An online queue, an online shopping system, online checkouts — building your own neobank is closely connected with features that seemed impossible only a dozen years ago. Financial institutions have long ago taken positions in the digital space since our lives have been drastically changed by factors such as

• total globalization;
• coronavirus pandemic.

Many services have switched to a virtual format and work primarily online. Worldwide quarantine has shown that it is profitable and convenient. More and more areas are switching to remote customer service, banks included.

In practice, a neobank is a fintech company that provides banking services only in digital format: through a mobile application or website. Sounds simple, right? However, to build a neobank that will make clients trust their money to an entity having no tangible department, you will face a few exciting tasks and overcome some challenges. How to open a neobank in 2023? Let’s delve into this topic.

Building Your Own Neobank: Market Overview

After you decide to develop a neobank, you automatically become the fintech player. Fintech is a generic term that applies to industries, organizations, and innovations, the expertise of which lies at the intersection of finance and technology. Fintech dates back to the late nineteenth – early twentieth century when the first Trans-Atlantic communications streamlined the processes of exchange of financial information and, thus, improved financial services. 

Neobanks, otherwise known as challenger banks, or banking disruptors, are companies that are designed to provide banking services digitally, via web apps and other types of software, without any physical offices or contacts between the representatives. They are one of the fintech industry’s latest trends aimed at improving the fintech services making them fully accessible online.

There are more than 200 neobanks in the world now, and their number is going to grow, as it is quite a competitive and tough market where it is difficult for businesses to sustain themselves and cater to the client’s needs effectively. The market size of neo and challenger banks was estimated at nearly 47 billion U.S. dollars in 2021.

Why Should You Develop a Neobank in 2023?

Neobanks began to develop recently but have already managed to win a large client base. This trend can be explained by a number of advantages offered by this type of fintech app. If your desire to build a neobank lacks specific arguments, we hurry to ensure you that such a business will be on top of market demand in the next decade. Why? Apart from switching their services fully online, neobanks also offer

• High interest rates on deposits. Since neobanks have no branches and fewer employees, they can offer better interest rates on deposits;
• Simplified way to get loans. The process of obtaining loans from neobanks is more convenient and faster because it uses modern technologies to assess the client’s credit risk;
• Low rates. Often, neobanks do not charge fees for servicing cards and transferring funds; 
• New solutions for financial analytics. In addition to conventional banking services, a neobank API provides services for the automatic analysis of account movements and, at the same time, offers users personalized financial solutions.

The success of neobanks often depends on the regulatory environment and clients’ actual needs in a particular jurisdiction. At the moment, the most successful neobank launch stories are associated with Europe, where the UK is the leader among all countries.

How to Develop a Neobank: What Are the Trends in 2023?

Neobanks, sometimes referred to as “challenger banks,” usually specialize in specific services such as checking and savings accounts. They also tend to be more nimble and transparent than their mega-bank competitors in the financial industry, although many of them partner with such institutions to secure their financial products. However, since this niche has been developing quickly, some clear trends can be already highlighted. Before you start building your own neobank, pay attention to the next:

1. Opening an account in seconds. Customers should be able open a neo-bank account without visiting the branches of financial institutions. Everything is signed online via a digital signature. 
2. General fintech trends matter. As people use digital banking services, they become more aware of the financial instruments available to them. Follow the market trends otherwise, you will lose clients.
3. Transparent financial services. Strive to provide real-time information on any fees and commissions that the client incurs. 
4. Visible cybersecurity. Build a neobank that lets the client feel protected: use biometric verification, encryption technology, and various other security measures such as lock and freeze at any time through the app.
5. Personalized AI helper. AI has enabled internet banking technologies to provide customers with a wealth of useful information about their transactions, spending, and investment activities. A neobank is not just a bank — this is a dozen of apps in one.

Differences Between Neobanks and Traditional Banks

Traditional digital banking is always tied to the bank itself. Clients will still need to visit the offline bank establishment to sign papers or carry out some procedures. Building your own neobank means developing the digital interface to provide a fully virtual standard service set.

Besides, a neobank is always about the broad functionality of financial services, including but not limited to automatic income and expense reporting. It is an app more functional than most fintech startups we usually deal with. Mainly because a neobank is regulated by the same legislative base as a traditional bank or has to be in a partnership with a traditional bank that works as a banking services provider for the neobank’s clients. 

The main idea of a successful neobank lies solely in market research of clients’ needs and providing painkilling functions by technically innovative means, even if the client wants to have a trading tool and parenting control features for junior banking in the same app. The concentration on satisfying customers’ needs is key to the neobank API.

How to Start a Neobank: Best Examples in the World

In the global fintech market, customers have a broad selection of successful neobank apps. As developers who strive to build a neobank that would stand out, we follow the market leaders to highlight the features that make these apps special. 

Our top-3 best neobanks apps list:

• Revolut
• Nubank
• N26

Revolut

Revolut’s journey started in July 2015 at the Level39 tech accelerator in Canary Wharf. Last year, being the most significant financial unicorn in Great Britain, it raised Series E funding of $800m. More than 16m customers are happy to use this great financial tool.

The goal of Revolut is to become the world’s first truly global super app and provide access to financial services to everyone.

Features

• Money transfers in 29 currencies, without borders.
• A pre-paid debit card for cash withdrawals in 120 countries without fees.
• A crypto-currency exchange with converting currencies functions for the most popular and trending currencies.
• Junior banking features.
• Budgeting and saving money functions.
• Mobile phone and overseas and pet medical insurance.

Main points

Revolut’s owners definitely knew some secrets on how to start a neobank. The app is controversial in its marketing, PR, and HR branding, but it might be the way to get on the first lines of scandals, hypes, and trends. The ambition to satisfy all tech-savvy dynamic people with their financial tools brings to the market full of competitors: starting with traditional banks and ending with niche banking or money apps.

Nubank

“Brazillian neobank giant” and “the most valuable Latin fintech” are typical synonyms for Nubank. And these descriptions are not empty words, as overcoming the new success milestone of 6m users and reporting a new record of profit in the latest quarter are good signs for the neobank business. 

After some rounds of seeding investments, in early 2016, Nubank had 500.000+ users reaching their limits of operational capabilities and had more than 75.000+ future accounts queuing on the waiting list.

Features

• Clear UX/UI design of an app based on simple access to any function. 
• 100% digital, no physical contact with a client.
• High operational efficiency and manageability for the client.
• ~Twice fewer fees for standard banking operations compared to traditional banks.
• Quick answer on customer complaints and questions—both inside of the app and on platforms like ReclameAqui.

This seemingly comprehensible and attainable set of features made Nubank the friendliest and most transparent bank that changed the image of the banking establishment in Brazil.

Main thoughts

Following the axioms of physics, things are doing everything to stay in stillness and save the status quo. Still, the victory of such simple apps made by dynamic and stubborn companies like Nubank is unavoidable. 

N26

N26 is a European neobank paying attention to digital security and achieving full compliance with European financial regulations. It is fully recognized as a regular bank in the Eurozone and currently has more than 5m customers worldwide. Starting from 2013, N26 has been through various difficulties developing and balancing the app under the circumstances of high competition, a heavily regulated Eurozone, and a community of whimsy users with high demands. 

Do you want to develop a neobank like N26? Let’s see what makes it #1 for its customers. 

Features

• Bank account in 8 minutes, based on IBAN, no bank offices needed;
• Quick access to payments, paying bills with no hidden fees, 
• Both virtual and physical bank Mastercard;
• Foreign transfers with Wise, cashback services;
• Personal finance management, insurance, and travel perks;
• Quickstart with Google/Apple Pay, 
• No deposit fees, deposits are protected up to €100,000 according to European legislation;
• Smart goals, tracking habits, push notifications, categorization;
• Biometrics login, face recognition function;
• Multilanguage support.

Main outcomes

The N26 has become a child of old Europe and a dream of digitalization: pursuing the ideals of bureaucracy, lobbying of interests of current banking market participants, but still motivated by its own customers to break the old rules. Reliability is tightly connected with security, so keeping customers assured of the safety of their assets is still a top priority. 

How to Open a Neobank: Common Success Drivers

You cannot take the best of each neobank and produce a Frankenstein monster of it without preparation and market research. Your audience deserves something special and customizable, and you have a different background than Revolut or Nubank. Still, you should develop a neobank with of a kind bearing these points in mind:

1. Personal motivation, skills, passion, story.
2. Team and failure-proof attitude.
3. Market research is a must.
4. Simple functions will not surprise anybody.
5. Neobank should be a business.
6. Official recognition and banking licenses are unavoidable tasks during the growth.
7. If your clients do not need a bank building, it does not mean they do not need customer support. Your staff will cost a lot. Massively a lot.

How to Start a Neobank: Challenges and Domain Specificity 

Neobank starts with a customer need and discomfort you can solve using technology. Then, the abstract hypothesis matures into a product idea and decomposes into scenarios of how it benefits the customer. The answer to “how” you have to do it—lies in the domain specificity. 

Reasons Behind the Ideas: Audience Investigations for the Neobank API

How to open a neobank? The first and main challenge you must overcome to hit the neobank market is conducting Comprehensive Customer and Market Research. Get a list of fears and worries, nice-to-haves, and must-be features. 

The most important high-level statements are tightly connected with the following questions you should answer before building your own neobank:

1. What is the attitude of your target audience to money?
2. Will your audience adopt new financial habits easily, and what is their vision of “comfortable” usage?
3. What is the lifecycle of your target audience, their traveling and living routes, and what is your product’s place in their lives?

Markets and Their Legislations Above All: Unavoidable Circumstances

The ignorance of market and geographical targeting can cause a lot of twists and turns that were not planned and thus will multiply the cost of development. So in parallel with your audience research, select the market you want to compete in as you develop a neobank. 

The maturity of the neobank markets of the world can vary depending on the region. The most developed and saturated markets are European, with visible leaders of Great Britain and Sweden neobanks, the USA, Brazil in the LATAM region, and South Korea. 

To cope with regulatory obstacles, you must deal with powerful institutions and spend some time in rooms and corridors of bureaucracy. In the United States, the Office of the Comptroller of the Currency (OCC) within the United States Department of the Treasury checks and approves all emerging neobanks. In Europe, this is the European Banking Authority (EBA), another not-cheap and not-fast circumstance to deal with as you build a neobank.

Build a Neobank: Security as a Must-Have

There are two main principles for building secure infrastructures that are worth mentioning here:

1. Avoid security through obscurity: you will not get a better security level through the complicated and intricate mess of connections. 
2. Claude Shannon’s maxim: “…One ought to design systems under the assumption that the enemy will immediately gain full familiarity with them.”

Hiring security specialists to build up the security information and event management system (SIEM) that will automatically monitor and react to unexpected behavior due to the protocol is a must. Other actions you can take to make your development more security-aware and your whole neobank more attractive for your clients:

1. Standardization

ISO 27001 standard: if you go through this certification, you will be in a league of neobanks that cover all FinTech data security standards. It is tough but worth it.

2. Restless testing
   Use penetration testing, black box, and white box tests to check if your system behaves correctly.
   
3. Role-based access control (RBAC) or Access control list (ACL)
   Provide a clear and transparent policy of access and functions for each role existing in your neobank.
   
4. Store and protect only the essentials
   The less is staying on your side, the less chance to lose it someday.
   
5. Use CI/CD (Continuous Integration/Continuous Delivery) with incorporated security requirements
   The messy code will cause problems for your infrastructure, be sure to use tools that will enforce developers to write clean, testable, and consistent code.
   
6. Care about all third-party integrations and libraries you use
   You have to know what’s going on behind each endpoint of your system. The smooth testable attachment of each integration will cause fewer chances of breaking your system.

Develop a Neobank Using These Models

After we mentioned the integrations part, we have come to the most interesting part of our research of how to start a neobank. Your company has to cover the heroic to-do list of bureaucratic regulations on the one hand and deal with all features development on the other. 

• Connecting BaaS (Bank-as-a-service) for outsourcing banking services and licenses.
• Platform neobank is exclusively licensed as a traditional bank, including all banking systems alongside interfaces.
• Cooperative model: traditional bank provides the back-end via API while neobank is responsible for tech solutions and the front-end layer.

The BaaS model of development is the most common one, as the cooperative model requires a tech-savvy bank partner which is not easy to find. Besides, to build a neobank using a platform model, be ready to provide investment and seek synergy of geniuses in programming and project management.

The biggest plus for the BaaS model is that they care about all connections with banks and licenses, transferring services, card emitting companies, and all those Visas and Mastercards for you. All connections are reliable and tested and can be customized with 3rd party providers for your convenience.

Common & Advanced Features of a Neobank

Another way of prioritizing features is by applying the Kano model. This framework is based on the simple thought that a feature has higher priority than another if it is clearly more desirable for the client. The price of implementation is also taken into account. 

How to start a neobank based on the Kano model? Devlight team uses its modified version and categorizes features into three groups:

• Must-have features;
• Delighters;
• Wow-effect features. 

We have collected a general list of features for you to sort and group according to your special case: 

How to open a neobank depending on the maturity of the market? Each of the advanced features can be simply moved to the basic section because the appetites of the audience grow with each new neobank launch.

Develop a Neobank’s Architecture

Your architecture will be unique. As the blueprints differ from person to person, your architecture will differ from each already existing one. We can just describe some of them for you and explain what is common for all of them.

Simple architecture example

As you develop a neobank, you should make sure it works safely, fast, is efficient and stays error-prone. So all knots of integrations, ETL (extract, load, transform) processes, recording, and storing sides should be reliable and secure.

Another important point to consider from the very beginning is scalability. Without layers that will provide you with readiness for any traffic, the app’s security and reliability will equal zero.

Types of Business Models and Monetization

An important part of learning how to open a neobank is choosing the specialization and the way of being profitable according to your market and target audience. Neobanks acquire clients faster than traditional ones, but the end revenue is still smaller. 

The ways to generate profit include

• Interchangeability: when neobank cards are used for payments, neobank profits. 
• Cash withdrawal: when people get cash at ATM, they pay a fee.
• Credit cards, Buy Now Pay Later (BNPL) services: provide credits in the traditional way but give more control to the client over expenses and income.
• Financial superapps and marketplaces: neobank becomes a mall of financial products providing everything in a few clicks.
• Debit-based, investment, and other assets models: clients place assets easily, raise them, and comfortably operate them.
• Development and implementation of extensions for the main products that solve some limitations of financial domains: providing extra service or access to the financial analytical tools or data that cannot be reached in another way. 

The Technical Stack Needed to Develop a Neobank

You may not know that, but building your own neobank isn’t just coming up with the newest tools and the most expensive development services from the beginning. Be mindful of your dev journey, as it is a marathon, not a sprint. Even if you have already won a round or two of investments, you should be mindful of each new tool bought for your team to use. App Development approaches:

Choosing a cross-platform or native approach depends greatly on your customer’s habits. If 99,9% of them use iOS and you plan mobile apps only, you shouldn’t even think about cross-platform. 

Costs of Development

This is the most painful part of our guide, so we will try to be as delicate as possible here. The price for a neobank launch may vary drastically depending on

• the maturity of the market;
• legislation restrictions and bureaucratic procedures of getting a license;
• the prices of BaaS providers;
• your dev team location.

