personalized finance applications that are used in everyday life. Fintech platforms allow you to make online payments without opening a bank account. For performing transactions, users can create virtual cards within payment systems. Mobile applications powered by fintech technologies allow to make instant money transfers both among the clients of the same and other systems.
2. Cryptocurrencies
Cryptocurrency is a decentralized digital currency built on the blockchain system which is a technology for distributing data registries. Cryptocurrency transfers take place without the participation of mediators, which ensures privacy and anonymity for all users. Cryptocurrencies are mined by miners who are engaged in the collection and processing of information about cryptocurrency transactions that are conducted.
3. Credits
With the help of fintech, all citizens and legal entities can ask for a loan from a bank without applying to the credit organization itself. Some platforms offer direct interaction between the participants of this process, determining the conditions for money lending. A client has to pay only commission for received services.
The development of the fintech credit market is complicated because of the strict requirements for the people and entities that want to take a loan. In many states, this type of activity requires a specific license. Therefore, digital platforms in the field of loans are often created by credit institutions or have partnership agreements with them.
4. Platform as a Service (PaaS)
This term stands for a set of services needed for the development of modern applications with the help of cloud platform. To boost productivity, PaaS offers ready-to-use software components that allow developers to add new features to applications. They support such technologies as artificial intelligence, chatbots, blockchain, and the Internet of Things (IoT). Thanks to PaaS banking establishments can adjust to new tendencies. It improves teamwork, resource management, payment processing, and credit risk management.
5. Security
Fintech technologies are widely used for delivering more reliable services. Since crimes tend to become even more sophisticated and difficult to detect, this feature adds to the popularity of fintech. As we have mentioned, AI belongs to these technologies. It is capable of collecting, analyzing, and storing vast data flows. Artificial intelligence aims at gathering private information about the system users ( with the client’s permission).
Why is it so important? AI technologies help to determine the common behavior patterns of each individual. It includes the location, banking activity, etc. If something unusual happens, the system quickly detects it and takes appropriate measures. A person may be asked some additional questions, receive a confirmation e-mail on the smartphone, etc. Anyway, in such a way fintech prevents identity thefts and money fraud.
5. Investment platforms
These platforms include robots-advisers, digital brokers, micro-investment platforms, and personalized financial programs. They are aimed at making the market automated and easily accessible for retail investors. Fintech investment platforms are highly appreciated by investors due to predictive analysis and robotization.
6. Neobanks
Neobanking is a great alternative to traditional banking services. Neobank is a type of direct bank that operates only online without applying to physical financial networks. They usually exist in the form of mobile applications and provide high-quality services to clients. Such banks are more customer-oriented and do not need physical branches.
How much does it cost to build a fintech application?
Well, now you understand the basic notions, peculiarities, and fields of fintech application. If you want to become a financial services provider or give your banking establishment a second life, it is essential to make use of fintech technologies. Then the logical question may arise: ` How much does it cost?`. The final development price depends on a number of aspects. To make you understand the average price for the fintech application of your dreams, let’s consider some crucial things.
The fintech trends
As part of the Futureshop laboratory, experts named nine trends in the fintech area at once:
- contactless payment;
- QR codes;
- instant payments;
- financial education and development;
- personalized services;
- sharing economy (car sharing, co-living, co-working and other ways of joint temporary ownership);
- voice interfaces and personal advisors;
- ecosystem approach;
- investments instead of deposits and savings accounts;
The functionality of the application
The development cost directly depends on the amount and complexity of features your application has. The ecosystems of fintech apps are various. You can create a platform offering a specific feature or a multifunctional one. Among the financial functions you may offer are
- The ability to track transactions;
- Online transactions;
- Insurance services;
- Internet transactions;
- The ability to take credit;
- Morgage services
It is just a short list of the features you can include. Make sure you offer high-quality services. In the financial sector it is better to include just a few options but make them comfortable and efficient for the users.
Types of fintech applications
If you can’t decide what features and functions your future application will have, think of the main purpose of your product. There are some common fintech apps types for you to choose from.
- Applications that help keep track of finances:
- expense tracking with built-in tips and advice on how you can save money;
- control and management of personal funds with the opportunity to learn more about how to save finances;
- analysis of the user’s financial behavior and personalized consultations;
- services of a smart digital piggy bank with convenient settings and support for transferring funds to a deposit.
2. Applications for investing funds:
- digital assistant for portfolio diversification and investment;
- asset management services using technologies based on artificial intelligence;
- automatic copy trading;
- a system for tracking and alerting about changes in prices for cryptocurrencies, stocks, and fiats.
3. Applications that support lending services:
- providing creditworthiness assessment in an automated mode based on AI;
- issuance of microloans in automatic mode through the use of artificial intelligence;
- P2P lending between users;
- reducing the time needed for the loan processing procedure using a chatbot.
4. Applications for payments and money transfers:
- a web wallet or mobile wallet that supports electronic money and cryptocurrencies;
- support for auto payments (irregular or regular at the discretion of the user);
- risk assessment of a particular transaction;
- division of a monetary transaction into several recipients.
The development cost
As we have mentioned above, it is almost impossible to predict the final cost of your fintech app without knowing the details. However, you should understand the possible price. It is essential for managing your budget and development process. To build a basic application that offers efficient and safe services you should have at least $40,000. It will take you nearly 4 months. If you want to develop a sophisticated platform with high performance and multiple functions, be ready to invest up to $85,000 into it.
The final cost also depends on the type of team you have chosen. If you opt for an in-house team, it will cost you $90,000. Freelancers, on the other hand, are much cheaper. If you choose this strategy, be ready to pay $30,000. However, in this case, you can face numerous challenges. Different time zones, lack of face-to-face communication, lack of control, etc.
Another option is to hire an outsourcing company. It is an alternative solution that helps to spend less money on app development without sacrificing quality. The outsourcing services will cost you $50,000.
Another aspect that has an impact on the development cost is the choice of programming language and frameworks. Now the most common language for building fintech apps is Java, then comes Python and Golang. Remember that cross-platform apps are also more expensive than single ones.
Final thoughts
Fintech technologies have revolutionized all sectors of our lives and will continue to do it. If you are running a startup in the banking industry, you should take advantage of all available technological wonders. To build a fintech app you should take into account many crucial sectors. Before getting down to business conduct the analytical research. Analyze the market, potential rivals, decide on the features your product will have. Only after it, the development process should start.
