Developer’s Guide to Building a Fintech App

According to Statista, the adoption of fintech solutions grew rapidly between 2015 and 2019, with 75% of consumers using some form of digital payment or money transfer service. 

Then the events of 2020 completely changed the face of all industries, finance included. User demand for online and mobile payments escalated; more than ever before, people prefer managing their finances on their phones and not in a bank. They are more accustomed to digital banking and feel comfortable doing so. As a result, new services spawned to address users' needs. 

Today, China leads the pack with around 90% of citizens using fintech payment, banking, and financial management solutions, while the U.S. comes in second with a bit over 40%. 

The Inviggo team has recognized the significance of fintech products, and we are happy to be a part of the financial (re)evolution. We have our fingers on the pulse of the industry and are involved in building some of the hottest fintech apps to handle mobile payments, consumer finance, insurance, lending, investment, and more. 

This article is intended as a guide to building a fintech app for developers looking for best practices and tricks to create modern financial solutions.

Determining the tech stack and app development methodology

First off, let’s discuss the three possible types of app development:

  • Native app development 

Native app development means creating separate fintech apps for any operating system. As a result, you build an application that delivers smooth performance and a great user experience, since the process encompasses all technical and UX guidelines of the operating system. Native applications are secure and can easily use built-in devices like a camera, microphone, GPS, and others. However, bear in mind that native app development is time-consuming and, as such, expensive. 

  • Cross-platform development 

Cross-platform development refers to building a single code for both operating systems. Cross-platform solutions are usually developed by a small team in a relatively reasonable time frame. 

  • Progressive web app (PWA) development 

PWA development means building an app on a single code base. Progressive web applications offer a native experience and are light and fast to download. But unlike native apps, PWAs cannot as easily access built-in features like NFC or Bluetooth. 

Cross-platform app development is our personal favorite. However, you shouldn’t finalize the decision before weighing the pros and cons of each type and considering all other factors that go into development - tech stack, framework, architecture, etc.

Tech stack

Fintech app developers are faced with an array of possibilities: 

  • Cloud services - AWS, Azure, Google Cloud
  • DevOps solutions - Docker, Kubernetes, New Relic, Git, GitHub, Bitbucket, CircleCI
  • Programming languages: Python, JavaScript, Java, PHP, TypeScript, C, C#, C++, Objective-C, Ruby, Kotlin, Swift, Elixir
  • Databases and stores - Redis, PostgreSQL, MySQL, MongoDB, Kafka, Realm, Citus, Snowflake

Bonus tip: You can boost your efforts using a PaaS or MBaaS platform. Depending on the service in question, they may come with managed cloud infrastructure, operating system, runtime environment, etc., leaving developers to focus on code and design. These also easily integrate with APIs and enable you to add more services.

Methodology

Since most fintech apps start as an MVP, agile stands out as the perfect methodology. It enables gradual app enhancement and supports iterative development, thus helping collect early user feedback. 

Some development teams still prefer the waterfall approach to app development: its simplicity, ability to define deliverables, and more accurate cost estimates. But since waterfall takes a linear approach and doesn’t allow proceeding to the next stage without completing the previous one, agile remains the front-runner. 

Agile methodology leaves room for flexibility to adapt to ever-changing customer demands. Fintech app developers appreciate being able to work on different phases at a time, update the app whenever necessary, and present users with a working prototype to discover system bugs and feature gaps. 

Whenever we work on a fintech app development at Inviggo, we also implement the principles of domain-driven design. Our dev team connects with a domain expert to expand their knowledge on the area and, as a result, build a cleaner, better code. 

Mobile payments

How to choose the right architecture for fintech apps 

A fintech app has to be 100% secure, reliable, flexible, and scalable, and the choice of architecture dictates whether you will be able to meet these standards. 

You are faced with three key options: monolith, service-oriented, and microservice architecture. But before we go into more detail about each of these, here’s what needs to be defined before officially evaluating the different architecture types:

  • Business location, as you need to meet the country-specific guidelines established by the country’s financial institutions. This is especially true if the app functionalities include cross-country transactions, where each has a different taxation system, collection, storage, and data management rules. In such cases, the ideal system is distributed.
  • Business model and system load determine the extent of scaling.
  • Security protocols and technologies are critical for designing an app that stores and manages confidential data. 
  • Reliability and fault tolerance of the system, since users are looking for the highest uptime possible. 

Monolith architecture

Monolith architecture enables fast development. The functionality is built on the developer’s side and doesn’t deal with the infrastructure level. Connections between business abstractions are stored in the app, while the business logic connections are inside the programming code, and connections between services are on the infrastructure level.

On the flip side, monoliths scale as whole units, which is more difficult and not as optimal. The thing is - if even one part of the system fails, all else fails as well. And downtime is not something fintech users will tolerate. 

Service-oriented architecture (SOA)

On SOA, every service works as a full-fledged application with its defined business role. You’ll hear developers saying that it “uses the Decompose By Business Capability pattern”, which means that it defines business capabilities to break the app into individual services. Plus, any changes made to the code affect the related business areas. Service-oriented architecture is simpler and easier to plan than microservices, allowing developers to create flexible systems. Businesses can scale easily and meet-ever changing requirements. 

