Building a fintech application from A to Z

Fintech is everywhere. Dematerialized payments, crowdfunding, ETFs, instant credit.... The market is complex and growing at an unprecedented rate. In fact, users are becoming increasingly adept at using applications to save, pay and invest. Behind this promising future lie very specific requirements! That's why Le Backyard is here to guide you through the creation of fintech applications.

1. What is a fintech application? 

A fintech application is a technological solution that meets one or more financial needs: management, payment, loan or investment, for example.

There are as many fintech applications as there are financial sectors: 

1. Banking apps: money transfers, savings, tax payments... (e.g. Revolut or N26)
2. Payment applications: mobile payment, digital wallets (e.g. Lydia)
3. Credit and scoring: microcredit, BNPL (Buy Now, Pay Later), credit scoring
4. Banking aggregators: account centralization and expense analysis (e.g. Bankin', Linxo)
5. Crypto and blockchain: buying/selling cryptocurrencies, wallets, staking, DeFi (e.g. Coinhouse, Binance)
6. B2B solutions: cash management, factoring, financial APIs for companies (e.g. Pennylane)

There's a real porosity between all these sectors, which makes it extremely interesting for start-ups. Indeed, once they've launched an initial service, they're in a position to offer related services. This opens up great prospects for growth.

1. The importance of technology

Technology is the driving force behind fintech applications. Not only does it reduce intermediation costs, but it also offers concrete innovations, such as mobile payment or simplified access to complex financial products like ETFs.

It must also be at the service of a high-performance, fluid and intuitive UX. Indeed, when they were launched, the neo-banks came up with applications designed with end-users in mind, enabling them to stand out from the competition and make a profound mark on the sector. They have eliminated friction points (real-time balances, simplified share purchases, etc.) and costs by making judicious use of technology.

2. The pillars of a successful fintech application

Money is no object. No user will want to use your application if the user experience or performance leaves something to be desired. What's more, as a start-up, you need to protect yourself against all existing security risks.

• The importance of UX: fintech applications must inspire trust and transparency. This starts with onboarding: screens must be clear and actions simple to avoid potential customers giving up. 
• Legislation: Le Backyard advises its customers to check the legal aspects with specialized lawyers and professionals. Indeed, it is essential to ensure that the concept of each application complies with current regulations and can operate legally in the countries concerned. It's just as important to identify the data to be included on the app (RGPD, DSP2-related obligations, etc.) to comply with local regulations.
• Security: of course, actions must be taken to protect users' money, but our agency also warns its customers against the risks of money laundering, using third-party services such as Stripe or Regula. KYC (Know Your Customer) and KYB (Know Your Business) systems should also be taken into consideration to facilitate identity checks. We also follow theOWASP security recommendations.
• Performance: a fintech mobile application relies on a whole series of actions that it can be useful to entrust to third parties to guarantee their smooth operation. Money transfer, provision of an IBAN, payment by credit card or Apple Pay... Le Backyard always advises you to go through expert external services that are already working and whose APIs are already mature.
• Real-time data: another pillar of a successful fintech application, the API must be able to handle real-time data, so that customers can see the status of their updated balance, as N26 has been offering for years. To achieve this, our experts will guide you towards the right technical choices to ensure a smooth and fast experience. Indeed, the volume of data to be managed can quickly become significant, so it's imperative to have the right technical expertise to ensure that data is perceived without problem in real time.

3. Key features to include

Depending on each start-up's project, the key functionalities to be considered are different. Le Backyard can help you define those that will bring real value to the user.

Here are a few examples of features that have become must-haves: 

• Online payment / between individuals
  

• Real-time account/balance management
  
• User scoring / credit analysis
  
• Automated KYC (Know Your Customer)
  
• Crypto wallet / currency conversion
  
• Push notifications, security alerts, transaction tracking

We advise you not to integrate everything in the first version. It's better to launch a solid MVP, focusing on a high-value-added feature, then enrich it over time according to user feedback.

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2. How do you create a fintech application?

As with any application, it's important to transform the idea into a viable, workable concept. There are several stages to this process, which must be carefully observed.

1. From idea to store

A good idea is not enough. It's important to make it as concrete as possible, by defining the business model and the necessary functionalities.

In the case of fintech applications, it's vital to carry out an in-depth regulatory study to ensure that you comply with the regulations of each state in which you wish to launch your business.

The next step is to focus on the technical stages: 

• create a prototype to test the idea quickly ;
• application development based on the most appropriate technologies;
• testing all aspects, from security to UX ;
• launch on stores.

2. The most suitable technologies

Depending on your project, Le Backyard can help you choose the most appropriate technologies for your intech application. Here are the main technologies to consider: 

• Banking APIs: integration with banks via DSP2, data aggregation ;
  
• Open banking: enriching the customer experience with third-party services;
  
• Blockchain and smart contracts: for projects related to cryptos or decentralized finance;
  
• Scalable cloud infrastructure: AWS, GCP, Azure, for scalability;
  
• High-performance mobile frameworks: Flutter, React Native or Swift/Kotlin as required.

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3. Avoid fragmentation for a successful launch

Le Backyard supports its customers in the creation of their fintech applications, and makes it a point of honor to advise them on the risks to be anticipated from the outset. After all, you only have one chance to launch a fintech application, so you need to do everything you can to make it a success.

And the main risk is dispersion. Launching on all fronts is tempting. However, for the first version of the product to be launched, it's best to focus on a truly innovative service that meets a real need. Once a certain volume of users has been reached, it will be possible to increase the range of services on offer. Trade Republic, for example, began by offering order placement on stock markets, before expanding its range of services.

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4. Use iteration to avoid problems

The chance to make a good first impression is obviously unique! So this is where iteration is important: with each new version of the application, you'll need to take into account user feedback, particularly on the riskiest features to launch.

Feeding off this feedback results in a near-perfect version of all features.

For this, user testing is the method of choice, but you also need to study the statistics to see whether the application is being used properly (or not).

Of course, the start-up proposes the functionalities they wish to integrate, and our agency advises them, but it's always the users who know their needs best. So it's they who need to be listened to carefully.

By relying on iteration, you can build an application that really meets your needs, step by step, and minimize any worries at the time of launch.

The Le Backyard team has a truly informed view of the fintech sector as a whole. Indeed, we've worked with customers on projects to redesign banking and crowdlending applications, among others. This experience has enabled us to amplify our technical and UX experience, which we now put to good use in supporting other start-ups. Click here to discuss your project!