key players in the Digital Banking ecosystem

Who are the key players in the Digital Banking ecosystem and what are the causes of their success? 

The fintech and digital banking ecosystem has evolved significantly in recent years. The reason? Technological advances have redefined customer expectations.In fact, today, traditional banks are forced to have functional digital products to remain competitive. For this reason, understanding the dynamics of the main players in the sector offers several benefits, including identifying opportunities for improvement and understanding how to build better user experiences. 

What makes a digital banking application successful? 

The key to the success of a digital banking application lies in several factors. Among them include:  

1. Modular Banking Strategy: 

Modular banking allows traditional institutions to quickly adapt to new technologies without completely restructuring their current infrastructure. Similar to Lego pieces, interchangeable modules are used to fit specific needs. These modules can be created and reused in an unlimited manner, providing a flexible and efficient structure to meet customer demands. What is gained? Flexibility and efficiency, innovativeness and optimization of the user experience. 

2. User Experience (UX): 

Successful applications focus on providing an intuitive and easy-to-use interface. This includes a clean design, adapted to the development guidelines of the different operating systems, simple navigation and fast loading times. An excellent user experience not only has an attraction function, but also improves retention of existing customers and keeps them engaged and satisfied. 

3. Security: 

Security and resilience are priorities in digital banking applications. The best apps use multi-factor authentication, end-to-end encryption and continuous monitoring to protect your users’ data. In addition, they focus on compliance, ensuring that developments comply with all relevant laws and regulations in each region. 

4. Advanced Functionalities: 

Successful applications in the Fintech ecosystem offer features that go beyond basic banking operations. This includes budget management, real-time notifications, integration with other financial tools and support for multiple currencies. These functionalities not only enhance the user experience, but they also increase loyalty and continuous usage. 

5. Adaptability and Flexibility: 

It is essential to develop the ability to anticipate market needs and expectations. This implies updating applications on a regular basis, having the ability to incorporate new functions “on the fly” and customizing services according to  each user’s preferences. 

What are the most important Digital Banking applications in the market? 

As mentioned, financial institutions and banks that can adapt quickly and offer personalized experiences will be more likely to succeed in the digital banking landscape. But which ones have done the best? 

The specialized site PYMNTS is an excellent resource to answer this question. On a monthly basis, it compiles a list of the most relevant digital banking applications for smartphones in the U.S. market. To do so, it considers the following factors: 

  • Coverage channels: The application’s presence on different platforms (iOS, Android) and its accessibility for users, including accessibility features for people with disabilities. 
  • Downloads: The number of times the application has been downloaded, reflecting its popularity and reach. 
  •  Average monthly users: The average number of active users each month, indicating the loyalty and constant use of the application. 
  • Sessions per user and average session duration: The frequency and duration of  users’ interactions with the application, which provides information on user engagement and satisfaction. 

Which applications tend to stand out time and again in the ranking? Here are some of them: 

  • 1. Dave: it is characterized by cash advances and operating on the basis of tips and underwriting fees rather than overdraft commissions. In other words, Dave’s main service is short-term lending. The company does not charge interest, origination fees or similar ones, but charges a monthly fee for using the service, and gives the option to “tip” the company. 
  • 2. Chime: It offers early access to salaries, negative balances with no overdraft fees, high-yield savings accounts and a guaranteed interest-free credit card. Chime stands out for its focus on helping users avoid traditional banking fees and improve their financial health with accessible and easy-to-use tools. 
  • 3. MoneyLion: it is a mobile banking application that offers a wide variety of features, including personal financial resources, prepayment option, quick cash advances up to $500 with Instacash℠ and search for loan offers through MoneyLion Marketplace. The app also offers credit score enhancement tools and rewards programs for using your debit card. 
  • 4. Albert: it is a financial management application with a wide range of services oriented to budget, savings and investment management. It offers personalized spending information, subscription tracking, smart alerts and automatic investment options. Albert also provides access to human financial advisors for personalized consultations. 
  • 5. Acorns: it offers automated investing in diversified ETF portfolios, retirement savings and investments for children (a distinctive feature). In addition, it provides a debit card, has a rewards system and exclusive access to educational content. 
  • 6. Empower: it provides quick cash advances to help users cover expenses without credit checks or interest. It also offers the Thrive feature for flexible credit, as well as budgeting and expense tracking tools. Empower focuses on providing quick access to funds and improving the financial health of its users. 
  • 7. Ally: Ally’s banking and investment application is a comprehensive financial tool that helps users manage multiple bank accounts, credit cards, investments and mortgage loans from a single location. Ally Bank is known for its high savings rates and lack of monthly fees, providing a complete and convenient banking experience. 
  • 8. Go2Bank: created by Green Dot, a company with more than 23 years of experience and 67 million managed accounts, it offers a no-fee online checking account, high-yield savings account and a secured credit card. Go2Bank is focused on providing accessible and affordable banking services for a wide range of users. 
  • 9. Varo Bank: a financial management application with more than 3 million users, offering banking and savings services with no monthly fees or minimum balance. The app allows for early access to paycheck, easy money transfers with Zelle, account activity alerts and credit building features. Other features include a high-yield savings account, cash advances and FDIC-insured security. 
  • 10. Wise: formerly known as TransferWise, it specializes in international money transfers with low fees and full transparency. The application allows users to send money abroad quickly, track transfers, and manage multiple currencies in a single account. Wise is known for its efficiency and low international transaction costs. 
  • 11. Revolut: it offers a full range of financial services, including bank accounts, debit cards, foreign exchange, and more. With an intuitive interface and innovative features such as commission-free foreign exchange and budget management, it has become one of the most popular applications. Revolut also offers investments in cryptocurrencies, stocks and precious metals, as well as travel insurance.

