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Banking Software Development End-to-End Guide

banking software development
Faiza Khalid
CIS engineer | Developer | Tech Writer

Are you looking for a resource to help with your banking software development project?

Are you interested in learning about the rapidly growing banking software industry and looking to invest in a banking software solution?

Look no further, as, in this article, we will be discussing banking software development from end to end.

What is Banking Software?

Banking institutions are racing to introduce custom software solutions into their business processes. Reasons range from creating a more efficient working infrastructure to a better user experience.

Like all other industries, financial companies are also undergoing rapid digitization due to our increased reliance on mobile devices and internet-based technologies. 

Customers these days are increasingly unwilling to wait in line at banks to pay their bills, withdraw money from their bank accounts, or make complex banking transactions to other accounts.

Most of these financial procedures are now automated through software technologies and thus make the customer’s experience simple and fast. 

Banking software development is a process of automating financial and banking practices so that users and staff can avail themselves of the financial services that they need, anywhere and anytime, through online banking platforms. 

Technologies like AI, Big data, and DevOps, are the backbone of the latest technologies that allow developers to build high-quality custom banking software.

Mobile banking solutions are now more popular than Internet banking thanks to the popularity of mobile device usage.

The Future Statistics of the Digital Banking Industry:

According to a recent report, the global market size of digital banking is expected to reach 12 trillion US dollars in 2026.

The main growth drivers include a change in customer behavior, a growing Fintech market, favorable government policies, and a rapidly flourishing e-commerce industry. 

Due to the nature of this segment, cybersecurity is considered one of the major challenges faced by the digital banking industry.

Mobile banking will have a global market worth $1,824.7 million in 2026 owing to the secure process executions and streamlined customer service via digital transformations.

Overall online banking will hit 31.81 billion US dollars by 2027.

Let’s look in detail at the types of banking software you can develop for the users.

Types of Banking Software:

Banking software development covers a broad range of software solutions. You might be choosing to develop one of the following banking software solutions:

  • Financial Operation Management Software:

These banking solutions provide management tools to help the bank admin and staff in planning, budgeting, accounting, and transactional procedures.

Document management software for banks helps automate the planning and reporting system, including outgoing and incoming financial documents, memos, administrative documents, contractual papers, etc.

Banking document management software helps in speeding up banking practices. These applications help with decision-making and task implementations while maintaining security. 

  • Administrative Management Software:

Administrative software products are management systems for admin tasks like staff attendance, task assignment, scheduling, etc.

  • Customer Service Solutions:

These include core (Centralized Online Real-Time Exchange) banking software offering services to customers from any location through ATMs and branches.

All the bank branches connect to a central server so these processes can be automated and offered to customers. Integrated bank services process transactions in synchronization and in real time.

The global market size of the core banking systems and software products is expected to reach 16.38 billion US dollars by the year 2027.

The core banking services include:

  • Online transactions;
  • Loan management;
  • Mortgages management;
  • Mobile payments;
  • Credit card issuance.

Another customer service solution is a banking CRM. CRM is a complete application with different modules that assist in marketing, financial process automation, and customer services. 

They help market researchers in collecting customer data and assist sales managers in serving customers according to their individual preferences.

Latest technologies like predictive machine learning algorithms assist in developing a personalized experience for users.

Let’s now move on to our comprehensive guide on the bank software development process from end to end.

It will outline the complete development roadmap from software idea to its development and execution for any startup founder or business owner interested in investing in the digital banking industry.

Banking Software Development – A Guide

You will go through the following steps in the banking software development process:

Banking Software Idea

The first step is to decide on the banking service you want to provide through your software product. A good approach is to follow a need-based solution method.

This means you look into the needs of your potential customers and think about what will make their lives easier. Your aim is to provide a solution to a customer’s problem through your custom software.

With numerous banking software already available online, you must come up with a unique banking software solution that will make potential users stand up and take notice.

Consider this example, most companies refuse loan issuance to people with low credit history.

You could develop a software product giving loans to such individuals determining their eligibility from their financial information by using AI to help determine if they truly have the means to pay it back. 

Techniques like brainstorming and SWOT analysis really help in deciding the best business product idea.

Market Research and Feasibility Analysis

After deciding on your bank software idea, you need to conduct thorough market research. Look into similar software products, their user base, and features, and try to determine what they are missing. 

Also, dig into the types of consumers using the app in detail. What are their usage patterns, what do these users like in this particular piece of banking software, and what features are not worth investing in given the user trends, etc?

Feasibility Analysis is done in four ways:

  • Economical: To help you outline the cost/benefit analysis. This will help you decide if it is economically viable for you to build this banking product.
  • Technical: This will help you analyze the technical resources that you will need to complete your banking software product.
  • Timeline: To help you decide the duration of your financial services software development process. The major development milestones, their completion timelines, etc. You can also further discuss the product development schedule with your software development partner.
  • Operational: This will help you figure out the required human resources, product usability, maintenance, support, etc.