The price you pay will always be less painful if your business is profitable. As most fintech startups, and neobanks in particular, struggle with their business models and revenue schemas, you must thoroughly think over your neobank API. 

Develop a Neobank Starting With a Team

From the very beginning of development, each of your team members will have more than one role. After a few sleepless nights, your colleagues will start delegating and sharing their responsibilities. 

As per Conway’s law, a system’s technical boundaries will reflect the organization’s structure. So, if an organization is built more around verticals that are oriented around features or services, the software systems will also reflect this.

Core: Founders’ Team

These people are energy core and inspiration machines for the neobank. They also become public personas typically, so all scandals and bumps will hit their reputation if something goes wrong:

• CPO (Product Manager with roadmap vision);
• CTO (architecture, tech issues, and integrations, building the infrastructure of the whole app);
• CMO (marketing and promotion, relations with target audience).

Head’s Level

These guys know what to do with each vision of the Founder’s Team. Such professionals are key managers for all branches of the company. Their synchronization is a key to quick development and high quality of the final product.

• Head of Acquisition (building of internal funnel within the app and managing the CAC/LTV costs);
• CBO (Banking Operations, running all banking operations, including risks, frauds, and relations with other banking partners);
• CCO (Compliance Officer, law specialist);
• CRO (Revenue-driven Business Development Operations, the main task is to keep the revenue high);
• CIO (Infrastructure, security, and data).

Development Team

This is where the true jewels are hiding. People that will perform all the created tasks and make your neobank possible to appear on your client’s screen. Your core players of this game.

• DevOps (the more the merrier);
• Mobile App developers (~4 specialists);
• Back-end integrations team (~5 specialists);
• 2 Manual QA;
• 1 Automation QA;
• MBA;
• 1-2 Project Managers;
• UX/UI team;
• Low-code Business Processes Engineer.

Know How To Build An App for a Neobank In 7 Steps

In the simplest of terms, your neobank is a technical savvy layer between banking functions set and a customer. A full-fledged neobank may cover the need for more than 90 back-end applications, 4 mobile applications, and 10 web applications, as in the case of Revolut. 

The simplest lifecycle of the feature while building your own neobank has a defined set of stages:

1. Definition of requirements
   This stage requires the involvement of the Project Manager and Product Owner in constant negotiation regarding the main terminology, definitions, and dependencies of what is going to be developed. Even studying part of this stage is important to clarify the understanding of both sides.
   
2. “Click dummy” based on UI
   It is a UI-based prototype of the features used to ensure being on the same page with the Product Owner. Typically Product Owners need to see the feature prototype to be aligned with a dev team even before the development itself starts. And “click dummy” is much cheaper than MVP.
   
3. Proof of Concept
   Developers are on the spot: they take the approved “click dummy” and implement it in terms of the selected framework. Within this stage, developers get a fuller image of the obstacles to overcome as they develop a neobank feature.
   
4. Minimal Viable Product
   At this stage, the Product Owner sees the implementation of the functionality in the ecosystem of the apps.
   
5. Development
   Now, the efforts of core, back-end, and front-end developers, as well as UI designers, are united for the creation of vivid functions and interfaces. This is a parallel process that the Project Manager must properly orchestrate. Compiling documentation, creating, and launching a base of automatic tests alongside code-coverage tools guarantees the high quality of the code.
   
6. QA (Quality Assurance), testing
   After entering the production-ready stage, in-house testers run customer scenarios and check invariants and all possible deviations from them by hand and automatic tools. The reports about unexpected behavior are unavoidable at this stage and must improve the overall experience of the feature’s functionality.
   
7. Production
   Finally, you have finished your neobank API feature. Now you have to publish an update and check user activity stats in your analytics. According to your policy, you can launch A/B and other kinds of tests at the Play Market and App Store if you have an app. 

You may say that it is a classic “waterfall,” but such a linear base fits easily within any Agile/ Scrum application development methodology. But remember that these instruments are created to simplify developers’ and project managers’ lives. For example, prioritizing the feature tasks can turn many devs’ problems into not-problems-at-all.

How We Build Neobank for Vodafone — Top Telecom Provider

It was 2020, the first lockdown after COVID-19 pandemics has hit the world economy. Each business had to adapt to the new circumstances and stay profitable. And missions to discover new markets become not a benefit, but a chance to survive and enforce the business.

One of the largest telecommunication company in the world, Vodafone, has come to us with a bare wish to build up an app in the quite new market for them. Thanks to the strong product development expertise, we assess the market quickly and find the best-matching app idea according to our clients’ requirements and limitations.

Thanks to the Discovery phase of our service-providing model, we can pull the business insights out of data shredded over the niche as we at Devlight are mostly interested in building viable products, not just lines of code.

Request

Vodafone asked us to find a competitive set of services that can be wrapped in the app that will fit the market and deserve the customers’ love and everyday use. The client wanted to diversify its services and strengthen its position as a multi-market company.

As Vodafone assessed the fintech industry as quite new for them, they wanted to hear more suggestions from us on where they have to focus. So our task is logically divided into two parts:

• Market and customer investigations—we’re doing everything to find strong needs and pains that can be covered by a service that can be owned by Vodafone;
• Prototyping the service based on the app according to the data we collect on the first step and testing its viability. Presenting the app prototype with all inner and outer processes explanations to the client.

Limitations and challenges

Because of the pandemic, we had to provide 100% of our services online with no discount for quality. We conducted 40+ hours of online conferences, meetings, and in-depth interviews. According to the client’s deadline, we have had only 2.5 months for all we have planned. But treasures are born under high pressure — from stars to diamonds.

After a few investigation sessions with a client, another strict limitation we have got was that Vodafone wanted to avoid any crediting services in the app’s services portfolio. That motivated us to find another business solution for the neobanking experience that would fit Vodafone and generate a stable income. 

Process 

To build a neobank by forging the right solution for the client, Devlight uses a two-phased process of Product Discovery and Product Development, as both processes are inseparable. This is the reason for the viability of our products and their popularity with millions of customers who use our products every day.

In this particular case, here is a detailed action list of what has been done for Vodafone to complete the task.

Solution 

After dealing with each task from the Product Discovery phase, we ended up with a set of outcomes for our customer:

• Market research:
  • competitors research + cost structure
  • market user research
  • digital products + feature set
• Business model canvas + customer profiling
• UVP of the service
• Service blueprint + customer journey mapping
• Testing of the business model 
• App prototyping testing:
  • high-fidelity prototyping via Figma
  • user testing via Maze
• Presentation of a colored neobank API prototype alongside the testing results for the client + product development plan.

Competitors’ research is an efficient instrument for positioning and market discovery. It’s a must-be stage of our product development.

After analyzing what’s under the hood in competitors’ products, we’re able to create our own features backlog to get a helicopter view of all things that must be done in development.

It’s design time! We prototype the main screens and their possible variants of them to select the most fitting vector for our design system. Few options of design are going through our targeted audience reviews to check if it’s clear and understandable for them.

It is an excellent visual tool that describes the value proposition of product, its structure, customers, and the financial part of business. This diagram allows you to document the entire shape of your business model.

Vodafone was pleased with the prototype and business model that we developed for their project. We found a way to build a neobank that would land a telecommunications giant on a completely new market based on a tested and prototyped viable service. 

Final Thoughts: The Future of Neobanks

Traditional banks are already forced to respond to changes in customer behavior and compete now not only with each other but also with fintech companies. A neobank API is not burdened by a giant employee base and capital costs but is still able to increase its market share quickly.

The sooner you as a business owner realize the changes that are taking place and start building your own neobank, the more likely you will survive. The quicker you succeed in the digitalized world, the more opportunities consumers will receive. Build a neobank to offer your audience a better product at a better price. And for new entrepreneurs, all these trends serve as a great opportunity to start building the business of the future immediately.

The post Full Guide on How to Develop a Neobank App from Scratch in 2023 appeared first on Devlight.

About the client & the story behind them

Moneyveo is the biggest microcredit company in Ukraine. They are the main hero of today’s story — the client. Let’s take a closer look at them.

As stated above, Moneyveo is the absolute champion in the MFI\microcredit business in Ukraine. They are completely digital and online; there are no physical branches in Ukraine. But there are a lot of happy clients and loyal employees. The numbers will say it all:

• 44 million dollars — the amount of net income Moneyveo received during the first half of 2021 (the most among competitors) 
• 1.4 million dollars in net profit
• More than 700 employees
• 1.8 Ukrainians regularly use their services
• 6 million loans issued in the service
• 1 billion dollars issued in total

It is a large, modern, and properly organized company. This allowed them to think about diversification and new directions of development.  

Why did the client decide to develop the solution?

Moneyveo’s business model was really effective. In fact, it was one of the fastest-growing on the market. But over time, the pace of growth slowed down, and by August/September 2021, Moneyveo realized that they had hit a glass ceiling. The volume of the market that they had didn’t allow for further expansion. The target audience had exhausted itself. It was no longer possible to grow at such rates as they grew before.

The time had come to look for new solutions. It might be a new business model or differentiation options that would give the business a new push for growth. They weren’t certain at the moment about the direction they were going to move. But they knew for sure that they had to act. 

The obvious decision for the client was to move further into fintech, a promising field in which they already had considerable experience. Their goal was namely to create a neobank that would touch a target audience that was opposite to the one they had at the time. These are customers with medium and high incomes. They also were interested in credit products, like the main target audience of Moneyveo, but on completely different terms.

The client set himself the task of expanding his business, diversifying his product portfolio, and entering a new market.

Pros and cons of current solution

Moneyveo’s main products were loans. It was the main pro of the solution that brought it a big success. But over time, it exhausted itself and didn’t allow for further scaling of the business and the target audience. And thus, it went from being a pro to a con.

The cost of attracting clients was higher than the commission income from one client. And overall, the country’s population was decreasing. The target audience was running out and there were no signs of an influx of new people into the market. There was no one to work with for new clients further. 

Moneyveo is a fully profitable company without creditors, credits, or obligations. It meant that they had a sufficiently powerful resource to experiment, invest in new niches and try to enter new markets. And they decided to stop at neobank.

Users behavior and new trends

Neobank has been the main fintech trend since 2016. The business model and product are clear, and the client understands what it is and how to use it. The cost of attracting a customer is not too high, and the business model calculation is usually very accurate. Especially in Moneyveo ‘s case, as they had a lot of data: how much it would cost to acquire a user, how long they would stay, how much revenue the product would generate, etc.

For the end client, it is a clear, obvious, and expected product, which is why Moneyveo’s team chose neobank and not some other financial product.

Competitive landscape

The neobank market in Ukraine was very competitive at the time (as it is now). But let’s look at the landscape of 2021, when the project was at its very start. 

We had an absolute neobank leader in Ukraine — Monobank. At the time, they had 4 million customers (25% of the market). PrivatBank is a classic player, but they also had their digital solution and had 4 to 6 million customers according to various estimates. There also were products with much smaller volumes: Neobank from Concordbank, Sportbank, Todobank, Izibank, Sense Bank, and Alfa Bank.

Competition in the market was very high. And the market was divided by business models. Some projects were based on lendings and installments (and Moneyveo was among them). They knew their target audience as well as their target audience knew them. Other players were projects with mixed business models such as PrivatBank or AlfaBank. Keeping this image in mind, we understood that in order to enter the market, it was necessary to find a sophisticated solution. On the one hand, it had to be logical, on the other hand, it had to be truly necessary for the user.

Another important point is that the Ukrainian banking market was definitely driven by loans. This was the most obvious and understandable business model — free issuing of a bank card and free issuing of a credit limit with a grace period. This is how it works: you provide a credit limit, and when a person leaves the grace period, they start consistently paying interest for using the credit limit. This results in consistent income from the client to the bank.

Moneyveo had a large credit system and an understanding of how it all worked. They made a key bet on large credit limits with a long grace period as the main competitive advantage, and it has borne fruit. But in order to maintain the growth rates of the company, they had to start looking for new directions of development.

Request to Devlight

How did they come up with the idea?

Our cooperation with Moneyveo started long before this project. We’ve been working with them since 2017 by providing different consultations on the implementation of mobile applications, improving the performance of their mobile applications, implementing design solutions, and more.

The Board of Directors had approved the idea of creating a neobank as a way of diversifying business in August 2021. Right after that, the Moneyveo team contacted us as they knew that we were one of the leaders in neobank development in Ukraine. At first, they requested a series of consultations. At this stage, we conducted a market survey and user profiling for them. This allowed us to take a more focused look at the market opportunities, possibilities for Moneyveo in that market, and, of course, Ukrainian users. The survey helped us to better understand their problems, values, motivations, how the competitors’ products satisfied all these areas, and what can we do to find and occupy our own niche.

Exact request

The plan was to first conduct a series of consultations, and if they proved we share the same values, worldview, and level of competence, and saw one common goal in this project, we would move forward to the next stage, which the discovery stage. This part includes market research, research of customers and competitors, and the development of a future digital product based on the unique value proposition. Other tasks of this stage include:

• making a high-fidelity black-white prototype
• testing prototypes on the target audience in order to make sure we are making the most accurate, understandable, and usable interface for the client, before the development stage
• creating a technical task based on it, which will include the technical and functional parts for the creation of the product

After the discovery stage, the UI and development stage starts.

Customer thoughts and references 

A CPO, a CBDO, and two project managers — representatives of Moneyveo who walked with us all the way, side by side. They had extensive banking expertise and a a strong background in banking, with a deep understanding of the banking market, methodology of the products, and an understanding of the correct formation of certain bank operations and transactions.

What they also had was a vision and a broad understanding of what the new product should be. They needed our expertise to sharpen the blurred vision and combine it with their thoughts and desires and the results of our research. As a result, we had a clear understanding of what the product should be, its user interface, and a mobile application.

The client was actively involved at all stages: whether it was the creation of a value proposition, some discussion, or research — we always worked as one team.

Moneyveo’s team saw the competitiveness of the market as one of the biggest challenges in this project. We could not afford to enter the market with a mediocre product. A product that wouldn’t fully cover the needs of the user. It’s everything or nothing. The expectations of the end user are very high. The market has set a very high bar of competition.

How do we make the right first impression on our end user? All our client’s thoughts and all our work revolved around this question. We cannot create a second impression, and trying to change a bad first impression would be expensive.

How do we make such a great first impression that the client wants to stay with us? This was a key question for the client. It requires strength in many important areas: UX, functionality, product content, and the entire customer experience.

Expectation

Product performance

Moneyveo’s expectations were more than clear. Their goal was for their new neobank to become the #2 neobank in 3 years in Ukraine. We started our work in August 2021, so the plan was to become the #2 neobank in Ukraine in August 2024. 

2.5-3 million active customers were expected, which would determine the product’s performance. The project was expected to profit within 2-2.5 years at most. The business model built by the client’s team confirmed that with the basic scenario that we pictured for ourselves,  2-2.5 years would be an adequate period for payback.

Deadlines

We planned to finish the active session of market research and discovery in 6 months, so the deadline was the middle of February 2022. Our team fully met this deadline. By that time, Moneyveo already had all the artifacts and materials that were agreed upon.

