In February 2020, a detailed report of Market Data Forecast informed that the global Fintech market will gradually grow to reach the market value of $305 billion by 2025. Indeed, the booming of technology has resulted in the invention of the new term — Fintech, short for Financial Technology. This word explains the integration of technology into traditional financial services, based on the feasible financial app ideas to secure financial data better and facilitate transactional activities of both companies and individual customers.
If you are looking for financial app ideas to do startups in this field, here are the 8 Fintech trends you should not miss.
What is a Financial App?
The Definition of Financial Apps
Generally, a financial app is a software program that tackles and manages all financial activities of individuals or companies. The traditional in-person transactions are too time-consuming and discouraged in today’s fast-paced world. Financial apps, accompanied with the growing popularity of mobile devices, offer feasible solutions to accelerate this process. Investing, consulting, lending or even splitting bills between friends could become easier and faster with the support of cloud services or Internet of Things. You may want to check out the process of creating a financial app here.
How good financial app ideas could give birth to successful startups
There are three key drivers of starting up your business in the Fintech sector, including:
The growing demand for personal finance management
The social development has improved the well-being of residents and increased personal spendings, for example, investment in stocks, housing loans or tuition fees. Seminal reports from creditable gencies such as Market Research Future indicate that the BFSI (Banking, Financial Services and Insurance) industry has been rapidly developing on delivery of numerous financial services to satisfy human demands. Consequently, people are more concerned about how to control those incurred expenses effectively.
The increasing use of mobile devices
The advent of portable devices facilitates online transactions between individuals, enterprises and banks around the world. Accordingly, even when users are on the go or staying at home during a quarantine period, they can easily pay bills or trade forex easily via mobile apps.
Requirements for financial data security
Financial data in paper form are vulnerable to physical attacks. The best way to avoid unexpected incidents is digitalizing such information. However, cybercrime is a big challenge that financial organizations and individuals may encounter afterwards. So building financial apps to secure confidential data is always the top priority.
Top 8 Financial App Ideas For Startups
Digital Wallet (E-Wallet)
Digital wallets are software programs that allow users to make electronic transactions instead of payments in cash or by credit/ debit cards. After registration for accounts, users will store their payment information in a secure environment; particularly, they can integrate their cards into those wallets and make a bank transfer or use a network of distributor premises offered by e-wallet providers to directly deposit money on accounts. E-wallets are often protected by passcodes or other forms of authentication.
Using e-wallets for online transactions (Source: Research Leap)
Those wallets are stand-alone apps or housed in other apps (e.g. Moca wallet of Grab). They provide in-store, online and peer-to-peer payments for utility bills, purchases at stores, vouchers, public transportation passes, movie tickets and so forth.
Peer to Peer (P2P) Payment Solution
Similar to digital wallets, peer-to-peer payment apps have also witnessed tremendous growth in recent years. Those apps act as an excellent vehicle for instant money transfer between payment systems and bank accounts. Developed by common technologies (e.g. biometric, NFC, voice and face recognition), such peer-to-peer payment solutions as Zelle, Venmo, Cash App or Paypal cost users no commission fees when they are making online transactions. Popular features of those apps include:
- Notifying users when their payments are made, received or refused;
- Sending or receiving money without fees;
- Recording past transactions;
- Providing fingerprint lock for apps;
- Offering a unique ID or one-time password to verify transactions.
Nowadays, the peer-to-peer payment feature is also integrated into e-wallets, so these two types of apps can be interchangeably used. For example, Paypal can be seen either a P2P payment app or an e-wallet.
Digital Banking App
Banks and financial institutes today expect to speed up transactions of customers and reduce the dwell time in branches or ATMs. Digital banking apps emerge to meet those requirements.
Unlike P2P payment apps, digital banking solutions require a more complicated registration process. Particularly, clients need to fill a registration form before submitting the form with an identity proof to a branch. They will then receive an account ID, a password to log in or a PIN to activate their account on an app.
Some banks will charge commission on transaction or monthly fees for using digital banking apps. Accordingly, users can transfer funds, add beneficiaries, open passbook accounts or manage transactions with some simple taps.
Financial Advising Apps
Financial advising apps, or commonly known as Robo-advisors, are designed based on Machine Learning to analyze a user’s spending habits and income. Also, some financial planning services are automatically suggested so that clients can make smart decisions for their future investments. Those robo-advisors may require the minimum deposit on accounts and charge clients some annual advisory fees.
Finance Management App
Mint, YNAB, Spendee, and suchlike are different from robo-advisors. They are financial management apps. They require users to link their bank and financial accounts (e.g. investments or loans) to apps. Accordingly, their spending and earnings will be visually presented in pie chart form. Thus, users can see their current financial health.
As people, especially millennials, care more about finance management, this type of app offers personalized recommendations with some charges to help users customize their future budgets better.
Trading and Investment App
Many people wish to leverage their finance by trading forex or investing in other funds instead of keeping their savings in bank accounts and waiting for monthly interests. Financial markets have been vivid than ever before; particularly, investors can participate in forex, stocks, precious metals or commodities to gain huge profits. By providing legitimate and secure trading platforms, new entrepreneurs can find room in a large number of brokers and investment companies in those markets.
Loan and Credit App
Not all people have enough capital for investments and other plans such as paying tuition fees or purchasing a car. This increases the demand for borrowing from banks, financial institutes or even usurers. Therefore, developing a loan and credit app is one of the financial app ideas that make you stand out in the Fintech market. Personal loan apps act as a mediator between lenders and borrowers. Accordingly, the latter can apply for the maximum loan rates based on their capability whereas negotiating with lenders for reasonable interest rates.
Normally, after opening an account, a borrower will provides personal details before applying for a loan, including his name, contact information, annual income, social security number (or equivalent cards) and expected loans. A lender will base the lending decision on various factors, most notably the borrower’s credit scores. Apart from loans, the borrower may be charged an interest rate and other possible fees like prepayment penalty.
Regulatory Technology (usually abbreviated to RegTech) plays an important part in the Fintech industry. RegTech software exploits Big Data, AI, Cybersecurity, Data Mining, Regulatory Sandbox, Machine Learning and even Blockchain to help companies manage regulatory compliance, monitor transactions, compile reports, diminish financial risks and detect fraud or laundering. Although RegTech is not a new term, it is one of the fastest-growing financial apps and worth investing.
Inevitably, the combination of finance and technology adds more convenience and security for financial data which are always vulnerable to any attacks. Therefore, starting up in the Fintech industry may be an important consideration. No matter which financial app ideas you have, you should determine the market demands and create products that aim at the right segment.