Diverse Ways of Accessing Data

Only some bank customers want to access their bank accounts in the same way. According to this infographic, everyone needs several essential pieces of technology in their tech survival kit. That includes flash drives, external drives, and SD card readers. These accessories can all be useful at various times, such as for keeping important information on or for emergencies. That brings us to the point that online banking isn’t something that should only be available when you’re in an urban zone with excellent network coverage. A digital bank also needs to be available when needed, no matter where the customer is. They need to offer the chance to access data offline securely and various ways of storing important information.

It should also be remembered that digital banks are for everyone, not just for technical experts. The data has to be presented in a way that anyone can understand. That explains the trend for simple banking apps that have a minimalist design. Still, augmented reality (AR) and virtual reality (VR) could perhaps be used in the future to give even more accessible and more intuitive ways of carrying out transactions, as we can see in these examples of AR technology in action. 

Use of Data and Customer History to Personalise the Banking Experience

We’re now so used to getting a personalized experience online that perhaps we barely notice it now. Still, if we think about it, many industries use our data and past interactions to customize the experience. That allows your streaming service to be pretty accurate with their suggestions about what might interest you and how online shopping sites can suggest the best products for our needs.

Artificial intelligence (AI) is making it easier to do this, and there’s no reason it can’t be used so that digital banking gives us the convenience that other industries have achieved. There are also banking platforms that use AI to automatically calculate how much a customer should be able to save each month or to decide how to move their funds across different accounts.

A truly digital bank can remind us when we reach a date when we usually pay a bill, or it can tell us how we can best use our money, taking into account what AI has calculated about us over time. It’s no wonder that 80% of banking are already aware of the possibilities offered by AI, as explained in this article on the subject.

These different areas will help digital banking become more valuable than it already is, allowing us to carry out our financial transactions in a way that suits every type of lifestyle and personality.

Accelerated by the pandemic and empowered by the latest technological advancements, it has quickly entered people’s lives and aligned with the demands of businesses. 

Statista predicts that the number of US citizens using digital banks will hit 216.8 million. Among the reasons why consumers turn to online banking are the ease of use, security, and extensive banking capabilities available within their favorite solutions. 

The concept of digital banking admits easy and swift money management, performing fund transfers and online transactions, payments automation, and more. Modern banking solutions provide the ability to operate with digital currencies, introduce asset management, and provide comprehensive lending options.

The reasons for developing digital banking platforms are many. Let’s figure out what the process of financial mobile app development is like and how to start an online bank.

A quick overview of the digital banking market

The market for FinTech services is growing exponentially, and it’s projected that by the end of 2022, more than 65 percent of the US population will be banking online. 

The target audience for digital banks

Taking into account their lifestyles and aspirations, Millenials and Gen Z representatives are considered to be the most active mobile banking users. At the same time, the share of online banking users aged 50+ has also grown in recent years.

While Millennials turn to online banking to make the most of online transactions, peer-to-peer transfers, and cashback, the representatives of older generations may benefit from obtaining information about bank products, receiving mobile payments, and tracking their balances online.

So, deciding on the audience to target with your banking product, you better take into account the needs of different age groups.

Popular online banking solutions

Some banks make digitalization a part of their transformation strategy and FinTech businesses provide digital banking without having any brick-and-mortar branches behind. The latter is often called neobanks or digital-only banks. To operate legally, they partner with bank license issuers and distribute virtual and physical cards just like traditional banks do.

Among the most popular banking solutions that provide digital services are:

• Chime is the US most popular neobank that allows its customers to open deposit and debit cards, view their credit history, easily withdraw cash, automate savings, and more.
• Wise is not purely a mobile bank, but a system offering electronic money accounts. It offers international and domestic money transfers, provides debit cards, and provides options to operate with different types of currencies.
• N26 is a German digital bank that evolved from a startup and is now functioning in more than 50 countries. For users, its capabilities include direct deposits, international fund transfers, and personal finance management.
• Monzo is a popular neobank from the UK. Their services include p2p transfers, splitting the bills, easy budget tracking, digital loans, and many more.

Each success story has a tedious formation process and hours of work behind it. Now, let’s figure out how to develop a digital bank.

How can you develop a digital bank?

Banking software development requires a deep knowledge of the market. This includes understanding the legal part, complying with the industry requirements, and bringing to the table hands-on technical knowledge.

Getting started with digital banking, make sure you’ve figured out the things to do first and have in place all the assets to get you covered.

Among the challenges you may face on this way are:

• Building product architecture requires involving a Business Analyst and a Solution Architect. Together with the stakeholders, they are to decide which of the architecture types (monolith, microservices, or layered) better aligns with the technical requirements and business goals.
• Choosing the right technology stack you need to mind the time to market, a long-term development strategy, and the risks to mitigate.
• Ensuring all-around security is a must for applications that deal with sensitive data. This means every Fintech solution is subject to introducing enhanced security measures like introducing secure authentication, developing dedicated encryption and data storage systems, and following KYC (Know Your Customer) principles.
• Achieving regulatory compliance means developing and following a set of principles related to risk mitigation, data reliability, and user data processing.

Clearly understanding your business goals, following the security best practices, and partnering with a reliable financial software development services provider are the key principles for creating a successful digital solution.