By August 2022, the product was expected to be released.

Devlight’s service

Ownership and living role in conducting discovery and building product value and the product functionality model — this was our service. As well as adaptation of all the artifacts that we got as a result of research to a mobile application by creating interfaces ad designs. At the other stages, our responsibilities would be completely leading the development of the mobile platform on both iOS and Android. And after that further work with the product and development of the product after the release.

Our solution

Research & preparation. Series of meetings with client

An important phase of the preparation for the project was to immerse in the client’s thoughts. To do so, we held 5-6 online meetings with the client to understand their technologies and business model better. It is very important for us to understand that we share the same picture with our clients: how we see competitors, how we evaluate the players and their competitive advantages, how we understand what drives the competition in the market, and how we should develop our product. It is crucial for further success to be on the same page with the client at the very beginning of the cooperation. As such, the final goal of all these consultations and preparatory talks was to develop a common vision of everything: from potential user profiles to product expectations. 

What the clients’ team did at this stage: 

• Commissioned an in-depth socio-demographic study of Ukrainian bank users in 2021, which gave us an understanding of the market. 

This research allowed us to see a detailed list of the costs of Ukrainian bank users, to understand from which banks to which banks users transfer money, and why exactly they choose those banks. We spent 2 meetings discussing this research.

What we did at this stage:

• Prepared a trend canvas synchronization exercise. Before starting our cooperation with the Moneyveo team, we did a synchronization exercise that we do with all clients — we filled out the trend canvas in order to understand the banking market in Ukraine better, synchronize our values, mission, and drivers of the future project, determine the market context in which the future product should exist, and also generate the first ideas.

• Prepared a large study of competitors on the market. Used the Porter Diamond methodology. This allowed us to analyze the market for existing players as well as their strengths and weaknesses.
• Analyzed new players who are just entering the market, their market entry strategies, their expectations about the strengths and weaknesses of competitors, and about the target audience.
• Analyzed substitute products that could replace our product, and other services that users could start using instead of using neobanks.
• Analyzed the competitive forces that exist on the market now and that is driving the market further.

A series of these preparatory synchronizing meetings allowed us to develop a common vision of the current market situation, competitors, and market drivers. With this, we could start moving further to in-depth research. After we were immersed in the thoughts of the client, it was time to immerse in the thoughts of users. 

Solution hypothesis and internal discussions 

Meetings with the Moneyveo team gave us a better understanding of their technology, product, capabilities, vision, and passion. With our extensive experience working with Ukrainian non-banks and our understanding of the market, we realized that we can reach our final goal. We can create a product that is functional and necessary to the user, which would be based on the lending model, but we called it «advanced lending».

The Ukrainian banking market of 2021 was entirely credit oriented.

As of 2021, the Ukrainian market was entirely loan oriented. Users willingly took loans for everything from personal expenses and small household purchases to cars and businesses. Loans were part of the culture. It was normal, an everyday phenomenon that customers were well familiar with.

But offers that existed on the market didn’t satisfy users enough. They were unpersonalized and monolithic. We realized that we can play a competitive fight exactly on this weakness. Depending on their credit score, we can provide various users with flexible credit limits, or large limits with a long grace period. For example, a large credit limit of UAH 100,000 for 100 days was absolutely unique on the market. We would be able to acheive this quite easily due to Moneyveo’s extensive expertise in the credit business.

The ability to effectively work with credit scoring and possible risks was one of the strongest points of Moneyveo’s business model. These strengths allowed us to create a hypothesis of a flexible product credit engine, around which we could build a defining competitive advantage for the product.

Of course, this hypothesis had to be tested on the key target audience. But at this stage, we were already quite sure that it would become the basis of our proposal.

Proposal structure and final discussion with the client 

Before our final handshake, we prepared the proposal for the client. Here’s what it looked like:

• It was assumed that we could build a highly competitive product that the user needed based on working with credit limits.
• We acknowledged that we had to enter the market with a highly functional product, talking about added functionality, as well as the list of functions and its usability. We aimed for absolute leadership in the field. We also understood that we had to release a product that the client would love at first sight. For that, we had to research the best practices of neobanking in Ukraine and the whole world, and then implement these practices in our product.
• We planned to conduct at least 100 in-depth interviews to identify those micro needs of users who are not satisfied with other products. The market is mature and competitive, and the competitors have professional teams that know their job. There were no obvious insights in the market, like some feature that would attract the audience of, for example, gamers, because no one else has it. All products on the market were functional, although they differed slightly in depth, in functionality, and in usability. But, as stated above, the market was at a stage where super-obvious deep insights weren’t easy to find. So we realized that the key to success could be working with micro needs: an additional tick or dot when transferring, shortening some flow by one click, and adding some functionality for small groups. Due to the closure of a large number of such micro needs, and due to usability, we would be able to create a highly competitive product,and thus, be remembered as a necessary and valuable product in the users’ eyes.

The client was completely satisfied with our proposal and strategy, and after our commercial proposal and deadline were accepted, we began our work.

The process of value creation

The process of value creation in this project consisted of a lot of stages. Let’s start with the first one:

Deep competitors research

We already had some info about the market and competitors, but it was time to go even deeper. We analyzed the competitors according to the following criteria:

• analysis of banking products, tariffs, commissions, cashback, and loyalty programs
• a separate comparison of credit products
• the speed of opening an account and the speed of issuing a card to start using
• analysis of the application functionality and its usability 
• analysis of the user acquisition model, retention model, LTV model, and awareness model
• analysis of amount of app downloads, reviews, and other product metrics that we could get using Data.io

Thorough research on the target audience from open market sources, determining users’ needs, pains, motivations, and expectations regarding the future digital product

• Profiling users according to socio-demographic characteristics
• Describing specific customer jobs for each individual profile
• Determining which services currently close specific user jobs
• Analyzing user comments on PlayMarket, AppStore, Facebook, Twitter, and Instagram pages of competitors
• Analyzing the reasons for opening an additional account in another bank
• Study and description of criteria for choosing a new bank (rational and emotional)
• Creating custom hypotheses based on the information obtained above
• Preliminary prioritization of target groups

Conducting exactly 100 in-depth interviews to test, refute, or confirm user hypotheses

• Sorting user hypotheses
• Creating a survey script for in-depth interviews with respondents
• Forming the respondent base
• Choosing a reward for interviewers for conducting an in-depth interview
• Scripting and systematization of data, and development of an analytical note based on surveys

Ideation session, systematization of ideas that we received based on research and in-depth interviews

Through the entire process of interaction and research, some ideas were created by respondents and the team; ideas that came from analyzing all the available sources on the internet. And we collected each of these ideas right away. 

We put them on the dashboard, and it already had more than 170 ideas even before the start of the ideation sessions. Our task was to consider each idea, decide if we want to place them in the product, and come up with more ideas if needed. Each idea went through the process of discussion, brainstorming, analysis, and understanding of its feasibility in the future product. This process reduced the final number of ideas to 25, which would be the basis of the product.

Creating a product’s value proposition and testing the value proposition on respondents

All the preparatory work was completed. The moment had come to carry out the most important exercise — creating a product’s value proposition.

As a basis, we took the Alexander Osterwalder framework. It is a strategic management tool to design, test, build, and manage products and services. Before the start of the workshop, our team completely filled the right side of the value proposition canvas, using the ideas we selected during the ideation session. The results of in-depth user interviews and competitor analysis were included here as well.

The workshop with the client’s team lasted 5 hours. During this time, we managed to generate enough ideas for services, pain relievers, and gain creators to say that the product’s value proposition was ready.

Creation of user stories based on the value proposition, formation of the product backlog

This stage included forming the product backlog based on VPC, sorting using the KANO model, and determining the volume of the first release, and after that, the approval of the first release by the client team.

Since the value proposition of the product was formed, we approved the list of services, functionality, pain relievers, and gain creators of our future neobank. The time had come to form a product backlog and move toward its detailed study.

This work took about 2 weeks. As a result, we received about 640 lines of the product backlog, which had to be sorted to understand its impact on the future product.

When performing such work, we at Devlight usually use the Kanno model, which allows us to analyze each functionality for its purpose in the future digital product:

• must-have functionality
• delighters
• wow effect

After several conversations with the client’s team, we decided on the scope of the first release. It was based on the team’s budget and deadline expectations. Thus, we approved the scope of the first release of the product.

After that, we moved to write user stories and acceptance criteria for each element of the backlog. At Devlight, this type of work is typically done by a team of business analysts, project managers, and quality assurance engineers.

Here is the result of this stage of work:

All work on gathering all the requirements for the future digital product was done by that time, and the phase of active prototyping and usability testing began.

During the prototyping phase, we use the Figma environment, where we create high-fidelity black and white prototypes. It allows us to fully reproduce the user experience of the future digital product and the user’s interaction with it. Each element of the backlog is also worked on in detail by a team of product designers, project managers, and business analysts to create the best possible digital user experience.

At this stage, we usually receive 400-500 black-and-white screens. We combine them into an interactive clickable prototype, and later use them for usability tests with the target audience.

Before the start of the development, we use Maze to fully test the entire interface for user understanding of:

• customer flow
• interface buttons, actions, pop-ups
• general interface convenience

And thus, we get an understanding of how obvious and user-friendly our digital product will be. As a rule, usability testing gives us 3-4 iterations of changes. It allows us to be completely sure that the target audience will perceive our future digital product positively.

At this stage, the black-and-white prototype was agreed upon and approved by the client, and we moved forward to preparing for the engineering work, namely, designing the API methods using a UX-driven ADI design approach. For this, we use the Postman environment. The result of this work gives the entire team comprehensive information about which integrations should be carried out and which data points from the client side should be created for product functionality.

The API project serves as the basis for the entire product development cycle, which is why we at Devlight are extremely careful and meticulous about this stage.

Limitations and challenges

Problem we faced us during the process

The process of research, interaction, and discovery went quite smoothly, as the workflow was built right both from our side and from the side of the client. With a client who showed tolerance and patience, we kept a good work pace. This allowed us to complete the preparatory phase and the discovery phase without any problems.

Biggest challenge we met while creating the solution

Working with respondents was the biggest challenge for us, as it was the largest piece of work. We conducted the exact amount of 100 interviews, but after it was done, we still had work to do: we needed to transcribe them, systematize, and find insights.

Respondents had great motivation to be genuinely involved in the interviewing process as they were rewarded for it with a gift certificate. As respondents were happy to share as much of their thoughts and insights as possible, the interviews lasted a bit longer than we expected. Each interview lasted approximately 1.5 hours.

How we solved the problem

Our decision was to connect additional interviewers to complete the process on time. There were so many materials that we received after this phase that our whole team had to work for several weeks without days off to analyze them and find the insights they needed. But after weeks of hard work, we managed to meet our deadliness and get the results we needed from this stage.

Results and Outcomes 

Solution launch and going live

The deadline for discovery was February 20, 2022. On February 10, the entire process was completed, and the results of it were handed over to the client for approval. 

We presented the results of the discovery to the Moneyveo team with pride. The management board of Moneyveo felt our excitement and was sure that this product had to be built and released. All doubts that existed before that disappeared. We saw the green light in front of us, and we were ready to move forward to the next stage.

Meanwhile, the branding agency was finalizing the work on the development of the name, visuals, key message, and color guideline for the product. We were waiting for the results of their work to start the UI design phase.

But then the war started.

Compliance with expectations

The entire process of interaction with the client was as productive and efficient as possible. We didn’t have any tension, except, maybe, during the interview conducting phase. Due to long inverviews with the respondents, we had to spend twice as much time as was expected. But we still managed to meet the deadline. A little (or not so little) overtime works wonders.

Clients’ feedback

The management board was impressed by our presentation; they stated that the results exceeded their expectations and they recognize the overdelivery we’ve made. They also stated that they wanted to continue moving forward in this project with us. 

We exceeded expectations the most at the prototyping stage. Two experienced designers worked on it, and every time we presented the result, the client was shocked by how well everything worked out.

Some market numbers, proofs, and results

• More than 100 interviews were conducted with users
• The total duration of the interviews was 120 hours
• 250 customer hypotheses were developed
• At the ideation session, we worked on more than 400 different ideas
• Less than 10% of them were chosen to be the basis of the product
• 660 screens for the prototype were developed

Conclusions 

Market & users insights

The market was and still is very competitive, but we managed to find a unique competitive advantage and the niche for our successful work in the market. That was our most important and biggest insight.

After close work with the target audience, we clearly understood that despite there being a lot of different products in the market, clients were still ready to consider and try our future product. Flexible crediting and management of their own credit mechanism is what gave us users’ attention and interest.

What we’ve learned from this project? 

• Satisfying a large number of users’ micro needs can become the driving force of a product.
• Customer interviews should be planned to take at least an hour, preferably for an hour and a half.

How our skills shaped after the case 

Retrospective

We realized that customer interviews require more time. Customers genuinely wanted to share; they were involved in the process and wanted to be a part of the product creation. 

That is why, when working on our next banking projects, we now invest more time in this phase.

The post App Development for the Biggest Microloan Organization appeared first on Devlight.

About the client & story behind

Nolimi bank is a financial startup that was founded as a pet project by one of the successful Ukrainian entrepreneurs in 2015.

The founder didn’t look like a person who is about to start his way into a new digital business — he came from a classic business realm, not attached to digital in any way. His past business was a large seaport in Odesa with a fleet of 50 merchant ships, a ship repair plant, and a cruising agency. The total number of employees of the holding amounted to more than 50,000 people, and the entire business was valued at more than 1 billion USD. Everything was great, so why even move?

But our client had something more than drive for profit. He had a vision. Back in 2015, he had a vision of how fintech would rule the world, conquering it and producing some of the most valuable companies on the planet. Looking at that from 2022, we can say he was right.

Why client decided to develop the solution?

Pros and cons of the current solution

The final aim of our client was to create the first financial marketplace with banking services at its heart in Ukraine and then expand it to the whole of Europe. Sounds a little bit boring for today, right? But back in 2015 traditional banking was irrevocably outdated and needed to be renovated. Our client saw it like that: traditional banks will be replaced by banks on smartphones. This trend was just emerging in Europe and no one singled it out, so our client designated it as «Antibank». This word contained the main reference point of the vision.

Here are some of the basic principles of the project concept:

• digital-first banking without physical branches
• the best possible user experience through web and mobile banking is the main emphasis
• replacing strict and somewhat boring usual banking tone of voice with a new, fancy and friendly one
• 24/7 online support department
• customer-centric approach

Reading this in 2022 seems obvious and not at all innovative. This is the basis, the necessary minimum that we require from banks nowadays. But in 2015, this concept sounded like a breakthrough in the market. 

Users’ behavior and new trends

Clients of the banks weren’t very picky back in 2015. They were more than willing to visit branches on the regular basis, deal with constant paperwork, and if any problem would arise, spend up to 20 minutes at the call center waiting queue until the available operator shows up. And no one of the clients considered all stated above as problems. They were o-k-a-y with that. 