Online tools, like SoGoSurvey and Living Facts, can help you in conducting surveys and market research of real users using statistical data. 

Conducting a thorough feasibility analysis will help you with the next stage of choosing the right software development partner.

Choose the Software Development Partner

This is a crucial step in the process as the success of your banking software product depends on a knowledgeable, experienced, and reliable financial software development company.

For a complex software product like banking software, skip hiring freelance developers, as poor industry knowledge and technical skills will result in product failure or overruns.

Instead, opt for a hybrid company providing financial software development services via outsourced developers and dev teams.

Software development companies should have a wealth of experience developing a range of enterprise-level software solutions. 

A good company will have excellent product development and communication procedures in place. Most importantly, they will offer your company access to a range of skilled developers, each an expert in a particular programming domain.

Read our guide on choosing the right software development company for more information.

An in-house team of developers will take time and lots of energy to build. You will have to go through a recruitment and training process for each developer.

By outsourcing the banking project to a banking software development company, you will only have to go through a very brief vetting process as the company will have already done this for you. 

To make sure you get the right developer, focus your research on reviewing the company’s past projects (especially banking-related projects), case studies, client reviews, technical expertise, development practices, etc.

All you need to do then is to contact suitable software development companies, discuss the banking software project details with them, review their developers for their banking software development services, and get started working with your new remote software development partners.

Read our article on how to measure the developers’ performance should you need help with this. 

Next, we will discuss the technical skills to look for in your developers.

Skills required in a banking software developer

The banking software is built using the latest technologies and tools to give seamless banking services and the best customer experience.

  • Web app development 

Web applications involve two development processes. Front-end and back-end.

  • Front-end Development

The front-end developers are responsible for implementing the user interface designed by the UI/UX designers by writing the code. The front-end developers should be skilled in CSS, HTML, and JavaScript. 

They should have adequate knowledge of JS libraries like jquery and React to build dynamic and interactive websites. JavaScript framework, Angular, is also popular today for building secure and robust web applications.

  • Back-end Development

The back-end developers deal with tasks such as functionality, performance, data integration, application security, etc. Java and Python are widely used for building financial products. 

Python is a simple-to-use programming language with English language-like syntax. It helps to build robust web applications while allowing developers to adopt an agile approach.

It has great features such as enabling developers to rework the code module and add new code as needed. 

Python also has an easy integration process with frameworks like Django. It is designed to allow for a fast MVP development process, which makes it very popular.

Java is another widely used programming language. It is lightweight and flexible, yet powerful enough to handle large volumes of data.

Java is a structured object-oriented programming language that is secure and reliable and includes out-of-the-box features like runtime constraints and an advanced security manager.

  • Mobile app development

The skills you will require in your mobile app developers will depend on the type of mobile banking application you want to launch. Each mobile device operating system calls for a separate skillset to develop.

  • iOS App Development

Native iOS app development skills are required for devices operating on the iOS operating system such as the iPhone, iPad, etc. iOS developers should be skilled in Swift or Objective-C programming language. 

Swift is more used today for iOS app development due to its extensive library support that helps build a secure and performance-efficient app.

Developers should have experience in using Apple Integrated Development Environment (IDE), Xcode, to build applications efficiently. 

Your development team should also be familiar with the Apple human interface guidelines required to design an Apple standard software product.

Developers should also have the skills to work with testing software like XCTest to build bug-free mobile banking apps. 

  • Android App Development

Native Android app development skills are required for apps running on the Android operating system. Programming languages like Java and Kotlin are common for building secure and performance-efficient apps for Android devices.

Android app developers should be familiar with Android IDE like Android Studio and Android Software development toolkit (SDK) to develop efficient apps with maximum library support. 

Android app developers should be skilled in using testing tools like Espresso. They should know UI design requirements using Google’s Material Design Guide.

  • Secure Software development

As Banking software deals with users’ private and financial data, security is of primary importance. Your developers should be experts in implementing the latest application security practices in an ideal banking management system. 

They should be knowledgeable of the latest security threats like Denial of service, SQL injections, and scripting attacks.

They should also know the solutions to prevent them, for instance, data encryption algorithms like DES and RSA.

 Multi-factor authentication (MFA) and change of passwords are some basic standards to ensure application-level security, your app must include them.

Developers should be familiar with the Compliance-As-Code to ensure that your app complies with the correct security standards.

  • Cloud Computing

Cloud computing services are used in software development due to the flexibility and scalability that they offer.

Cloud computing services take the form of infrastructure, platforms, and software tools such as development environments and APIs, etc.

The advantage is that businesses no longer need to invest in physical IT infrastructure beyond a few laptops and a wifi connection.  

Infrastructure as a Service (IaaS) like Amazon Web Services and Microsoft Azure allows developers to work virtually on their cloud provider’s infrastructure.