Must-have features of digital banking apps

Deciding on the features to add when you start a digital bank, it’s essential to understand the needs of your audience. Think of the ways to realize your ideas and evaluate the resources you can count on to implement the desired functionality.

Consider starting with the product MVP and then gradually rolling out additional features. This approach will help you meet the time and budget constraints and evaluate your success on the go. 

Most mobile banking solutions are equipped with the following must-have features:

• Login and authorization
• Account management
• Transaction management
• Fund transfer
• Digital payments including P2P
• Notifications
• Support

With this basic functionality, your application can soon evolve into one of the custom banking solutions providing its users with:

• Expense tracking functionality
• Cashback system
• Digital loan capabilities
• Insurance options
• Tips on investment management
• Integration with digital wallet services and more.

How to monetize your digital banking app

So, how do you make money from developing a digital bank? 

As a rule, FinTech solution providers get some profit from:

1. money on cards, which is getting some share from customer deposits;
2. transactions, meaning that a part of the interchange fee is split between the card network (Visa, Master Card) and the bank card issuer.

You may also consider offering a part of your banking functionality as a premium tier, adding some insurance options, increasing your product LTV by introducing BankID, and targeting your customers with PPC advertising.

Providing your customers with real value and adjusting your solution as their needs change with the product change is a winning strategy you should take with you when developing a digital bank.

As it aims to upend the UK banking market, Chase’s launch will mark JP Morgan’s first overseas retail operation in its over-two-century-long history. The head of JP Morgan’s international consumer division, Sanoke Viswanathan, told the Financial Times that the company would invest heavily to transform Chase into a serious force in the UK. The American lender also has plans to expand into Europe and Latin America.

“This is a very big strategic commitment from the firm’s standpoint,” Viswanathan said. “We will spend hundreds of millions before we get to break-even and get to a place where this is a sustainable business, and we’re not in a rush.”

According to sources close to the process, Chase will officially launch in the UK next week after having been first alluded to back in January of this year.

In preparation for the digital bank’s launch, JP Morgan ran a pilot programme with over 6,000 employers for six months. Initially, Chase will only offer current accounts with a rewards programme. However, over time, it aims to delve into personal lending, investment, and mortgages. 

Their success is down to many things – luck, vision, hard work, but too often ignored - because of good hires. Thanks to effective recruitment, they have been able to bring their vision to life, bringing transparency, access and customer experience to the banking industry. The results speak for themselves – they have a million customers using their debit cards.

The quality of their employees has been a huge contributing factor in their success. Monzo have put customer satisfaction at the heart of their company and made it their mission to shine a light on the ineptitude of legacy banks. Hind Ali, Operation Support Analyst at Monzo, believes that customer experience is fundamental to the business. She explains that the business has built their reputation on providing a level of real-time customer service and insight that the established banks don’t offer. “Undermining this would have far-reaching implications”, she says. “We have to continue to deliver the most transparent and usable app, and to do that we need the best Customer Operations team. We don’t just need bodies; we need personable people with the right problem-solving skills to provide the customer service we expect.”

One of the byproducts of achievement is demand, and in the Autumn of 2018, Monzo felt the full force of their success. They found themselves in need of 60 new full-time employees and set the ambitious target of having them all hired by Christmas – a huge task for a company so young. Hind tells us that the start-up was running at full capacity, holding two to three assessments each week which they were sometimes struggling to fill. “So, we needed to find other ways of sourcing great candidates”, she adds.

Start-ups such as Monzo are in existence to disrupt the industries, and their recruitment process should be no different.

Start-ups such as Monzo are in existence to disrupt the industries, and their recruitment process should be no different. Technology is central to their evolution, and video-based hiring was the answer to their concerns.
It provided an opportunity to improve the quality of candidates, whilst simultaneously simplifying the process. This not only saved time and therefore money, but also had the added benefit of meaning people could be onboarded in the recruitment team with minimal training.
Hind explains that “what’s great about Tempo is that they give us control of the process. We could choose to put less emphasis on previous experience and instead focus on the candidate’s soft skills. We really needed to assess skills like empathy from the start. There’s usually no emotion or personality in a CV. It can be very difficult to get an idea of someone’s soft skills by looking at a list of jobs they’ve done. With Tempo, we see a 30-second video introduction from the candidate, and we could ask applicants questions in real-time. This meant we could see how they reacted to challenging situations, before inviting them to an assessment day.”

Through optimising their recruitment process through technology, Monzo managed to hire 200 people, as opposed to the initial (albeit ambitious) target of 60. Efficiency and peace of mind are what Monzo now associate the recruitment process with, phrases that typically don’t spring to mind when organisations are hiring.

“Tempo has been an incredibly useful tool for our recruitment process. Rather than hiring the 60 people we set out to, we’ve been able to hire 200! They were the best choice for getting in quality candidates, quickly. The main differences have been in two areas – efficiency and peace of mind. Some of our assessment days had a 50% success rate. As anyone in the recruitment industry will confirm, that’s a fantastic return.”

“We’re now able to immediately see which candidates are engaging and would fit our culture before we invite them to assessment days. As a result, we’ve been able to host larger and more successful assessment days. That’s saved our team of four a huge amount of time and effort, which we can spend on hiring for technical roles or improving onboarding and internal processes”, added Ali.