Some of the banks had digital banking. It was a big advantage for clients but it didn’t have many features. Mobile banking applications at the time were mainly able to make P2P transfers, top up mobile and maybe make IBAN payments of a certain type. There was no FaceId technology available for mass users, and contactless payments such as Apple Pay or GooglePay were not supported by most banks.

However, there was more and more integration of smartphones into people’s lives each day. And as its penetration into society was growing at a frantic pace, it was obvious to leaders of the industry that completely remote digital-first banking is the future that will come within the next few years. 

Competitive landscape

International market research has allowed us to highlight some of the strongest competitors:

• British market — Atom, Monzo, Moneese
• European market — N26, Revolut
• russian market — Rocket bank, Tinkoff bank

The domestic Ukrainian market research didn’t show us signs of strong competition in the digital banking segment. With 37 million citizens and 28 million bank clients, it had almost no signs of digitalization. Instead of moving toward the future, Ukrainian banks at that time moved towards the past: they increased resources that were spent on the expansion of the physical network of branches and mass card issuing and distributing among the population. PrivatBank was the absolute leader of the industry, having more than 18 million clients but a very UX-poor mobile application.

At the end of this market research, it was clear, that we were at the origins of a wide and deep blue ocean. And next steps for us would be the correct prediction of customer behavior patterns, consumption, and how to satisfy them.

Request to Devlight

How they came up with the idea?

The client had no experience in launching all-digital businesses. And that was the main problem.

Lack of experience was resulting in struggling with product building and launching roadmap development. The project team went through a lot of consultations: with market experts, brand experts, UI/UX specialists, marketing specialists, etc. They did help them, but not enough. The client still didn’t have a detailed picture of the result they want to have by the end. There was no roadmap, no step-by-step plan of product launching, and no features and modules it should consist of. So this unresolved problems and unclear tasks lay on Devlight shoulders. 

Exact request

April 2016. That’s when the project operational team contacted us with the request of creating a simple mobile app for payments. According to their plan, during 1,5-2 years this simple app should evaluate into a full-fledged mobile bank. At the moment the in-house team consists of mobile developers and UX/UI specialists. But the results of their work didn’t succeed to meet the expectations.

«Can you take over the entire process of project development, both in the mobile app and the web banking app, so that we could have our first version released by the beginning of 2017?», — that was the exact request of the project team to Devlight.   

What did they have at the moment? Almost nothing. No clear technical task, no requirements regarding the product concept, no understanding of the value product will bring to the end user, no deadlines, and understanding of how an app would integrate into the bank system. All they had was:

• professional operational team with extensive banking experience
• budget for product implementation
• vision, and a strong desire to bring the product to life

Customer thoughts and references 

One of the main clients’ references was russian Rocket Bank. At the time it was one of the most progressive banking in Europe. This reference gave us an understanding of end expectations. But it didn’t give us a clear picture of what the MVP should look like with its features. In our discussions with the client, we were torn between two concepts: the first was a PSP product without a personal card, and the second one was a full-fledged neobank with both web and mobile versions.

Another difficulty was that open API banking was just emerging in Ukraine. You couldn’t outsource digital banking services to any bank in Ukraine back in 2016. There just was no full-fledged BaaS project with a bunch of integrations in its architecture that would make it possible to acquire, pay for third-party services, take a loan or authorize remotely. Each integration had to be embedded separately and manually. And for each, there would be an added cost. It would increase greatly both the cost of the project and the future costs of services, which put the entire business model of the bank under attack.

But here comes the plot twist. In the middle of our negotiation with the client, our hero emerged — one of the international banks represented in Ukraine. It stated that it sees its future as an Open API banking, and promised to implement the technical task provided by the client by mid-2017. 

This moment erased the last doubts and became the starting point of our cooperation.

Expectation

Product performance

Deep banking experience was our clients’ main strength. This expertise complemented us perfectly and during the time of our cooperation, we managed to learn a lot of useful information and industry insights from them.

Through the research, analysis, and negotiation process we discovered an important measure: project BEP will come after 250,000 sold cards with an average usage volume of 18,000-22,000 USD per year.

These figures became a great motivation for our team as we realized the product should contain enough well-developed functionality for the client to have an urge to spend his money within our ecosystem.

Deadlines

The first-discussed deadline was early 2017. At that time public release should have been conducted. That meant we had around 8 months to develop a product.

But time frames for integration from the partner bank made significant adjustments to our plans. We realized we weren’t able to have a bank card as a product even in the middle of 2017. And this influenced all our plans and expectations a lot. 

Budget

The budget wasn’t the main factor from the beginning of our acquaintanceship with the projects team. It wasn’t the aspect that would determine whether we could collaborate or not. But we still had to make it as coherent as possible in the first stages.

As we didn’t get the clear technical task or PRD (product requirements document), we developed a kind of it by ourselves. It resulted in a simple WBS document with a general assessment of epics and modules, that we developed using the three-point method. This made us understand the approximate budget numbers better, while clearly acknowledging that the final budget for the product development and launching will appear much later when the Discovery session will show its results. 

Devlight’s service

As time went by and our cooperation got closer, our role in this project transformed from a simple mobile application contractor to a full-fledged partner. Our responsibilities had expanded to defining the product vision and forming the roadmap while being responsible for the design, development, and quality of the product.

And the client operational team had the chance to focus more on legal, financial, and banking issues to ensure a successful product launch.

So, after our final handshake, we got to work and distributed our responsibilities like that:

Our solution 

Research & preparation. Series of meetings with the client

At the beginning of summer 2016, we discussed all the important questions, shook hands, and got to work. Our first big task was to develop a specific product roadmap for the next 3 years. As we went through that process, we were guided by the following criteria:

• the first version of the product should be released no later than the end of January 2017
• there will be no bank card in the first version since the integration with the processing of the partner’s bank will not take place yet
• the back office processes were too undeveloped to launch to a large audience
• most product hypotheses were untested on the target audience

We received clear user personas from the marketing partner of the project. And with them, we received a list of untested hypotheses. So working with them both became task #1 for the Devlight product team at the first stage of the project.

Together with the client team, we conducted some user studies and surveys to find out what the potential target audience thinks of the so-called «Antibank» product, and what are their main headaches and motivations. 

Through the survey we discovered that: 

• clients were not ready to entrust their finances to a newly created service without a recognizable brand
• as banks weren’t digitalized at all at the time and users didn’t have experience with it, they had great difficulties in using their bank cards online
• the client wanted to use several cards from different banks at the same time, without choosing just one bank
• web-oriented PSP services were more convenient for the user than a mobile application

The further we progressed, the more obvious the conclusions became.

To make sure we chose the right path, we conducted a deep competitive research of similar projects in Europe and Ukraine according to the following parameters:

• analysis of the declared value proposition and analysis of brand values
• analysis of features quantity and quality 
• competitors’ heuristic design audit
• analysis of user journeys and feedback on the Customer Experience of users
• analysis of competitive advantages of projects

Solution hypothesis and internal discussions 

As a result of competitors’ research and surveys we received the following hypotheses:

• Since the integration with the partner bank will be ready only after a year, there is a sense to launch the first version of the product in the form of a Web App – PSP service with the ability to use cards of different banks
• the product value of the MVP version is the largest number of online financial services in one resource. All insurance providers, all utility payment providers, telecom and internet companies, schools, kindergartens, online games, and even government services are on one platform.
• the mobile application will be efficient when there are at least 100,000 active users on the platform and integration with a partner bank is implemented
• the product should solve most of the current customer pain points associated with the daily use of the bank

Proposal structure and Final discussion with the client 

The next step was to finalize the vision of the product development process. To do that, three meetings with the client were held. And here’s what we got in our product roadmap as a summary:

Stage 1: Build a web PSP for rapid market entry and testing of the processes and team. Carrying out most of the integrations with partners who provide financial services.

Stage 2: Testing of the integration with the bank, issuing a test bank card

Stage 3: Building a full-fledged neobank mobile application with its own card inside the product

Stage 4: Searching for a partner bank with a license that covers the countries of the European Union, and who may provide licenses for other countries in the future

Stage 5: Iterative-incremental product development process, with a focus on the mobile application.

Finally, we agreed on the strategic direction of development and were able to dive into the work on the actual digital product creation.

The process of value creation 

Creations of web solutions and used approaches

Right after proposal approval, we began with the implementation of the first stage of the product — the creation of a web app.

Here is what the process of web app development looked like:

1. Collecting and ordering all existing ideas through ideation sessions with the client.
2. Conducting 25 in-depth customer interviews to understand the current customer experience, their pains, and problems when using similar services.
3. Creation of the VPC, based on customer jobs, pains, and gains. Designing services that solve client problems and pains, as well as additional motivation to use the product.

1. The next step is designing a customer journey map. It helps thoroughly understand the customer’s journey throughout the service and the value of the product. Here we used the framework proposed by Alexander Osterwalder in his book [add description]
2. With a ready VPC, a list of services that we are planning to provide to a client, and a CJM, we started with forming a list of product requirements.
3. First, we systemized the backlog and brought it to a logical and orderly form. [add an image of the backlog, and add a story about filtering backlog using the Kano model]
4. Then we developed user stories and acceptance criteria for all the features. The whole team worked productively and precisely on the development of edge cases for each user story. It was crucial to consider every little point of this process.

Backlog is ready? Great. Now is the time to formulate business requirements for each user story and feature to which they belong.

Usually, we go with the following approach:

Each feature is being discussed in detail with the expert from the client side, we determine all possible states of each user story. Then, for a better understanding of features work within the system, we design the BPMN process for each user story.

After that, we work with each BPMN element to look for necessary data that will be received and sent during the interaction of the end user with the product. Once this work is completed, the technical team begins to design the system Data Flow diagram.

User interface development was the next step in the Nolimi bank project.

We usually use the three-stage approach to work with interfaces in the process of product development.

1. Design of black and white high fidelity prototypes
2. Usability tests of black-and-white high-fidelity prototypes with users carrying out. We do this to avoid the problem of a complex or incomprehensible interface for the client even before the start of work
3. Design system and UI product creation

Before moving forward, let’s look closer at the design system development. We needed to make the user experience of interacting with the system as uniform as possible, as we kept in mind that there will be a mobile app following the web version. That is why at the very beginning of the web solution development, we created a uniform design system that will be a solid base for all future additional apps, products, and services. 

And black and white prototypes were used for fast feedback receiving both from the client team and the end user. The process looks like this: the team of designers and business analytics conducts their own research and develops first sketches, that are based on user stories and BPMN which were developed in the previous stages. We work on the creation of high-fidelity wireframes using one-week sprints. At the end of each sprint, we have a team demo on Fridays, and the client takes part in them too. This allows us to get quick feedback and move faster. The VA team, which accompanies the process, moves one or two sprints earlier to prepare the necessary information and artifacts on time.

As soon as the prototypes are ready and approved by the client, we move to user testing. To do Nolimi bank user testing, we used the Maze service. Through the service, we can understand whether the prototype is simple, intuitive, and easy to use for the end user. To do so, we conduct 3-4 consecutive iterations of testing with 20-25 users until all edits are made and there are no more comments in the focus group. At this point, the prototype is ready, and we can move forward.

Above we talked about design system development. But we weren’t the only team that was engaged in the process. In the Nolimi bank case, the client hired an outsourced marketing agency that we worked closely together. Their team consisted of a digital marketer, a brand designer, a brand strategist, and a copywriter who was responsible for the tone of voice and all the texts of the platform.

As they did their part, we received from them the brand book and instructions for its implementation. And right away we began with the final design system creation and development of the final color screens of the web app.

The next stage of the development process — the project architecture design and its development plan — was within the scope of our client’s competencies. From our side, they needed the following requirements and wishes regarding the process:

1. UX-driven API design, based on our prototypes
2. The microservice architecture of the project with the principle of a thin client on the frontend and heavy logic on the backend
3. Using AWS as an infrastructure provider with mandatory use of Docker for virtual scaling of the system under load
4. Angular as a language for Web programming, Java as a language for backend systems

We prepared for the beginning of the project development stage for 3,5 months. We used the principle of two-week sprints during the development process, and it showed an excellent result.

Our development team consisted of:

• solution architect
• DevOps
• 2 Java Devs
• 2 Angular devs
• AQA + QA
• UX/UI designer for support purpose

4 months — that’s how long it took to develop the solution. And at the beginning of February 2018, the project was released.

A lot of testing: manual, loading, and security was carried out in the middle of January. We used previously prepared test cases and security checklists. As soon as we were in the green testing zone, the in-house team of marketers entered the game.  And traffic poured into the resource.

At this stage, our work was done. We took a 4-month pause until the beginning of the next stage which is mobile application development. But until then, we could breathe out and take some rest work on other projects. 

How did we come to a mobile application creation and what roadmap did we create for its development?

At the beginning of summer 2018, it was clear that our partner bank was ready with all the planned development it assigned for. It meant that we could start with the integration process for issuing our own plastic and virtual card.

Finally, it was time to create a mobile application.

At the very beginning of the development process we understood that to succeed mainly we needed to focus on three directions of work:

1. Study analytics and conduct CusDev of the current web solution, which at that time already had about 85,000 active users.
2. Conduct a VPC session for the mobile application.
3. Check all ARIs provided by the partner bank, conduct all defects tests and tests for compatibility with our system

The first two stages were our responsibility, and the last one was the responsibility of the on-site team.

We invited the client team to have a 5-day workshop with us. This work allowed us to determine the value proposition of the mobile application and to plan its launch.

The discovery part of the Nolimi bank development. How did we find the pains and solutions for the target audience?

Trend Canvas filling in was the first task for the client team as they arrived at our office. It’s a framework that allows teams to quickly synchronize with the external environment around the future product, review competitors, and ideas on the market, and define our focus.

In the process of Trend Canvas filling in and discussion we understood, that the previous concept is the right one and we should move in the direction of creating a full-fledged neobank.

Here are challenges that stood in our way at the moment: 

1. The client’s team did not have a sufficient liquidity pool and willingness to work in the credit business. It meant that there won’t be loans on our product. This forced us to look for an alternative business model for monetization.
2. The ARI methods of the partner bank were far from ideal, which meant the absence of 40% of the discussed functionality in the first releases of the application.
3. A large-scale release of the neobank Monobank was supposed to take place in Ukraine at the end of 2018. It created considerable competitive pressure on our team. (The release was successful and Monobank became the absolute leader in the Ukrainian market with more than 4 million customers on board)

A lot of creativity was required from us to bring enough value to customers from the very first release, thereby keeping the customer in our product.

The next day we started discussing the value proposition of the mobile app as well as determining which problems will have to be solved in the first release.

As was stated above, we used Osterwalder VPC while working on the project. Its beauty and specialty are that, if done right from the start, you can identify most customer problems and design services to solve them.

Before starting with VPC, we made a questionnaire with several questions, and after it was ready we made about 50 blitz calls to current customers of the web application to learn more about their experience, motivation, service problems, and expectations for new products and services. The majority of customers were satisfied with the service. They also were interested in the possibility of continuing to use it as a mobile application.

But they also outlined some problems:

1. The absence of the company’s mobile application, for quick and convenient use of the service on smartphones
2. The need to attach cards of other banks, and constantly go through the 3DS procedure during the payment process
3. High commissions due to the use of cards from other banks
4. No consolidated cost analytics or it was not convenient enough

After we carried out the survey and got all the needed information from customers, we structured this information and entered it into the appropriate part of Canvas for further processing.

