How to create a successful Digital Banking Platform

May 9, 2024

Statista forecasts that the Digital Banks market will witness a surge in Net Interest Income, expected to reach US$2.19 trillion in 2024. This underscores the imperative for financial institutions to align with evolving customer expectations through digital transformation.

An effective digital banking platform can enhance customer loyalty, drive revenue growth, and streamline service costs for your company.

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

Let's explore the 8 essential steps for successfully developing a digital banking platform.

What is a digital banking platform?

A digital banking platform is a technology that allows customers to access their bank accounts and perform transactions using a website or mobile app. Customers can open accounts, deposit money, transfer money, pay bills, and access other banking services.

Two significant drivers of the digital banking market are the rise of digital technologies and evolving consumer preferences, especially among millennials and Generation Z.

Financial companies can capitalize on this trend by providing convenient online banking services tailored to meet the needs of modern customers, thereby boosting revenues.

Key Aspects Required in a Digital Banking Platform

Digital trends have reshaped the fintech industry, driving it towards innovation and adaptation.

This emphasizes the important features to concentrate on when developing a banking platform:

· Account management

· Fund transfers

· Bill payments

· Mobile banking

· Card management

· Advanced security features

· Integration options

· Customer support

Contemplating the necessary features of a digital banking solution underscores the critical focus on customer needs. Thus, adopting a customer-centric development approach is crucial for setting your banking solution apart from others.

The following segments will explore the 8 essential stages of creating a digital banking platform that addresses the needs of both users and businesses. Alternatively, consider employing a ready-made digital core banking like Macrobank by Advapay.

 

Clearly define the objectives and parameters

Defining precise objectives and requirements relies on comprehensive market and consumer research to uncover the needs, preferences, behaviours, and motivations of potential customers. This crucial step empowers you to optimize your solution's revenue potential and streamline development efforts by understanding specific product requisites and user benefits. Additionally, you can establish project timelines and budgetary outlines based on documented requirements.

 

Choose the right technology stack

The demands of a digital banking product can heavily impact the technology stack chosen for its development. As digital banking platforms deal with sensitive financial information, strict security measures are essential, leading to the incorporation of robust encryption protocols, secure APIs, and multi-factor authentication, all of which play a pivotal role in technology selection. Opting for a technology stack for digital banking software depends on project requirements, scalability, security, and regulatory compliance considerations.

Implement a customer-oriented approach

A robust customer-centric approach emphasizes usability, accessibility, and intuitive design over mere visual appeal. This results in software that elevates customer satisfaction and fosters loyalty. Essential principles of customer-centric software development are:

· Scalability: the system delivers ongoing updates and gradual enhancements.

· Flexibility: the digital banking platform responds flexibly to evolving customer behaviours and needs.

· Engagement: banking software integrates customer insights across multiple levels.

 

Ensure effective security measures

Security remains a key focus in the development of FinTech products, especially in safeguarding sensitive financial data. Integrating advanced encryption protocols like SSL/TLS is vital for ensuring secure communication between users and the banking platform. Additionally, regularly updating and monitoring the APIs used for integration is crucial to address potential vulnerabilities. Conducting regular security audits and penetration tests is necessary for identifying and resolving vulnerabilities. These periodic evaluations are essential for proactively managing potential threats and maintaining a high level of security.

 

Regulatory compliance

While digital banks pursue innovation and unconventional strategies, they must still adhere to the regulatory framework governing traditional banks. Regulatory compliance is essential for safeguarding the industry against threats and vulnerabilities. Financial institutions encounter three major risks: Data privacy, Money laundering practices, and Cyberattacks.

To safeguard users from potential threats and data breaches, financial companies must abide by specific regulations, including:

· PCI DSS (Payment Card Industry Data Security Standard) which establishes security requirements for handling credit card data.

· PSD2 (Second Payment Services Directive) an EU regulation governing electronic payment services.

· GDPR (General Data Protection Regulation) which oversees the collection, use, and storage of personal data by companies in the European Union.

· AML (Anti-Money Laundering) regulations, aiming to prevent money laundering and terrorist financing.

· KYC procedures, a subset of AML regulations, mandating institutions to verify customer identities.

Bare in mind that regulatory landscapes can vary significantly from country to country and compliance with local laws is critical for successful digital banking platform launch.

 

Develop the platform

Software development emerges as the cornerstone in the establishment of a digital bank, serving as the fundamental element around which the entire digital banking ecosystem revolves. It entails frontend, backend development, and seamless data integration. Within this phase, the concrete blueprint of your product is crafted. Thus, it is imperative to execute the development process under the guidance of seasoned professionals within the fintech sphere. You have the option to leverage an internal development team or enlist the services of a software development team well-versed in the intricacies of the financial sector.

Test and launch

Thorough testing is vital not only for identifying and rectifying issues but also for ensuring an optimal user experience and building trust in your digital banking solution. Employing various testing methodologies, including functional, security, and user acceptance tests, assesses the platform's performance across diverse scenarios. While the launch is the final stage of the development process, it does not mark the end of your responsibilities. Continuously monitoring performance metrics, usage trends, and user feedback using tools such as analytics, surveys, and reviews is imperative. Additionally, promptly addressing any issues, concerns, or inquiries and providing ongoing support and guidance to your customers and users are essential.

Improve the application

The software launch is just the beginning of a continuous journey towards improving your financial platform for long-term success. Prioritize ongoing enhancement with these 3 steps:

• Establish a user feedback mechanism

• Regularly update the system

• Optimize performance

 

 

 

 

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