8 Steps for a Digital Banking Platform Development

According to Statista’s analysis, the Digital Banks market is expected to achieve a Net Interest Income of US$2.19 trillion in 2024. This underscores the importance for financial institutions to adapt to digitalization and cater to the changing preferences of their customer base.

An effective digital banking platform holds the potential to elevate customer loyalty, drive revenue growth, and optimize service costs for your company.

Before embarking on any development process, it’s crucial to ensure the legality of your operations by obtaining specific licenses such as payment or e-money licenses, fintech licenses, MSB licenses, or by partnering as an agent with a BaaS-provider.

Now, let’s delve into the 8 necessary steps for successfully developing such a platform.

What are digital banking platforms?

Acting as a virtual gateway, a digital banking platform empowers customers to engage in diverse financial transactions via either a website or a mobile app. This encompasses functionalities like online account management, money transfers, bill payments, mobile banking, and various other financial operations.

Financial companies can capitalize on this trend by providing user-friendly online banking services that cater to the demands of contemporary customers, thus boosting revenue streams.

Fundamental elements of a digital banking platform

The fintech sector has experienced profound transformations due to digital trends, shaping it into one of the most progressive industries. This outlines the essential features to emphasize while building a banking platform:

  • Account management
  • Fund transfers
  • Bill payments
  • Mobile banking
  • Card management
  • Advanced security features
  • Integration options
  • Customer support

Examining the necessary features of a digital banking solution underscores the critical emphasis on addressing customer needs. Therefore, employing a customer-centric development approach is key for differentiating your banking solution.

The upcoming sections will detail the vital stages in crafting a digital banking platform that addresses the needs of both users and businesses. Alternatively, you might consider integrating a ready-made digital core banking system such as Macrobank by Advapay.

Step 1. Set clear goals and requirements

Establishing precise objectives and requirements necessitates thorough market and consumer exploration to discern the needs, preferences, behaviours, and motivations of your target demographic. This foundational stage enables you to optimize your solution’s revenue potential and streamline development efforts by comprehending specific product requisites and user values. Furthermore, you can devise project schedules and cost estimates based on documented requirements.

Step 2. Choose the right technology stack

The specifications of a digital banking product can significantly shape the technology stack chosen for its development.

Digital banking platform involves the management of sensitive financial data, stringent security measures are essential, prompting the implementation of robust encryption protocols, secure APIs, and multi-factor authentication, all of which profoundly impact technology selection.

Choosing a technology stack for digital banking software hinges on project requirements, scalability, security, and compliance with regulatory standards.

Step 3. Distinguish your platform with a customer-oriented approach

A solid customer-oriented approach transcends mere visual appeal, prioritizing usability, accessibility, and intuitive design. This leads to software that enhances customer satisfaction and nurtures loyalty. Key pillars of customer-centric software development include:

  • Flexibility: the digital banking platform adjusts to evolving customer behaviours and requirements.
  • Scalability: the system offers ongoing updates and incremental enhancements.
  • Engagement: banking software leverages customer expertise across different facets.

 

Step 4. Ensure robust security protocols

Security takes precedence in the development of FinTech products, especially regarding the protection of sensitive financial data. Implementing advanced encryption protocols like SSL/TLS is essential to establish secure communication between users and the banking platform. Additionally, regularly updating and monitoring the APIs used for integration is vital to address potential vulnerabilities. Regular security audits and penetration tests are necessary to pinpoint and rectify vulnerabilities. These periodic assessments are instrumental in staying vigilant against potential threats and maintaining a high level of security.

Step 5. Regulatory alignment

While digital banks strive for innovation, they must still conform to the regulatory landscape governing traditional banks. Regulatory compliance is integral to enhancing the industry’s resilience against potential threats and vulnerabilities. Financial institutions encounter three main risks: Data privacy, Money laundering activities, and Cyberattacks.

Financial companies must comply with the following regulations to protect users against potential attacks and data breaches:

  • PCI DSS (Payment Card Industry Data Security Standard) mandates security protocols for entities handling credit card data.
  • PSD2 (Second Payment Services Directive) is an EU directive governing electronic payment services.
  • GDPR (General Data Protection Regulation) regulates the collection, usage, and storage of personal data by companies operating within the European Union.
  • AML (Anti-Money Laundering) regulations aim to prevent and combat money laundering and terrorism financing.
  • KYC (Know Your Customer) procedures, a subset of AML regulations, require institutions to verify the identities of their customers.

Compliance with local laws is vital for the successful launch of digital banking platforms, as regulatory landscapes vary significantly across different jurisdictions.

 

Step 6. Develop the platform

Software development plays a central role in the establishment of a digital bank, providing the framework upon which the entire digital banking infrastructure is constructed. It encompasses frontend, backend development, and the seamless integration of data. Within this phase, the definitive structure of your product is established. Therefore, it is crucial to oversee the development process under the guidance of experienced professionals with expertise in the fintech domain. You can choose to utilize an in-house development team or enlist the assistance of a software development team proficient in the financial sector.

 

Step 7. Test and launch

Thorough testing is indispensable not only for identifying and rectifying issues but also for ensuring an optimal user experience and instilling confidence in your digital banking solution. Employing a range of testing methodologies, including functional, security, and user acceptance tests, evaluates the platform’s performance under diverse conditions. While deployment signifies the final stage of the development process, it does not mark the conclusion of your responsibilities. Continuously monitoring performance metrics, usage patterns, and user feedback using tools such as analytics, surveys, and reviews is imperative. Additionally, promptly addressing any issues, concerns, or inquiries and delivering ongoing support and guidance to your customers and users are essential.

Step 8. Improve the application

The software launch is just the beginning of a journey towards ongoing improvement for your financial platform. To achieve long-term success, prioritize continuous enhancement with these steps:

  • Establish a user feedback mechanism
  • Regularly update the system
  • Optimize performance

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