Then we conducted a one-day VPC workshop and identified the value of our product as follows:

1. Neobank, with its own virtual and plastic card. Emphasis on convenience and the ability to pay for almost any services in the country, including most of the services provided
2. Ability to issue and delegate up to 4 prepaid cards to your relatives or other persons if necessary
3. Ability to add cards of other banks to the product by analogy with the web app, i.e. card wallet
4. Free basic card package and application.

Having approved the VPC with the client, we moved on to the next stages of discovery. They were similar to the stages of creating a web service. But let’s take a quick look at them:

• customer journey map design to determine all the nuances of the customer’s journey during service receipt
• backlog formation, sorting, and prioritization for the first release
• development of user stories and acceptance criteria
• BPMN design, collection of all business requirements for all states of functionality in a mobile application
• design and usability test of a black and white prototype of the application
• designing an API based on a black and white prototype of the application in the Postman API product
• creating an application design using a ready-made design system
• determination of the technological stack of the mobile application, selection of the marketing stack of third-party services for integration into the application
• finalization of the technical task for product implementation
• product development, testing, and launch

And the last few important points that required special attention throughout the process were:

1. Mobile application analytics
2. Customer journey map orchestration system in a mobile application
3. Technological stack and other useful services
4. Project management approach

Results and Outcomes 

Process of solution launch and going live

In the spring of 2019 testing of all system and services were completed and we were ready for public release. The marketing team did a lot of work to prepare for the project release and the start of communication. They developed highly effective funnels for attracting customers to the mobile application and designed an excellent onboarding session for new users.

The result spoke for itself. On the first day of launch, 2,000 cards were opened and we received more than 6,800 product downloads. We expected a large flow of customers, but not that big. So, half of the client’s team worked in two shifts during the first three weeks. This critical situation forced them to acquire a new qualification as they had to combine their core functions with the functions of call center operators, thereby helping users throughout their product journey.

After three weeks of frantic work, more support managers arrived and the flow of clients stabilized. Finally, it’s time to breathe a sigh of relief. And open the champagne bottles

Conclusions

Retrospective

Analyzing the Nolimi bank case from today’s perspective, we can outline the weakest link in the chain — the partner bank. It constantly refined/reworked the API methods on the go, often without informing us at all. It was the biggest problem that accompanied us during the entire process of developing the mobile application.

The bank had a lot of limitations that influenced our work. They created limitations in the design of UX that deprived us of the opportunity to create the best possible user experience for our users.

Final results

As always, we made conclusions out of the story of difficulties working with the partner bank. And not only conclusions but also a plan on how to avoid such problems in the future. We developed a clear system of constant automatic monitoring of all API methods, versioning of documentation, and updating of automatic smoke tests for keeping the service working correctly. It was important for us to work at the SLA level of 99.99, which forced the team to instantly respond to any change on the part of the bank. We have successfully scaled this experience to all our other projects so far.

At the end of 2020, the entire project was sold to a large European banking group to increase its presence in the growing Ukrainian market. 220,000 cards were active in the project at the time of sale. And after the sale features like credit and installment were added to the service, which opened new prospects for product development.

For three years we’ve been interacting with the clients’ team. We managed to build a strong relationship where all the problems were solved through joint discussion and joint development of a solution. The client team was satisfied with working with us, as well as we were satisfied with working on the project, despite many difficulties and limitations. And, since the project is fully monetized, we consider the result more than successful  

The post App Development for Digital-First Banking appeared first on Devlight.

The invention of the Internet and spreading it among the masses has become a big leap all over the world, but especially in the world of business. Small businesses that decades ago couldn’t dream of expanding over the borders of their local market now can right away go selling stuff to people from another corner of the world. And the PSP is one of the things that make it available.

Through the years online payments are becoming more and more convenient for people. 

Statista states, that during 2020 only 3% of customers in Spain chose to use cash on delivery. 98% of users prefer different types of online and card payments. 

There are plenty of options one can choose: paying via debit card, credit card, e-wallet, cash card, etc. And one of the most important aspects of online payments, no matter what type of them you are using, is security. This is a vital part of any modern business that sells products or services. If you can’t guarantee the security and quality of your payments how can you ensure the quality and efficiency of your products or services? Payment is one of the first experiences your customer goes through before using the product and it is the essential part of the experience, that can ruin the impression in case something goes wrong. And in case everything goes smooth at this stage, it is much easier to retain current customers and acquire new ones. 

So, to be short, the more convenient and versatile ways of online payments you suggest, the more satisfied your customer gets, and the more customers will choose to stick with you. But maintaining a wide variety of payments can cost a lot including all kinds of support, infrastructure building, security issues, and labor. That`s where PSPs (Payment Service Providers) are entering the game. Let’s take a closer look at them, what they are, what they do, and how can they make your business perform better. 

What is a Payment Service Provider? 

A Payment Service Provider (PSP) is described as a third-party company that enables business owners to accept online payments securely.  Businesses that accept all types of online payments can be PSP users: from credit and debit cards to bank transfers and e-wallets. PSPs are responsible for assuring a safe and secure way of money transfer from the buyer to the seller. 

Each of these businesses could of course use a usual merchant account but that would be much more expensive due to constant support costs and other fees. While a merchant account would be separate for each merchant individual, PSPs act like an umbrella for numerous merchants. They all become a part of one single account, with a subaccount for each individual customer. As they all share one account, they also share all the costs and fees and it makes PSP much cheaper, while security and risk management remain at a high level.

Once you decide to stick with PSP and sign up for cooperation, you no longer need to worry about online payment transactions. All the responsibility is on the PSP side. From the moment the user initiates the payment to the moment the business gets its money through the payment gateway to their bank account — everything is secure and safe that is guaranteed by the Payment Service Provider. They connect a broad range of acquiring banks with multiple cards and payment networks, to get the smoothest and most secure payment experience for both sides.

To see how PSP works we will need to go through an example of a basic online transaction. We will start from its initiation and end with funds being transferred to the business merchant account. 

How does the PSP work?

It all starts with one button — PAY.

The client enters his card details and presses the button, and after that PSP enters the room.

Verification

PSP verifies customer card details, sends transaction requests to the payment gateway, and checks if the card has sufficient money on the balance to pay for the purchase. The payment processor is the tool that helps PSP go through this stage.

Initiation

Customer card details are verified and PSP knows he has a sufficient amount of funds on his account? Great. Now PSP initiates the transfer of funds from the customers’ bank to businesses acquiring bank onto the merchant account.

Notification

Once the payment is approved by both customer’s issuing bank and acquiring bank, each side will be notified about the completed payment.

But there can be problems in this flow. Card details could be invalid or fund insufficient. In these cases, PSP will terminate the payment and act as described above — send a status notification to both sides about failed payment. 

Each this step will not only facilitate the payment process but also ensure the safety and security of the transaction of funds. There are a lot more advantages of PSP than that, and we can dive deeper into them soon. 

Types of PSPs

There are three different types of PSP. They differ in fees, contracts, and payouts but still cat quite alike. Let’s take a closer look at them and discover which one suits better for which kind of merchant.

Distributing PSPs

Distributing PSPs build connections to variable payment methods and maintain them. Thus, they remove technical obstacles for e-commerce merchants. If you will choose this type of PSP, your business will have the facility to accept several types of payment methods.

Distributing PSPs will suit those merchants who want to offer their customers only a few payment options. 

Collecting PSPs

In a world where there would be no PSP, merchants had to receive a separate settlement for each payment method they accept, and each separate settlement would consume sufficient time and cost. Having a lot of separate settlements would be unprofitable and inefficient for a business. Thankfully we live in a world with collecting PSPs that can combine all payments from divergent payment methods into one settlement, reducing time and money consuming and simplifying payment reconciliation. 

Collecting PSPs are a great choice for businesses that offer a lot of online payment methods. 

Aggregating PSPs

Aggregating PSPs deviate a little bit from collectors and distributors in a different way. What differentiates them from collectors is the ability to contract with the payment companies on behalf of numerous merchants. And from distributors, they differ because of their ability to collect funds on their own internal account, power to settle the merchant’s bank account, and negotiate the terms of the payment. 

Aggregating PSPs would be favored by merchants who prefer not to contract with banks, financial institutions, and other companies that provide online payment methods.

Payment Service Providers vs Merchant Service Providers

One of the main differences between Payment Service Provider and Merchant Account Provider comes to risk. Let’s see how and why it works.

Both these tools have one aim — they make it possible for businesses to accept online payments. But merchant account provider creates a separate account for each merchant, while PSP collects hundreds of thousands of merchants under one account.

In providing online payment services there always is some risk. In the case of merchant account providers this risk is concentrated on one merchant — thus to be approved and start getting paid to this account may take days or weeks, as the vetting process is thorough and businesses individual risk is estimated. With PSP that collects a lot of merchants under one «umbrella», this risk on the approving stage spreads among all the merchants and thereby approval process becomes simple and almost instant. And the cost of the account maintenance is also divided among all the users and that makes PSP much more affordable, especially for small businesses and startups than maintaining a single merchant account. 

But, while approval goes smoothly and fast, some other problems can be raised with PSP later on. A designated merchant account is being verified with details and it results in a stable account that won’t be disturbed by any extreme circumstances. At that time, as PSP holds a collective risk of several merchants, they can from time to time terminate, hold or freeze accounts they decide are somehow risky. 

Another considerable difference between PSPs and merchant account providers are types of solutions they provide. PSPs usually have on their list turnkey solutions that have a set price and a set range of features. On the other hand, merchant accounts are more flexible and provide customizable solutions that may be changed according to businesses’ needs. 

Pros of PSP

There are a lot of pros as well as cons of using PSP for your online business. Let’s go through each one of them:

Flexibility

This one continues the topic of the differences between Payment Service Providers and merchant service providers and flexibility is the reason why one would choose the first over the second. Payment Service Providers are a lot more flexible than merchant accounts. They allow you to change the services and tools you use and explore different payment methods and options. That’s what you wouldn’t be able to do in case you choose to stick with the merchant service provider. Flexibility and availability to change decisions when needed are crucial to small businesses and those who are just at their start. 

Low cost

As we already discovered, PSP collects a lot of merchants under one account, that is what’s making it much more affordable. While being not at all an expensive tool without a monthly fee and a required minimum for transactions made monthly, PSP provides a lot of different tools, payment security, and other advantages. That is a perfect decision to choose for businesses that are growing. 

Easy and fast start

If you want to start fast Payment Service Providers are definitely a choice. Just fill in the application and you can start accepting payments for your acquiring bank account almost instantaneously. There is nothing to be intimidated with at the first stage: no contracts, underwriting processes, and no need to wait a few weeks until you are approved and go through vetting processes. Nothing can guarantee as easy and smooth start as PSPs can guarantee today.

Fraud prevention

Setting up the PSP makes your business comply with Payment Card Industry Data Security Standards (PCI DSS). The PCI DSS is vital for accepting online payments. 

What this compliance does is simply protects cardholder data and at the same time business data from fraud.

Also, PSP has safety limits on users’ accounts that can catch unusual transactions and deny them.

Multi-currency processing

PSP account allows accepting almost all kinds of currencies your clients might want to use while paying for your product. And Payment Service Providers work on staying abreast of new trends in the industry like new payment methods and multiple currencies and make them available for users as fast as possible. 

Accepting multiple online payment methods

Credit card and debit card, online banking and e-wallets, ACH payments, American Express, and more — all these payment methods are available via Payment Service Provider. You will have quick access to each of them as each account is already set up with all tools — you just need to choose from them what suits best for you. This is especially important for international businesses, that need to accept all types of payments that are popular in the most different and remotest corners of the world. 

Cons of PSP

Support

While merchant account providers are much more costly, they also provide a lot more support. With a Payment Service Provider, you don’t get as much attention as an individual user, as you share one account with a dozen other merchants.

Account stability

Once you’ve signed up for a PSP, you have full access to their merchant account. This means that you have to stick with the rules of the merchant account holder, acquiring banks and payment service providers. You are not obliged to be aware of those rules, but they do leave you with the necessity to process payments at the payment service provider’s discretion. This may cause problems with account stability as you process transactions via Payment Service Provider. 

Final thoughts

It is obvious that Payment Service Providers facilitate payment processing, provides a wide range of different payment methods and multiple currencies, and don’t take a big monthly fee for it. But indirect benefits that PSP may bring to your business are less obvious. It is the ability to shift focus from taking care of payment processing to issues with a bigger perspective: achieve business goals, scale, and drive sales. 

We recommend considering using PSPs first of all for small businesses. They get the most out of the advantages of PSP and, as they don’t have massive customer flow, don’t have to worry about disadvantages. You will be able to expand your business by accepting a big variety of payment methods like debit cards, credit cards, e-wallets, cash cards, and different types of currencies, allowing your customers to use the most convenient method and encouraging them to start a long-term relationship with you.

The post What is a PSP – all you need to know appeared first on Devlight.

Interest in fintech products emerged in 2014 when banks began to develop their own applications and modernize traditional services. Thus, running a project discovery for a fintech app has been a popular request ever since. Now every third client of the bank uses at least one financial application, which means fintech apps are slowly but surely flooding the market. 

In parallel, fintech startups with fresh ideas began to appear. They worked faster than conservative bankers, were not afraid to experiment with money, and were closer to the people. This is how the market for financial and technological applications and services, including mobile ones, began to grow. Development companies, in their turn, are here to help promising apps carry out discovery phases.

What Is a Project Discovery Phase?

In order to estimate the cost of the project and make a commercial offer to the client, it is necessary to conduct a discovery phase or a complete analysis of all aspects of the project implementation — from the emergence of an idea and business concept to the technical implementation of the expected product. This approach allows the protection of the product from unplanned costs and facilitates and clearly defines the working conditions of the team.

A preliminary analysis of the needs of the client, the market, competitors, target audience, the upcoming scope of work, and resources is carried out in any area where the contractor wants to fulfill their obligations to the client in a quality manner. However, running out a discovery phase for a fintech app is especially vital since this sphere often involves great budgets and high stakes.

Product discovery means:

• discussion of the project’s existing business processes or the concept of a future project, expectations, and wishes regarding the deadlines;
• definition of the target audience;
• competitive market analysis (direct and indirect competitors);
• formulating solutions to business problems;
• determination of the scope of work;
• setting deadlines and priorities based on the project complexity and market trends;
• schematic distribution of roles and appointment of specialists who should be involved in the process (cross-functional teams are often created).

The Purposes of the Discovery Phase of a Project

The discovery phase is the first and mandatory stage of development, where requirements are identified, and business goals are analyzed in order to make a proposal for technical implementation, fix the project boundaries and estimate the cost of development. The fintech discovery phase aims to tackle the next purposes:

• Make a development roadmap

In the final result, we will deal with a clear deal a clear technical task with a description of the key functionality of the future product, which makes planning the development phase itself easier and clearer.

You will receive a complete project schedule with milestones, deliverables, and deadlines. The Software Requirements Specification (SRS) and mockups developed during the product discovery process in fintech can be used to find additional investors.