Microservices architecture

Microservices are a growing trend but are not a completely new approach to development. They are a collection of proven concepts, like agile, service-oriented architecture, API-first design, and continuous delivery.

In a microservice architecture, the connections between the services are arranged on the infrastructure level. This type of architecture supports innovation, speeds up deployment cycles, and improves the scalability and maintainability of software apps. 

Although microservices are a combo of multiple concepts, they all share several important characteristics:

  • Decentralization - Microservices are distributed systems without a unifying schema in a central database. Their development, deployment, management, and operations are also decentralized. 
  • Independence and ownership - Each microservice can be separately changed, updated, deleted, or replaced without affecting other architecture components. Teams working on microservices also work independently, meaning that respective teams are responsible for the operations performance and continual maintenance.
  • Polyglot persistence and programming - Developing a microservice architecture means building a product using various operating systems, tools, languages, and data stores. Each team has the freedom to choose the best approach to building a microservice and don’t rely on other teams’ work. 
  • Black box - Each microservice includes the details of their complexity and the communication between the services occurs via APIs to prevent hidden and implicit dependencies between them.

The microservice architecture delivers easily-scalable solutions but is more difficult to build compared to other approaches.

Key things to consider when developing fintech apps

There’s no cookie-cutter approach to fintech development. The exact steps to build a fintech app depend on multiple factors, like the specific niche and application features. Most broadly speaking, you need a specialized team of developers, designers, testers, and DevOps engineers, a secure, encrypted hosting solution, and a payment processor that complies with the necessary certifications. 

Legal requirements and certifications

Legal policies differ from one country to another, sometimes even within states and regions. Fintech apps must be developed in compliance with privacy and security policies that were put in place to increase user security and prevent fraudulent actions. Some of the most frequently requested ones include:

  • General Data Protection Regulation (GDPR)
  • California Consumer Privacy Act (CCPA)
  • PCI DSS (Payment Card Industry Data Security Standard)
  • CJIS - Criminal Justice Information Services Standard 
  • Cyber Essentials Plus
  • Federal Information Processing Standard (FPIS). 
  • Federal Information Security Management Act (FISMA)
  • ISO certificates 
  • AML (Anti-Money Laundering) compliance 
Fintech Security

Security

Fintech platforms are complex: several types of users have access to a single account, each with a different type of access (account owner, bank manager, investment advisor, etc.) The app has to enable each of them to perform their roles in the right and secure way. 

Security is one of the key priorities when building a fintech app, considering the amount of sensitive personal data they manage. You need to understand legal agreements, create a privacy and management policy, and set up disaster recovery in place.

The industry’s come a long way, but fintech still faces huge security risks, like data exposure, injection, broken authentications, and broken access control. Developers should avoid misconfiguration, use of components with known vulnerabilities, insecure deserialization, and insufficient monitoring and logging.

In one of our earlier posts, we discussed security trends and best practices. For fintech products, the greatest emphasis is put on: 

  • different data encryption methods (AES, RSA, Twofish)
  • tokenization
  • biometric identification and fingerprint scanning
  • improved password protection (2F authentication, OTP system, password expiration)
  • use of fraud prevention tools
  • code security

We’d just like to add one more to this list: a reputable payment gateway since it is the most critical feature of a fintech app.

User management

First and foremost - there is no downtime! When it comes to fintech apps, users will only tolerate well-in-advance announced downtimes, and only if they occur outside peak hours. 

Now, everything we build inside the app is directed toward offering a seamless, uninterrupted user experience. This can mean implementing anything from:

  • QR codes for more convenient, error-free payments 
  • AI-powered chatbots and recommendations
  • API integrations with other apps to exchange data and enable access to account information, locate the nearest ATM, 
  • secure payment options for online purchases

and so much more. It all depends on the financial aspect of users’ lives the app is supposed to improve. We also tend to include features like advanced automation, deep integration with banks, and business analytics to collect data used for app improvement. 

Open banking and API integration

Open banking refers to a decentralized financial service that insists on transparency. 

Large financial institutions get customer approval to provide their data via a public API to 3rd-party developers. Users have complete control over their data, which is relayed to developers who use it to build fintech solutions that should help those same users get the most out of their money: manage all their finances online/via mobile phones, get assistance at any time and from any place, get better loan rates, investment advice, etc.  

Ideally, public APIs should be implemented using open-source software. And again, it has to be secure and contain features like trusted entities, authentication tokens, digital signatures, and data encryption techniques. So how do we make sure the APIs are secure? Here are a few tricks we resort to:

  • Host API backed with managed cloud services
  • Develop, test, and document API with tools (e.g., Postman, Swagger)
  • Secure API with authentication, authorization, data encryption, and similar proven techniques
  • Use robust database solutions (e.g., MongoDB, PostgreSQL)
  • Design effective URL paths
  • Set security rules in place for API requests and responses

The fintech market continues to grow at a staggering rate. Consumers opt for digital payment models, NeoBanks, smart budgeting apps, and mobile wallets. There really is no better time to invest in a fintech solution than now.

Inviggo has experience building open banking solutions by relying on some of the best practices presented in this guide. So if you’re interested in learning more about how to solve fintech app development challenges (or maybe you have an app idea you’d like to turn into reality) - we’re happy to join the discussion!