Developers are only responsible for building the application and do not need to bother about hardware maintenance.

Platform as a Service (PaaS) like AWS Elastic Beanstalk and Google App Engine provides operating system services that allow management of application development IDEs as well as data storage in the cloud.

Software as a Service (SaaS) platform provides pre-configured software packages to users. Developers do not have to install or manage the software applications themselves.

Microsoft Office 365 is one such example of SaaS. Many software development tools allow access to predeveloped tools such as AI systems. 

  • Latest Technologies

The use of the latest technologies helps to build app functionalities to offer the best and more reliable customer experience.

  • Artificial Intelligence

Artificial Intelligence, especially machine learning algorithms, is widely used in financial and banking software to provide a personalized customer experience.

Predictive machine learning algorithms learn from user data trends and help to identify the best-fit services for individual users. 

Chatbots are another great feature popular for assisting customers. Chatbots can serve multiple users at the same time, 24/7, without ever getting tired.

Moreover, AI algorithms help improve chat-user interaction through techniques like Natural Language Processing  (NLP), which makes communication increasingly accurate and human-like. 

Developers should have expertise in using AI chatbot development and integration frameworks like Microsoft Bot Framework, IBM Watson, and Amazon Lex.

Read our guide on building a market-competitive chatbot for more information on this.

To implement AI in banking software, developers should be skilled in machine learning and deep learning libraries, APIs, and frameworks like PyTorch, TensorFlow, and Keras

  • Blockchain

Blockchain technology is in high demand today, particularly for implementing sound security features.

Developers can use blockchain technology in banking software to secure payment procedures, user information records, user account verification, etc. 

Your developers should be skilled in blockchain tools like Geth, Remix, and programming languages like Solidity to implement blockchain smart contracts, etc.

Learn how to develop a user identification app using blockchain technology here.

Plan the Software Development Strategy

After finding your team of developers, it is time to implement your financial software development strategy and workflow.

In the software industry, there are many software development methodologies and frameworks. 

The most widely used is the Agile methodology. This is the one we recommend. It goes well with companies looking for a speedy and manageable software development process. 

An agile product development strategy lets the developers work in small, cross-functional teams to develop software rapidly in iterations.

Each iteration builds up the product by enhancing its features per user requirements. Frameworks like Scrum and Kanban help to implement agile practices in the software development process. 

In this phase, you decide with your development team on the product iterations. Usually, the software development process starts with the essential software features.

In Agile, these iterations of software development are called ‘Sprints’.

Design and Develop

At this stage, you formally start the design of your software product. Remember that a good UI/UX interface will attract and retain more users.

Design an app with the help of UI/UX designers that is easy to use and avoids unnecessary complexities. 

The custom software development process starts with the creation of a minimum viable product or an MVP. Your development team will roll out an MVP with the basic features for users to use.

Gradually, you will refine and scale up your software product with new features that are based on user-recommended improvements.

Test and Deploy

Make sure to launch bug-free banking software as the risk associated with banking products is huge. Conduct thorough testing of the product. 

Use QA testing tools to ensure the software product is working as planned. Use software tools like TestRail and RainForest for software product testing. 

Once satisfied, deploy the banking solution for the users to start using.

Market the Software Product

Marketing your banking software is essential. In the digital era, a software product can be commercialized through several channels. Some of these are:

  • Running Ads:

Run your software product ads by leveraging social media platforms like Instagram, YouTube, Google, etc. Invest in the channel with the maximum conversion rate.

  • Press Releases:

Reach out to news websites like PR Newswire, and submit articles showcasing your banking solution in detail. Your product press releases will find new audiences on these websites.

  • Online Presence:

Invest in an online presence by building your own website and linking it to your social media pages. Promote them on online platforms like Google and social media if you have the budget.

Final Thoughts on Finance Software Development

In conclusion, banking software development requires extensive planning and technical expertise.

Partnering with the right financial software development team is of primary importance if you want to realize your dream of creating a next-level core banking software solution. 

Many businesses have trusted DevTeam.Space developers and dev teams to help them build their software products.

DevTeam.Space’s developers are skilled in all the latest technologies and come with tons of experience in this industry. Simply let us know your project details and we will get in touch to discuss how we can help you build a particular banking software.  

Top FAQs

1. What are the latest trends in the digital banking industry?

Some of the latest features gaining popularity in digital banking applications include peer-to-peer (P2P) payments, robo advisors for offering financial advice in place of a human, personalized digital insurance (bancassurance), etc.

2. Which software technologies are mostly used by the banking software development industry?

The banking software industry heavily relies on .Net, Python, Ruby, and Java. Oracle is the most used database technology in the banking sector.

3. Why is banking software necessary for banking and financial institutions?

The digital era today makes it compulsory for financial businesses to streamline their processes through online banking software. Integration with bank accounts and a real-time transaction processing facility is crucial today to gain customer satisfaction, and ultimately, build a loyal customer base.

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