8 Steps Toward Building a Digital Banking Platform

Statista’s projections indicate that the Digital Banks market is on track to generate a Net Interest Income of US$2.19 trillion in 2024. This underscores the pressing need for financial institutions to adapt to digitalization and meet the evolving needs of their clientele.

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

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

Now, let’s explore the 8 crucial steps for successfully developing such a platform.

What is a digital banking platform for financial services?

Positioned as a digital hub, a digital banking platform allows to perform a diverse range of financial transactions via either a website or a mobile app. This encompasses functionalities like online account management, money transfers, bill payments, mobile banking, and other financial operations.

By offering accessible online banking solutions that align with the preferences of modern customers, financial institutions can tap into this growing market trend to enhance their revenue streams.

Critical features of digital banking platform

Payment service providers leverage digital advancements to enrich customer services, yet fintech software development and product enhancement encounter their own set of hurdles. Here are the fundamental features to keep in mind when designing a banking platform:

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

Among the vital features of a digital banking solution, the focus on customer needs is essential. Thus, utilizing a customer-centric development approach is crucial for setting your banking solution apart.

The following sections will outline the 8 essential steps for building a digital banking platform that fulfils the needs of users and businesses alike. Alternatively, you may choose to integrate a ready-made digital core banking system such as Macrobank by Advapay.

Step 1. Establish clear objectives and requirements

The foundation of setting clear goals and requirements lies in thorough market and consumer research to identify the needs, preferences, behaviours, and motivations of potential customers. This foundational phase enables you to maximize your solution’s revenue potential and conserve time and resources by comprehending specific product requirements and user values. Additionally, you can outline project schedules and budgetary frameworks based on documented requirements.

Step 2. Choose the right technology stack

The specifications of a digital banking product can exert significant influence on the technology stack selected for its development. Considering the handling of sensitive financial data in digital banking platforms, strict security measures are essential, necessitating the utilization of robust encryption protocols, secure APIs, and multi-factor authentication, which have a profound impact on technology choice. Selecting a technology stack for digital banking software relies on project requirements, scalability, security, and regulatory compliance considerations.

Step 3. Set your platform apart with a customer-oriented approach  

An effective customer-centric approach goes beyond surface-level aesthetics, placing emphasis on usability, accessibility, and intuitive design. This results in software that drives customer satisfaction and nurtures loyalty. Essential principles of customer-centric software development include:

  • Scalability: the system provides continuous updates and gradual improvements.
  • Flexibility: the digital banking platform adjusts to evolving customer behaviours and needs.
  • Engagement: banking software incorporates customer insights throughout the development process.

Step 4. Ensure strong security measures

Security is a top priority in the development of FinTech products, particularly concerning the protection of sensitive financial information. Integrating advanced encryption protocols such as SSL/TLS is essential for establishing secure communication between users and the banking platform. Additionally, regularly updating and monitoring the APIs utilized for integration is critical for mitigating potential vulnerabilities. Regular security audits and penetration tests are necessary for identifying and remedying vulnerabilities. These periodic assessments are crucial for proactively addressing potential threats and maintaining continuous security.

Step 5. Regulatory compliance

Despite their innovative nature, digital banks must adhere to the regulatory framework governing traditional banks. Regulatory compliance plays a crucial role in reducing susceptibility to attacks and vulnerabilities within the industry. Financial institutions encounter three primary risks: Data privacy, Money laundering activities, and Cyberattacks.

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

  • PCI DSS (Payment Card Industry Data Security Standard) outlines security requirements 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, utilization, and retention of personal data by companies operating within the European Union.
  • AML (Anti-Money Laundering) regulations aim to prevent and counteract money laundering and terrorism financing.
  • KYC (Know Your Customer) procedures, a subset of AML regulations, necessitate institutions to authenticate the identities of their customers.

Regulatory compliance can vary significantly from country to country and compliance with local laws is critical for successful digital banking platform launch.

Step 6. Develop the platform

The development of software holds pivotal significance in the formation of a digital bank, serving as the foundational element upon which the entire digital banking architecture is built. It involves frontend, backend development, and the seamless integration of data. During this phase, the concrete blueprint of your product is meticulously crafted. Hence, it is imperative to navigate the development process under the supervision of experienced professionals within the fintech realm. You can opt for either an in-house development team or enlist the support of a software development team well-versed in the nuances of the financial sector.

Step 7. Test and launch

Thorough testing is essential not only for identifying and addressing issues but also for ensuring an exceptional user experience and instilling confidence in your digital banking solution. Employing various testing methodologies, including functional, security, and user acceptance tests, evaluates the platform’s performance across diverse scenarios. While the launch represents the final stage of the development process, it does not mark the end of your responsibilities. Continuously monitoring performance, usage, and feedback using tools like analytics, surveys, and reviews is critical. It’s equally important to promptly address any issues, complaints, or inquiries and provide ongoing support and guidance to your customers and users.

Step 8. Improve the application

The software launch is just the beginning of an ongoing journey to enhance your financial platform. Prioritize continuous improvement for long-term success with these steps:

  • Establish a user feedback mechanism
  • Implement regular system updates
  • Optimize performance

Leave a Comment