• Improve communication

Even a good presentation cannot guarantee that you have chosen the right company. Regular communication at this stage allows you to evaluate the real team effort, your experience, and your approach to the project and establish two-way trust. Before starting development, you can use the discovery process results with other IT vendors.

• Save resources such as time and money

The main value is the expertise and experience the development company shares since they allow it to make the job faster. For instance, Devlight has been working in this field for years and knows how to help you perform a discovery. We are capable of conducting a product discovery process for a fintech app resulting in valuable insights that you will not find with a simple search on the Internet. These are live examples and real-life experiences. We share them so that you don’t have to dedicate years to learning everything from scratch.

• Idea validation

You will have an opportunity to check your actions with the guide and apply different product discovery techniques to implement changes at an early stage in case anything needs improvement. Thus, through discovery, you can validate your product ideas.

• Complex analysis and data gathering

The discovery phase helps both the fintech app development team and the client find an answer to the principal question: which problems of future users can our solution address? Modern product discovery is about gathering and analyzing requirements, systematizing all the input information, and lots of planning that eventually clarify the big picture of the whole project and eliminates any early-stage uncertainty.

Finally, the discovery phase is fundamental for the future success of your product development in fintech. Devlight will teach you how to conduct the product discovery phase in such a way as to avoid typical mistakes that often occur at the initial stage (we provide smart methodology/guidelines). 

Our team believes in a properly conducted fintech discovery process as a way to save your resources such as time and money with “tips and hacks” content-type: we always provide a separate block with the solution space clarifying the main points of what you will have to do. With no lengthy instructions or unclear directions, we get down to business.

Briefly on Fintech

The fintech industry means financial companies and banks’ operation, applying innovative developments, as well as the cooperation of traditional financial institutions with technology companies. Modernization or cooperation is needed primarily in order to remain competitive with other participants in the financial market.

In the business environment, an opinion has formed that technology start-ups can replace financial institutions. On the other hand, economists consider this thesis doubtful because startups are not inclined to engage in lending. Rather, these parties will enter into more partnership agreements, which will allow them to gain people’s attention. After all, fintech users are already used to the fact that all actions can be performed automatically by pressing one button.

The partnership of two previously independent areas is truly mutually beneficial. Financiers and bankers have client bases, access to large capital, the ability to work in a highly regulated legislative area. But for the same reasons, internal innovation and rapid testing of new solutions is difficult for them. High-tech enterprises need access to this customer base, and in return they are ready to offer their ability to create value-added services that inspire users. This is how fintech has emerged.

Major Challenges While Conducting Project Discovery in Fintech

According to Forbes, fintech investments in 2021 reached $91.5 billion, nearly double what they were in 2020. The global fintech market is growing rapidly. It is believed that by 2028 the fintech return volume will reach 16652.68 billion dollars, which is 2.5 times more than now. For comparison, in 2021, the fintech market was worth $6588.78 billion at a Compound Annual Growth Rate of 13.9%. In 2021, 64.6% of US citizens used online banking, according to Statista, and this percentage is predicted to rise. These numbers not only excite but put pressure on young fintech enthusiasts. What challenges should you be ready for when entering the fintech development niche?

• Creating a bank from scratch vs. finding a partner bank among existing ones

Digital banks, a classic fintech app example, do not use offline branch departments for customer service. They are available exclusively online via:

1. Having a financial license and independently providing financial services.
2. Directly cooperating with traditional banks to provide remote financial services.

The new model is designed for a user looking for a simple and affordable way to manage their money. It must be understood that such banks do not give loans, which means they do not take risks, and this allows them to reduce the cost of creating reserves. No need for an office either. This choice between these two models determines the API you will use for further integration.

• Issuing licenses

If your app operates on the basis of an existing bank, you will share their license.  It’s good when everything you need is already there. Otherwise, a license must be obtained since it will determine the product’s earning models, legal activity, and future scaling. For instance, you will need a license for charging commissions from transactions, subscriptions to premium accounts, and commissions from third-party services.

• Finding a KYC provider

The KYC procedure (deciphered as “know your customer”) obliges all fintech institutions to verify the identity of each client before the person can conduct any financial transactions. This protects companies from the risk of dealing with fraudsters and ensures the safety of customer assets. Once upon a time, this was only the internal policy of each company, but for about 5 years, KYC has been established as a clear legal practice. Thus, it is vitally important to choose a reliable KYC provider. This stage of the product discovery process for a fintech app determines your app’s security from the beginning. The way of client registration depends on this.

• Legal activity clarifications

Many modern fintech apps operate without a banking license, which is why they are not subject to the law. They act like virtual shells that complement offline banks and financial institutions with features that less advanced and flexible competitors do not have. While this has been the main advantage of fintech apps, it is necessary to find out under which regulatory and legal documents the potential application falls. For example, if the application collects users’ personal data and stores it, the startup is subject to GDPR requirements.

Will Skipping Project Discovery for the Fintech App Save You Time and Money?

Even if you have a great idea but don’t have a fintech app target audience or don’t meet their needs, you won’t have a successful business. To avoid this, you need to study the market, find out who your competitors are, analyze their products and determine your target user identity before hopping into development. For a small project, this might take approximately one to two weeks; for a larger one, it will take about two months of work.

The discovery phase and customer research can seem overwhelming in terms of time and resources. Still, they allow the team to determine project timelines and budgets, specify end-product requirements, identify end-user needs, and get feedback from them about the product. The more preliminary preparation is carried out before the start of product development, the more understandable and predictable will be the product strategy.

The product discovery for a fintech app allows the client to:

• more accurately determine the essence of an idea or project based on a real analysis of the market and the pain points of the target audience;
• identify some aspects of the project that were not taken into account initially;
• establish the basis for cross-functional collaboration and clarify the requirements for future team members;
• understand fintech target customer expectations and concerns based on competitor product research and user stories;
• get an expert assessment of the project and information on how to implement it properly;
• consider alternative solutions and technologies that will help make the project a reality;
• minimize and optimize costs;
• draw up clear terms of reference with the definition of the exact deadlines and budget for the project;
• understand how the performer meets the expectations, and make the final decision on the entire process of further cooperation.

As you can see, all of these benefits are worth investing more money and time into the product discovery process. Prepare and study the market instead of mapping your road straight into practice. This approach will save you time in the next stages and prevent the product from failure or unnecessary touch-ups.  

When Should You Start the Discovery Project Management?

Having a detailed “estimate” of the product idea, it will be easier for you to take the next steps — for example, find an investor or defend the project in front of the manager, select the necessary specialists, etc. In addition, it is difficult to determine the development timeline and the required team composition without an assessment. Thus, product discovery is a valuable preparatory step before launching any new app, service, or additional features. 

New Product Development

The fintech product development process is not something that can go naturally. Stated workflows and scenarios have already been invented. If you want to choose the best development scenario and properly assess the possible risks, you need to carry out the preparation stage before launching any product. 

It starts with the team deciding on the format and duration of sprints (meetings) and selecting tools for structuring and reporting on the work done. For example, tasks can be distributed and stored in a cloud-based Trello project management software. Diagrams, graphs, maps, and diagrams can be created in Microsoft Visio Drawing or draw.io. Prototypes and mockups are easy to create in Sketch, NinjaMock, or Axure.

Upgrading an Existing Product

Things get easier if you already have a stable team involved in product development. The discovery phase, in this case, will take less time and involve just a slight change in the teamwork routine. However, you should always carry out a discovery before launching new features to your project. Understand that you will practically deal with a new product after an upgrade. New target audiences or market competitors open up after you implement the changes. Thus, you should be able to predict them.

After all, the discovery process for a fintech product helps to prevent the need to make costly additional edits and changes in the course of work. It establishes a balance between the new business goals of the client and the interests of the end users of the upgraded product.

New Business Opportunities

Even when developing a minimum viable product, you must plan product development several years in advance. This allows you to consider all the business goals, requirements, and restrictions and lay a flexible product architecture. In this matter, the discovery phase for a fintech app is not only needed before broadening your product horizons, but any project architecture should already take into account the possibility of scaling the product and increasing the load.

Software Discovery Phase Team: Its Roles and Responsibilities

To ensure the accuracy of calculations and anticipate risks, companies tend to assemble a team of experts from several departments. Often this is an analyst, designer, and experienced developer — involving team members with narrow expertise is great for building high-load solutions. The product discovery process for a fintech app helps you determine which specialists you will need and their responsibilities.

After meeting with the client and clarifying their expectations, the PM assembles a team that will be involved in the project and decides what the fintech product development discovery phase will consist of, and who will play what role in it.

Business Analyst

A business analyst and consultant performs user experience analysis and potential customer interviews. Based on the results of the survey, they compile a BPMN diagram detailing the requirements for product development.

Product requirements are formed based on user stories and hypotheses associated with them. BA makes up a map or plan of steps that users and project employees take when performing certain manipulations with the product. All actions are recorded in small and sequential blocks. All participants in future conversations, meetings, or interviews should feel it during the fintech product development.

UI/UX Designer

A UX designer is involved in the work to visualize the look of the future project and get it approved by the client. This specialist creates a clickable prototype to test interaction methods and simulate user experience. All interactions are modeled as close as possible to what the final product will have, helping product teams decide on feature improvement. Professional design thinking is needed for this.

An interactive prototype is also created to conduct product discovery. This helps a client demonstrate a business project to investors, get feedback from end users or a focus group, and test a real user experience before starting development.

Product Manager

The project/product manager finds the best ideas for a company’s business, in line with what a user would expect from the service, and executes them in the best possible way.

The project/product manager leads the discovery phase, so they should possess a business, technical, and design thinking. Product discovery plays a vital role in understanding your product context and building the right strategy for it. This phase is more than essential. The better you know your end users (≠ clients), their needs, and their contexts, the more relevant you will be in the solutions you will build for them.

Tech Lead or a Solution Architect

The solutions architect has the role of designing, explaining, and implementing solutions adapted to the company’s specific problems. This specialist builds complex offers, conducts usability testing, and advises clients on transforming information systems. They must study the technical feasibility and risks before proposing solutions.

In a constantly changing technological context and business space, companies must ensure that their information systems are kept up to date to meet new requirements. This digital transformation requires specific expertise and practices to keep the company at the forefront of quality product delivery:

1. Analyze the project environment and its issues. Tech Leads manage the entire project and take care of the cost of the solutions. 
2. Define a trajectory of solutions adapted to the company. The Solution Architect must then ensure that the system they offer meets the product discovery process expectations of the company.
3. Comply with constraints. The Solutions Architect must therefore know how to optimize the budget allocated to the project to provide as many ideas as possible, taking into account technological and managerial constraints.

How We Conduct the Discovery Phase for Fintech at Devlight?

The fintech app product discovery work begins with the collection of requirements for the product. It’s good if the client has terms of reference (TOR), a specification, or at least a brief description of the idea, based on which we can make a list of requirements (UserStory) for the minimum viable product, according to which the development expenses will already be calculated.

However, there are not always formulated requirements and wishes. Thus, a discovery process for a fintech app aims to find out how much the development will cost and last (and whether it is worth developing the product at all). It happens that a client only has an idea for a future business (not a “product,” but a “business”). There are no technical specifications and no clear requirements. There is not even an understanding of where to start — no dedicated MVP exists. 

In this case, project/product managers need to conduct analytics before preparing technical specifications or drawing prototypes — the first stages (sprints) of product management. For instance, startups often seek to reduce the time and cost of analytics. Then, our product team helps them visualize, estimate the top-level architecture, and determine which functions can and should be implemented immediately and in the future. 

Below we will consider the main qualitative research stages and artifacts that the client and we will receive as a result of these studies. The steps can be mandatory or optional, depending on the level of detail of the concept and the type of project: for example, in B2C, drawing screens of a future application is welcome to evaluate the UX and help to impress future investors with the idea.

Phase 1: Product’s Value Creating

The starting point of the project life cycle is not planning but initiation. At this fintech product discovery stage, the project has not yet been confirmed. The client and the product team should review it in general terms and evaluate the perspective. First of all, you need to understand whether it is worth taking on it. To do this, you need to define the following.

Trend Canvas

The trend canvas is the new standard when it comes to supporting companies and organizations in dealing with trends systemically. As a tool for innovation teams, managers and economists, the trend canvas creates a holistic perspective of the future — and thus helps to assess trends and their impact.

With the trend canvas, trends are understood holistically and translated for your company context. It is a simple product management framework for dealing with complex relationships and a tool for understanding organizational potential and risks. It helps to answer these central questions:

• How are individual trends changing the reality of people’s lives?
• What effects do trends have on society?
• How are trends changing the economy and your market?
• How do I adjust my organization and processes to remain future-proof?
• What new products do people need based on potential client feedback?

Key business ideas

This stage is similar to the analytics stage but with a lower level of detail. Examples of business ideas: what problems does the business solutions and how does it benefit its users? Business ideas are closely connected with defining the problem space.

For example, ordering online using a shopping cart instead of sending a Viber message. Online payment, not a transfer to a card through a bank application. As a result of this stage, a client receives a summary table of all orders and clear information about their users, admin panel, the number of product, and their management.

Customer journey map

Using available customer feedback or introducing the product idea to focus groups, we collect data that helps us understand how users will get in touch with our product. Of course, it is preferred that this journey consists of as few steps as possible, which will mean our product is within easy functional reach for the customers: it is simple, effective, popular, and deals with their pain points in the most convenient way.

This user research data is arranged in the form of a simple diagram (the so-called “map”) that illustrates the stages of getting acquainted with the product, choosing to use it, getting back to it, or recommending it to others.

Value proposition canvas

A value proposition canvas is a tool that creators and businesses can use to visualize, design, and refine how to create value for their users during product delivery. It ensures that the services offered to meet the concrete needs of customers and users.

After conducting user research, we specify users’ expectations and prevent the client from getting lost on less demanded features/products. Finally, we materialize the value proposition canvas in a dual representation: the profile of the target users on the one hand and the value proposition on the other.

Phase 2: Requirement Gathering & Collecting

This fintech discovery part can be called the research phase. It is the collection of information about the idea, the formalization of product requirements, the verification of business hypotheses, the formalization of the solution, problem space, and then the cost estimate for both the initial version (MVP) and further development.

Backlog creating

At this stage, product teams are working on all the requirements for the MVP with the expectation of further product development. As a rule (especially when evaluating large projects), clients prioritize creating a User Story as the main way to divide the development into stages and assess each stage separately. At the same time, MVP is the highest priority.

Job & user stories creating

If we are analyzing a process automation project, then a detailed “as is” User Story (US) helps to identify bottlenecks (for example, steps on which product teams spend a lot of time or make mistakes) and suggest their corrections and automation.

BPMN modeling 

From the point of view of tools, it is very convenient to model the future process in BPMN notation, but it is not always immediately clear to the client, so the model has to be simplified when reviewed with the client. In general, you can use any visual models where the sequence of steps is easily traced. The main thing is that the model fixes the future process and is unambiguously readable by you and the client.

Business tasks describing

During this discovery phase, we discuss the process that needs to be automated or improved. You can learn a lot about your client by discussing the current process. Especially when people begin to contradict each other or get distracted from the course of the discussion, and go into details that only they understand. 

