Developing a Financial App Is Harder Than You Think

The development of a good financial application is much more challenging than with other apps, such as those for e-commerce. More stringent regulatory requirements and heightened security concerns are just a part of the reasons why developing a good financial app is difficult.

E-commerce apps mainly focus on facilitating transactions and managing inventory effectively. With a finance app, large-scale transactions with flawless accuracy, compliance with numerous legal standards, and the maximum protection of user data are required.

Let’s talk about all the possible complexities you’ll be dealing with when developing a financial application. This will help you understand the requirements that set a financial application development apart from other types of software.

Regulatory Compliance Comes First

A financial application is one of the most regulated types of software. The development team can’t ignore a whole pack of compliance standards because it affects the security level and legality of your app. If not playing it right, be sure to face severe penalties in the form of hefty fines and legal actions.

But it’s not only about penalties as adhering to the development standards maintains customer trust. That is because compliance ensures that clients’ data is handled both securely and transparently. You protect the business from fraud and data breaches that have the capacity to demolish your company’s reputation and harm its financial stability.

Be sure that you’ll face some or even all regulations mentioned above, depending on where the market you’ll be working on is located (this list is far from complete, there are more regulations):

• General Data Protection Regulation, or GDPR. This regulation governs data protection and privacy in the European Union.
• Consumer Privacy Act, or CCPA. This ensures customer privacy rights.
• Payment Card Industry Data Security Standard, or PCI DSS. This standard protects cardholder data and secures credit card transactions. PCI DSS is a worldwide spread standard.
• Sarbanes-Oxley Act, or SOX. The Sarbanes-Oxley Act mandates financial transparency and combats corporate fraud.

Ignoring the compliance aspect is not seen as possible, but if you want to simplify compliance with all these regulations, you can go with a fintech software development company. Their knowledge and experience you can use to make your application adhere to all relevant standards and avoid legal issues.

Security Is a Serious Concern in Fintech

Speaking of security. The stakes are high in the finance industry, so security is a big concern. Cybercriminals choose financial applications as their primary target and look for any opportunity to exploit vulnerabilities. Of course, the regulatory standards mentioned are an important aspect of protecting sensitive customer information and maintaining the integrity of financial transactions.

Nevertheless, your app needs more than just that, it needs modern security measures that mitigate potential threats. Before talking about effective security measures, however, we first must know what we’re fighting. An absolute leader on this list is data breaches. Unauthorized access to customer data or other sensitive information is the most common threat that leads to financial loss.

Two other common threats to your financial app security are fraudulent transactions, malware, and phishing. Fraudulent transactions are when cybercriminals perform unauthorized transactions while malware and phishing compromise your clients’ credentials and grant attackers access to financial accounts.

What’s Used to Protect a Financial App Today?

Now that we clearly understand the need to protect your financial app and from what it needs protection, let’s figure out what’s used to accomplish that mission. It’s worth starting with the very fundamental security measures, and encryption is one of them. Encryption secures data in transit and at rest. Then goes multi-factor authentication, or MFA. MFA adds an additional layer of security on top of passwords.

In general, you must ensure that the application is built with security in mind from the ground app and that you conduct regular security audits that identify and fix vulnerabilities.

When talking about advanced security protocols and technologies to implement, there are a few effective ones that you should have on your radar:

• Biometric Authentication that uses fingerprints, facial recognition, or voice identification for secure access.
• Blockchain Technology implements decentralized ledgers, maintaining transparency and ensuring security.
• Behavioral Analytics monitor user behavior and based on that detect anomalies and potential security threats.

The Increasing Complexity of Functional Requirements

The development of a financial application must address a whole range of complex functional requirements so that the app handles intricate processes and large-scale transactions with impeccable performance and accuracy levels. Only a well-architected application can meet these requirements and maintain the ability to scale and accommodate increasing user demands.

Apart from everything else, your financial app should have 3 main functionalities to operate in today’s finance industry.

Firstly, your financial app is expected to have real-time data processing. Real-time data processing ensures that all transactions and updates within the app happen instantly.

Secondly, scalability. Handling large volumes of transactions and data without performance degradation is an absolute must.

Last on the list but not the least important. Your app must connect with payment gateways, financial institutions, and other services without errors.

Integration of AI in Financial Applications Becomes a Standard

Artificial intelligence brings about a complete transformation in how financial apps operate and serve their users. A well-implemented AI technology enhances not only the efficiency of your financial services but security too. With an AI solution, your app becomes more user-centric and offers intelligent services unseen before.

Some common ways in which AI transforms financial apps include:

• AI algorithms analyze patterns and detect fraudulent activities and do that effectively.
• AI-driven chatbots give personalized financial advice that’s based on each user’s behavior and preferences.
• Predictive Analytics helps users make wise and informed decisions depending on current market trends and risks.

Conclusion

We learned that financial app development is a complex process. Yet, all the challenges we talked about are there so that in the end, your clients have a secure and efficient application that meets the demands of today’s digital economy.