PRD completing

PRD (Product Requirements Document) is a description that includes all the requirements for a specific product and reflects how the product will look and how it will work. The requirements in such a document reflect the client’s vision and expectations for the product.

Phase 3: High-Fidelity Prototyping Creating & Testing

Now it’s time to discuss with the team a specific action plan for the visual implementation of the project. Even if the client can’t wait to get started, we don’t recommend rushing without having created a quality prototype. Effective applied and tangible planning can prevent many of the root causes of project failure. 

Figma hi-fi prototype creating

If the prototype was explicitly written as an artifact for the product discovery process, then it is prepared by UX specialists in cooperation with a business analyst. In this case, we are talking about well-designed high-fidelity prototypes, often clickable, that help you catch all errors in the scripts before submitting mockups to development.

User flows mapping

To determine how the user will interact with the interface of the new product, a User Flow is created in the form of schematically depicted screens of the software solution and transitions between them. Thus, user behavior scenarios based on proposed solutions are designed through visual prototypes of the interface.

Clickable prototype creating

The wireframe is the blueprint that indicates where the main elements of your app are in the US and the transitions between screens. Wireframe models offer a user’s journey, given user behavior patterns. The approved frames will form the basis of the final design. 

Clickable prototype real-time testing

The prototypes undergo several testing rounds, depending on the project’s complexity. Testing prototypes will greatly facilitate the coordination of requirements and the estimation of labor costs for the development phase. The potential customer feedback determines the success of the prototype in this case.

Iteration changes

Backlog management, clarification of requirements with the client (remotely), documentation, clarification of requirements for the team, conducting product demonstrations based on the results — all those iterations are continuously accompanying the product prototype. Those are hundreds of testing rounds that allow you to receive validated ideas and implement final improvements.

Phase 4: Product’s Software Integrations Plan Creating

The idea of a proper discovery phase is that the client receives a mini-analytics of the future application in a short time (2-4 weeks to 2-4 months for big projects). Based on these data, it is already possible to make an assessment, make a decision on further development, and if the project starts, these data will form the basis of the TOR. 

In its fourth stage, fintech product discovery is about technical specification of the future product’s plan and implementing the data mentioned earlier into a visual representation (diagrams and documentation).

Software architecture diagram

The concept we produce at Devlight necessarily includes a proposal for the top-level architecture of the IT product. This is a diagram of all system components, as well as internal or external services (for example, CRM client), with which we need to interact — here we determine what data we will exchange. 

Data flow diagram

The product discovery also includes compiling a preliminary logical data model: how many entities, what parameters, what data, and how much will be stored in the system. This is necessary to develop a viable solution for the product architecture and evaluate additional work, such as example, load testing. 

API method specificarion

An API stands for application programming interface and allows two applications to communicate with each other by making data or functionality of an existing application available for other applications to use. Here is what should make the notion of application programming interface clearer.

3d-party services integration model

Assembly design modes require developers to fully understand how to interact with other software and systems. The API is an optimal solution for communication between two systems and the web service facilitates the interactions between two machines. It helps to integrate outside services straight during the product discovery.

Full technical specification creating

The functional specification, together with the prototype, tells what elements the system interface consists of and how it works. It describes what is laborious, impossible, or pointless to show in a prototype. With its help, you can improve the proposed solutions, answer the questions of developers and other project participants, and fix the agreements on paper.

Phase 5: Closing Summary and Preparing Documentation

The result of the discovery phase is horizontal analytics that allows you to cover the entire project to its slightest details. It is an elaborated and detailed scope of tasks to carry out for the first MVP or for the entire product in general. The purpose of the study is to “probe” the hypotheses associated with the product, and its usability risk, and collect requirements to estimate the time and cost of development.

Tips For Conducting Project Discovery Stage for Fintech from Devlight Team

Before establishing the project schedule and diving into development, we recommend that you learn some tips that have been helping us and our clients for years. There is always room for improvement, especially as you gain experience together with Devlight. 

Conduct Project Vision Sessions

This product discovery step is quite optional. If you are at the idea stage, we recommend holding sessions on project vision, if you already have a ready-made concept and you have been on the market for a long time, we can move on to functional development. 

Form a Separate Brainstorm Team

The ideal option is to allocate a dedicated team from your side that can quickly and qualitatively give feedback (the team that is responsible for making a decision) so that all people who make decisions and are interested in it are involved from the client’s side. Here is how to do it:

• Interview existing employees about the current onboarding process.
• Find out the wishes of managers about what can be included in the process.
• Create an overall onboarding process (90-day plan).
• Record training videos for the employee dashboard to make the process as clear as possible.
• Draw up procedures and checklists for the onboarding process.

Technical Consulting

It is recommended that a technical person with all the solutions the client already has is involved in consultation from the client’s side. At this point, it’s time to choose the right infrastructure architecture and the right technologies for testing assumptions. In-depth technical consulting will make your product supportable and scalable. Any deviations or changes in the future may result in high costs, so value risk and invest in analytics at any stage.

Mix and Unite Ideas

Keep ideas in your head and think about the architecture for them. Introducing a survey tool to gather customer feedback at any stage of iteration changes is great for validating ideas in continuous learning. Implement new approaches and mix the experience advised by any employee since the same methodology won’t work for all products.

Keep Your Company’s Behavioral Pattern

Finally, keep a behavioral pattern for users when analyzing competitors. Uniqueness should not come from behavioral habits. Of course, users’ problems change. But clients may have gotten used to your way of approaching the solution. Stick to your brand way and develop the new product in the same framework.

How to Start the Discovery Phase of a Project in Software Development?

Quite easy. We’re ready to consult and guide you throughout product discovery. Devlight advises the clients to begin with The product discovery to ensure that the product development and launch will be smooth and fit within the estimated deadlines and budgets.

The life path of a project starts with the discovery phase and moves into the product delivery phase. As part of the discovery, we:

• explore the subject area;
• we study the client’s business processes;
• find out the customer’s expectations from the new product;
• identify bottlenecks;
• we formulate solutions to client’s problems at a high level;
• set priorities and form a backlog;
• compile a roadmap for the project.

There are initial conditions that will allow you to conduct fintech product discovery:

• client confidence;
• their desire to meet you halfway for a good result;
• the relative freedom of timing.

On the last point — everyone should have a shared understanding of approximately when the project should start, when to enter the peak, and when to end. 

Final Thoughts

The main condition for existence and competition in the financial and banking markets today is the ability to change quickly, as well as the use of new technologies that are interesting to the target audience. How do you validate the idea before plunging into the sea of coding and iterating changes? Run a project discovery for a fintech app.

Devlight is a mobile app development company operating since 2016 and creating world-class apps for industry leaders. With more than 35M app installs and 50+ projects under our belt, we are a dedicated team of development enthusiasts and scrupulous analytics that believe in the importance of fintech product discovery.

We kindly invite you to cooperate with us. What should you expect? In our methodology, we have phase 1, which targets creating value for the product by trend canvas, key business ideas, CMJ, and other deliverables. Devlight will share with you the methodology tested and validated dozens of times over six years. See the results by checking the companies we had worked with!

The post Full Guide on Running a Project Discovery Phase for a Fintech App 2023 appeared first on Devlight.

The last two years can without exaggeration be called turning points for the fintech app development sector. The main reason is global digitalization caused by COVID-19 and quarantine restrictions. The virtualization of fintech stimulated the emergence of new tools for the provision of financial services, the growing popularity of neobanking, cryptocurrencies, mobile applications, and innovative IT technologies. 

Devlight invites you to dive right into the world of fintech mobile application development to discover its latest trends, pitfalls, and tips together.

The State of Tech and Apps in the Finance Industry

Today we can notice a change in the positions of key fintech applications. Pandemic and social distancing forced the number of contactless and online payments to increase significantly, which has led to an aggravation of the issue of the cost of transactions. Of course, in the coming years, international payment systems will retain their key positions, and financial institutions will play an irreplaceable role in the legal part of this. However, business interest in alternative payment methods has increased. 

At the same time, during the pandemic, the popularity of electronic wallets and cryptocurrencies has increased, and many countries are moving towards the creation of digital currencies. What is more, the variety and convenience of fintech solutions forced banks and financial organizations to reconsider their attitude toward user experience. If earlier focused on their tasks, today the needs of users are at the forefront and are the driving force of fintech application development.

Customers no longer have the patience to fill out long forms or tolerate the tedious processes of downloading printing, and scanning documents. The higher the user awareness of existing fintech apps, the higher the demand, and, accordingly, the faster the pace of development. In 2019, the EY company conducted a study according to which the level of use of fintech solutions in countries around the world is 64%, and 3 out of 4 consumers use the services of fintech payment platforms.

Today these indicators should be even higher. 2022 user is more active and interested, but also demanding, which will significantly affect the market, its participants, regulation, and the versatility of products and services. Besides, we should not forget about Generations Z and Alpha, who are growing up and whose needs influence the formation of a significant part of app development trends — banking in messengers, voice assistants when using financial products, etc.

Recent events in the world have taught us to quickly find solutions to the most unexpected events. The ability to respond to tomorrow’s needs in connection with today’s events is a necessary skill in modern fintech application development.

Types of Apps in the Fintech Market With Best Examples on the Market

Fintech application development starts with defining your niche — the type of application you want to work with. Fintech has grown in scale, influence, and several players over recent years. Thus, fintech app development attracts billions in investment every year and has logically fallen apart into several specific categories. 

What do you need to know to build fintech apps? Remember that your product can either belong to one category or combine several characteristic features, forming something new and phenomenal for the market. We will now consider the types of apps you can develop with the help of the Devlight team.

Neobanking

Different applications allow access to the bank account via a completely dematerialized system and low fees. These meet important challenges in terms of reliability, simplicity, and security of information. Neobank is a mobile banking app that has no offline representations and functions solely in the virtual space.

The global mobile banking app trend remains relevant for highly digitalized countries and those only entering this exciting world. We should expect not only the appearance of new local players but also the merging of fintech companies around the world and their entering new markets.

The popularity of neobanking is explained by the convenience and quick response to the client’s request. In 2022, neobanks will continue to supplant traditional banking. Now individuals go to banks much less often than two years ago. Digital banks will actively expand their share in the fintech industry.

Examples: N26 (Germany) — neobank, Monobank (Ukraine) — neobank with hybrid budget-planning features.

Payments and Money Transfers

Apps for mobile payments process the transactions on the behalf of a company and perform the role of an intermediary between the credit card company and credit card holder. This approach enables everyone to carry out contactless payments for whatever they want wherever they want. Small businesses get the possibility to sell goods and services that customers can purchase in one click. Such fintech apps help all users receive payments for private needs and carry out transfers daily.

All reputable businesses need to implement payment processors on their platforms and apps. This not only helps to transfer money instantly but offers customers various payment options to choose from depending on the convenience, fee, and accessibility of each. Payment app development has a functional purpose but adds to the user experience and increases personalization. 

Examples: PayPal (USA) — payment processor, Square (US) — payment software and app for businesses, Wise (UK) — a fintech app for international transactions.

Crypto Wallet App

The digital wallet working principle stays the same independently from the currency you are using. When it comes to crypto, you can use your wallet to send, receive, buy, or exchange cryptocurrency. Your assets are encrypted with a special key and safely stored inside the app. Of course, such a high level of data protection requires fintech software development services to enable some distinctive features. Two-factor authentication and data encryption are a must. 

Storing crypto is similar to storing any other currency in mobile banking in a way that you get two keys: a public (it resembles a bank account number) and a private one (your password to access the account). Of course, you can only share the first one while the second should stay confidential. 

Thus, a wallet is a middleman between a blockchain and a customer. It doesn’t necessarily store your currency — it enables you to access it and remembers the private key for you so that you don’t have to enter it manually each time.

Examples: Coinbase (US) — great for beginners, Electrum (US) — Bitcoin-specific, Exodus (US) — altcoins.

Investing/Neo Trading

Such apps represent digital platforms democratizing investments for everyone. Trading fintech app development substitutes middlemen that you would need to invest in the past by introducing tools like pro-tips, AI advisers, and Robo-brokers. You can assess risks and make favorable predictions all by yourself. 

You receive obvious safe options for investing or can set your Robo-adviser to make automatic investments for you. Such apps can be super intuitive or offer pro tools for knowledgeable stock market players. Devlight, a mobile app development company, helps you introduce the functionality suitable for the audience you are targeting.

Examples: SoFi (USA) — simple all-in-one trading shop, T.D.Ameritrade (USA) — mobile stock trading app.

Insurance

Insurance financial technology (also called Insurtech) applications upgrade the insurance market by enabling policyholders to assess risks easier. Applying for process claims or coverage is a part of their purpose. You can now meet many modern apps focusing on insurtech devoted to specific roles: from car to property insurance. In general, they help you close safer deals.

Mobile app development in terms of insurtech broadens the fintech user coverage helping regular people apply for insurance for various purposes. No more long queues in the physical insurance company or paper mountains — some native apps let you receive a signed insurance certificate in a matter of 60 seconds.

Examples: Lemonade (USA) — makes everyday insurance claims easier by introducing AI and chatbots.

Loans

Mobile apps for taking apps speed up the lending procedure by connecting the borrower and the lender directly. They do the job for you and you just have to read all the conditions carefully and choose a favorable rate. What is more, they don’t focus just on massive financial institutions like credit unions or banks but often use P2P lending (peer-to-peer). It means you can take out a loan and earn on its interest.

P2P financial apps will typically ask you to provide proof of income or clear credit history. It means you are a reliable borrower and can claim an application for a fast loan. Then, lenders, who are registered in a separate version of the app, look through the applications and respond to them. Both parties can negotiate the terms directly and sign a virtual contract on favorable conditions. 

This fintech market innovation is profitable for all: the lender, the borrower, and the app itself. As a borrower, you can carry out financial transactions straight inside the app: withdraw money, top up your account, or repay the loan. However, the development process is quite tedious in terms of design, legal issues, and back end since you have to come up with two versions of the platform for different parties.

Examples: Brigit (USA) — membership-based loan app.

Budgeting and Financial Planning

Thanks to fintech, you can also take advantage of applications allowing you to abandon your good old Excel file to manage your budget. Thus, financial planning apps allow you in particular to:

• categorize your expenses;
• analyze your credit reports;
• better anticipate your budget;
• make transfers;
• visualize your savings using graphical tools.

Fintech sector aggregators have forged close and secure links with the historic banks. On the one hand, aggregators attract and improve user comfort, on the other hand, traditional banks allow full and fully secure access. The partnership is an element at the heart of the success of these new applications. Thus, if you develop a fintech app for budget planning, you should emphasize user-friendliness, simple account management, and exciting features.

Examples: Mint (USA) — a free app that syncs with all your income and expense sources on all mobile devices to analyze them for you, Goodbudget (USA) — great for planning future investments and expenses.

What to Look Out for Before Developing Fintech Applications

Technology does not stand still, as shown by fintech apps development, the sphere which has begun to challenge various traditional methods related to banking. More and more banks have become interested in integrating virtual operations with their regular offerings and want to build a fintech app. Therefore, it is not surprising that this demand requires and attracts a large number of developers.

If you are a fintech mobile app developer or a business owner, here are some simple and effective tips to keep you moving in the right direction towards building a successful fintech app without any confusion.

Take Care of Legal Compliance

The first thing you need to do before you build a fintech app is to study, analyze and, most importantly, understand fintech and its legal side. You can be tech-savvy and know everything about building apps but not the banking sector. You cannot be unambiguously good at everything, financial knowledge included. However, finances and banking services are the most important components of fintech, so you should study them.

The purpose of financial apps is to help users in investment, budget planning, or insurtech matters with maximum ease for them. Once you align your trajectory with the goals of your target audience, it will be easier for you to move forward. Thus, it is a great idea to introduce a business analyst, a financial consultant, and a lawyer to your development team.

Plan a Marketing Budget

Advertising costs can reach 100-150% of the total budget for building mobile apps (depending on the scale) and are fully justified. Advertising is a profitable investment that allows you to understand whether your idea is relatable to the market or such apps already exist. How do you plan to advertise your fintech startup and make people download the application after they find out about it? Having well-developed lead flows, the customer may not be afraid to release any Android app.

As for market testing, here some people prefer to save money. In any case, testing finished banking apps on real smartphone users is an essential step before entering the market. 

Plan a Development Budget

Many factors affect the cost of developing a finance app. What operating system is it being developed for — iPhones or Android? Perhaps it will be a web version? What tech stack is required to launch an investment app? What about user-friendly budgeting apps? The initial discussion stage should help you understand the needs of the project and the tools that are needed to develop a fintech that will work.

Each technology and tool embedded in an application requires market research. Will it bring maximum customer satisfaction? Is it needed for this specific project? Do you launch new fintech solutions that will take time and money to advertise? This increases the cost. 

In addition, integration with third-party resources, thorough data security, and connection banking services are often required. Of course, a detailed price can be estimated only after discussing the project. Then the tasks will become clear, and the time for their implementation as well.

To carry out technical testing, it is necessary to have devices with different versions of the operating system available or use universal platforms (for example, Device AnyWhere), which allow testing the application for all models of mobile devices of interest to the customer. Therefore, when deciding on a cross-platform app or a native app, make sure you understand the budget scale.

Think Through a Clear Concept

New technologies are considered to be the backbone of fintech applications. Various technologies that include artificial intelligence and blockchain are considered to be the demand of the times and you simply have to include them in the application in some form. Blockchain can help with record keeping and AI should be used for purposes like personalized recommendations, data analysis, customer interactions, etc. 

The market place you will launch your app will also define its final look. Apps for Google Play Market and AppStore have a different designs, functionality, and target audience. Of course, as a progressive app development company, Devlight will help you tackle all of these preparation stages before we move on to the next.

A Step-by-Step Guide to FinTech App Development

The process of mobile application development for the fintech industry requires integration with a large number of partners and compliance with clear regulatory norms. It may sound unrealistic, but the fact remains: Devlight is the professional helper that will take over the majority of functional procedures and liberate you from the burden of making everything yourself. Here we will share our experiences and tell how to gradually turn the dream of a fintech application into a full-fledged ready-made solution.

Step 1: Discovery Phase

At this stage, the main goal is to understand exactly what the customer needs and what competitive advantages the fintech product will have. Market research should be conducted. Business analysts are irreplaceable for this purpose.

Check our article how to conduct discovery phase in software development

Step 2: Design Phase

Design is what users interact with. It must be not only convenient but also attractive to the client. An important task for our team at this stage is to create a recognizable style of the application and come up with digital solutions that will make the design intuitive, which is vital for fintech software development.

Step 3: Development and Testing Phase

Architecture development and partner selection are part of developing an architectural proposal for every fintech solution. It usually includes a mobile app, a fintech platform that orchestrates third-party integrations, plugins, and a back-office dashboard that serves the needs of the treasurer, customer support team, and compliance committee.

The stage of active development ends with a minimum viable product that you put to the test. All parts of such an application should be developed simultaneously and with no loss of quality because you should conduct a real-life test then. It is worth noting the important role of our specialists at this stage: architects, backend and mobile fintech developers, DevOps, QA specialists, Delivery managers, and product owners.

Step 4: The App Launch and Maintenance Phase

At this point, the activities of any project change, as a division into pre-release and post-release life appears. The app starts working with real money from customers. The product team should constantly analyze user behavior and developers should learn about new age cases or problems that needed to be fixed. If machine learning is implemented in the app, then studying the lead behavior gets easier.

Step 5: Constant Product Improvement

Further development of the project consists of the introduction of new features. For example, within 6 months after the public release, you could be still developing an investment platform, mobile payments, bonds, supporting bank accounts, international transfers, and many other fintech mobile functionalities. Taking the strategic plans of the client company into account is vital after the release because this will greatly influence the architecture of the project.

Types of Revenue Streams in Fintech App

Choosing a monetization frame is vital as you build fintech apps. You can combine several types of them or launch a pro version of your existing app a few months afterward. However, the main service options will be determined by the type of app you build and should be taken into account during the fintech mobile app development. Let’s talk about the main revenue options that you can implement for your apps in the financial services industry.

Loans

If you develop a loan fintech mobile app, it is logical that your service will serve as an intermediary between the lender and clients. Thus, you should take a fair fee for your help in speeding up such a lengthy legal procedure. All parties to the transaction can then share some part of the profit with you.

Paid Features

Enriching your app with paid features is another way to benefit from knowledgeable users who want more. Studying your target market during the app development process will enable you to find out what competitive features will make users pay (advanced Robo-advisers, AI predictions, and credit history).

Fees

Fintech mobile apps offering payment and transaction services are in full right to take a small percentage of the fee for their part of the procedure. This monetization option can be applied to currency exchange apps, trading, and investment apps.

Subscription Model

For other apps, providing a monthly or a yearly subscription can be a great solution. Budget planning apps, for instance, often offer their users premium features and cloud services that they can access for a monthly payment. It is rare for investment apps to stick to such a model, but the Robinhood app is an exception. This fee-free trading app and crypto wallet benefit from charging their users a $5-worth subscription every month.

Selling Non-personalized Behaved Data

NPB data is used for ads and referrals. This option will work if you have a large user base that creates high customer flow and activity inside the app. Clicks, visits, and any interactions can be monetized. Of course, they won’t cover all the development and maintenance costs but can be a great bonus for a company.

Challenges in FinTech Product Development Processes

Fintech applications development has its pitfalls connected with the specifics of this fast-growing and rapidly changing market. Since fintech is still a young industry, legal issues and data security remain big issues. Besides, customers quickly get used to a high level of quality services and force fintech startups to come up with more and more advanced features. What other challenges will you meet? 

Challenge 1. Fit the Market — Competitive Landscape

Each task or each process requires separate tools that you need to combine in one fintech application, which will be developed specifically for the tasks of your business. Cross-platform development of a multitasking resource that will help you reach a new level is quite a high bar. However, this threshold is real for fintech.

When choosing a company to develop a fintech app, you need to pay attention to many factors so that the contractor does everything you need to do well and the final tool helps you grow and develop, not just exist on the market. After you set the initial goals high, you will also need to correspond to this level all the time. With Devlight, this task becomes easier as we work on the market analysis together.

Challenge 2. Barrier to Entry

Fintech app development is an expensive project since the stakes are high. Key market players invest millions into the design, user-friendliness, specialist recruitment process, and new data security protocols. We adhere to a reasonable price-quality ratio, we always warn customers about the cost and possible additional costs. You will find out the price for the fintech mobile app development as soon as you tell all the details about it and we agree on the structure and functionality of your fintech tool.

To start discussing your business models or clarify any details, just leave a request on the site, or contact us in any other way convenient for you. Our managers will advise you, answer all your questions and tell you what to do next.

Challenge 3. Cybersecurity and Data Protection

Given the specifics of the application, your users will be forced to trust you and provide all confidential and personal data. But if all of sudden such information is somehow leaked and falls into the hands of scammers, it is obvious that your application will come to an end. Especially when it comes to big data, encryption and protection require great attention and unusual solutions.

Since your application will interact with the main systems of the bank, you simply have to ensure security and follow all legal requirements. Therefore, you should devote enough time to developing a back-end system with firewalls and proxies.

After completion of work, you should check fintech apps’ security, up to load testing for hacker attacks with the aim of vulnerabilities in the system. This is the only way you will understand if your financial technology product is well protected or if it needs any improvements.

Challenge 4. User Retention Issues

From the push notifications design to insufficient load speed — you need to be prepared for the fact that users will speak out about your application with all sorts of suggestions or criticism. What is more, they will be completely right because they have their own opinion on this matter. Listen to them and be ready to implement all the features.

This will save you time since it will be enough to put in extra effort during the research of the application so that you can protect yourself from future redesigns. To avoid user dissatisfaction, make the application interface more comfortable for them. Make sure your development includes the right features like gradient color transitions, motion graphics, etc. And remember that users are constantly using app-based services to manage their financial data and control their debt situation, therefore, they need to trust you 100% and receive all the appropriate features from you that will make them stay.

Fintech Industry Trends in 2022

The year 2022 shed light on the shortcomings and gaps in the fintech industry that faced the market during the previous pandemic. This, in turn, actualized and accelerated the development of many trends that deepened and expanded against the background of the impending world crisis and political processes. Let’s talk about some obvious and less so ones of them.

Enabling Crypto to the Banking

As practice shows, people want to make money transfers through well-known banking and financial institutions with a history, because this creates a sense of security. After all, brands and personalities are important to people, and it is big companies that inspire trust. 

People will also want to borrow money easier and faster than banks do it, without proof of income, etc. Therefore, companies in the future need to provide an alternative and determine for themselves how their centralized services are better than decentralized ones. It is where crypto will come in handy.

The Dawning of the Super-Apps

Superapps help the user not only clear the phone’s memory of digital junk, but also make the use of digital services convenient: without switching from one program to another, use all the necessary services — buy plane tickets and book a hotel, and at the same time — a transfer from the airport. Choose dishes for dinner not from one, but several restaurants, pay a single invoice and control delivery. One place to check payroll, pay for the phone and buy an insurance policy. An you as an enterpreneur can benefit from one team composition for developing all those apps.

The birthplace of super apps is Southeast Asia. It all started 10 years ago in Indonesia with Gojek, a mobile call center for motorcycle taxis and courier services. After 5 years, 4 services were combined in this application: GoRide, GoSend, GoFood, and GoShop. Their purpose is easy to determine by their names. Today, two dozen services have been united under the roof of Gojek.

The most striking example of the Asian experience of creating super apps is, of course, WeChat. It has long ceased to be just a messenger and now has dozens of financial services integrated. The Chinese prefer to watch movies, call a taxi, order food without leaving one app. This year, it also added a map that shows places where cases of COVID-19 infection have been recorded. And, most importantly, with the help of WeChat you can pay for purchases.

This functionality is especially in demand among Asian financial institutions, despite the fact that many of their residents simply do not have bank accounts. WeChat has hundreds of millions of users and, along with AliPay, has become the backbone of the mobile app ecosystem for the Asian market. As a result, many stores, service providers and other businesses are readily developing their own applets (add-ons) for WeChat in order to sell their goods directly on it.

Embeded Solutions Will Become More Popular

Companies that choose to integrate financial products into their platforms will discover the best ways to add value to their customers. Embedded finance is based on building symbiotic relationships with all stakeholders — banks, non-financial companies and fintech companies.

Brands trust fintech companies or third-party service providers for building a fintech app on the brand’s app. Fintech companies and financial service providers hope that banks will provide accurate and fast responses to API calls to their databases, and banks hope that fintechs will not abuse their secure models and will not put them at risk by providing access to their database data.

Embedded finance, blockchain technology in particular, gives companies more control over the user experience and helps them meet all user needs, whether financial or not. Another noteworthy benefit of embedded finance is the reduction in product launch times, allowing startups to launch and scale products quickly and cost-effectively.

Demand for Dealmaking in Underdeveloped Regions

Fintech finally reaches underdeveloped regions as progressive countries are making their banking sphere futuristic and more complex. African, South Asian, and Latin countries are slowly entering the market. Thus, we are sure to see a tremendous breakthrough in terms of software products development from there and should get ready to deal with many frech industry players.

AI and Machine Learning

Today fintech companies are creating trends in the field of improving customer experience thanks to the introduction of machine learning and artificial intelligence technologies.

Machine learning and artificial intelligence are the basis for determining the client’s portrait and, accordingly, improving the user experience. They allow us to offer products and services relevant to the client’s needs. ML and AI will only consolidate their positions in the automation of security processes, targeting of financial products, communication, and improvement of customer experience.

Web3 WIll Get More Mainstream

Web3 though still at the development stage is a pretty revolutionary concept. As opposed to Web2, which unites centralized data storage platforms, Web3 will enable corporations and regular users to create anonymous platforms and acheive higher privacy rate. New technologies like blockchain and artificial intelligence will be a part of this process. Of course, these changes will concern the fintech development as well.

New solutions will be delivered starting with the year 2022 allowing banks to make their apps and services more accessible. P2P transactions will reach a whole new level of privacy. However, this switch will require a stable legislative base to prevent frauds and data leaks.

Open Banking

In 2007, the European Union passed the Payment Services Directive (PSD), a bill that created a single market for payments in the EU and stimulated the emergence of safer, more innovative payment services. PSD aims to make cross-border payments within the EU as easy, efficient and secure as payments within an EU member state. This has forever revolutinized the app development in the field.

A growing number of fintech companies led to a revision of the bill, a new Payment Services Directive (PSD2) was issued, which brought with it open banking. Open Banking is a set of solutions and processes that allows banks and third-party service providers to exchange financial information and services electronically with the permission of customers. 

The key thesis of PSD2 that is vital for building a fintech app : the bank is obliged to provide the payment service provider with financial information about the client and debit the money from his account without concluding a separate agreement. For the procedure, the order of the client is sufficient. 

The growth of open banking will definitely stimulate synergy between representatives of the financial market and attract investment in fintech products.

Why Hire Devlight as Your Financial Software Development Service Provider?

Properly selected fintech solutions will make life easier for all parties involved and make most processes automatic. Here are some aspects of our competitive advantage for your fintech app development:

Approach

We accompany our customers from the first iteration to the winning one, we make products from scratch so that you do not have to look for additional solutions and try to establish the interaction of many teams.

Devlight managers are always ready to help you and answer all your questions. During the entire interaction process, you will be assigned a personal manager who will guide you by the hand through the entire process. Our pricing policy is simple and transparent, you always know what you are paying for and at what stage the development of your fintech app is.

Values

The main thing for us is the result. We immerse ourselves in the business of our customers and do our best to ensure that our fintech apps bring maximum benefit to our partners.

Expertise

We have been working in the field of fintech mobile app development for a long time, we know well which solutions work and which ones are not worth wasting time on, how to choose the right technologies to produce a quality tool, and how to correctly implement solutions to avoid errors, shortcomings, and revisions. 

If we managed to reassure you, let us know if you are interested! Devlight will be glad to accompany you on your fintech mobile app development journey.

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