What are the main challenges and opportunities when developing a mobile fintech app? 

As previously stated, technological innovation has given rise to a wave of developments that have impacted the way users conceive and understand banks. All of the above-mentioned players are perfect examples of companies that capitalized on this new reality. However, as in any process of change, there are challenges and opportunities. Which ones? 

Challenges when developing fintech apps

  • Time and costs: 

Keeping up with technological advancements is essential, but it can be complicated and costly. Both traditional banks and fintechs need to continually incorporate new technologies to improve their services, which means investing in training and upgrading their infrastructure. 

Example: A fintech company that wants to implement artificial intelligence to improve its customer services will need to invest both in technology and in training its staff to use it effectively. 

  • Regulatory compliance: 

Fintechs handle large volumes of sensitive information, which requires strict security measures and privacy policies. In addition, there is no room for distraction. It must be ensured that applications comply with all local and international financial regulations, even if this represents a major challenge. When developing mobile applications, you can’t go in blindly. It is crucial to know the laws and regulations of each country in order to avoid penalties and ensure customer privacy. 

Example: a fintech operating in several European countries must be absolutely sure that its applications comply with GDPR data protection regulations, in addition to other local regulations in each country in which it operates. 

  • Interoperability: 

This is a key aspect. Making fintech applications integrate seamlessly with other systems and platforms is a challenge. Interoperability is a fundamental requirement for many users who want frictionless experiences and dynamic transaction experience. 

Example: PayPal allows users to link their bank accounts, credit cards and other financial services directly to your application. This requires PayPal to integrate multiple APIs and ensure that your system is compatible with different security protocols and data formats used by banks and credit card providers around the world. This level of interoperability allows users to make payments and transfers seamlessly, regardless of the bank or credit card they use. 

  • Customer retention: 

With competition constantly increasing, keeping users engaged and satisfied is a challenge. Applications must deliver ongoing value and continually adapt to users’ needs. 

Example: Revolut is constantly adding new functionalities and services, such as cryptocurrencies and travel insurance, to keep its users interested and engaged with the platform. 

Opportunities when developing fintech apps

  • Improved customer experience: New technologies make it possible to personalize and significantly improve the user experience. Functionalities such as artificial intelligence and machine learning allow for personalized recommendations and automated support. This directly improves customer satisfaction and loyalty. 

Example: A fintech application can use AI to analyze a user’s financial behavior and offer personalized savings and investment advice, as well as assistance through chatbots that answer queries 24 hours a day. 

  • Process optimization: Digitalization and process automation can reduce costs and increase operational efficiency. This ranges from automating administrative tasks to improved risk management and financial decision making. 

Example: A digital bank can implement automated systems to process loan applications, reducing approval time and associated operational costs, allowing for more efficient management of resources. 

  • Expansion of services: Mobile apps allow banks to bring a wider range of services closer to their customers. It is no longer just a matter of offering basic banking services, but also complex financial products such as investments and insurance. 

Example: a platform can be offered where users can manage their bank accounts, buy insurance, invest in mutual funds and receive personalized financial advice. All in one place. 

  • Innovation in financial products: The incorporation of innovative applications or services can be a differentiating factor in an ultra-competitive market. 

Example: when looking to stand out, you can launch a debit card that automatically rounds up purchases and deposits the change into a savings or investment account, automatically and easily, encouraging savings. 

  • Access to emerging markets: Mobile applications can facilitate access to banking services in emerging markets where traditional banking infrastructure is limited. This not only expands the customer base, but also contributes to financial inclusion. 

Example: M-Pesa in Kenya uses mobile technology to offer financial services to the unbanked, enabling transactions, savings and microcredit through mobile phones. 

  • Data collection and analysis: Data collected can be used to customize offers and develop more effective retention and attraction strategies. 

Example: Robinhood, a well-known investment app uses its users’ transaction data and investment preferences to provide personalized stock and fund recommendations. In addition, it analyzes market behavior and investment trends to send alerts and suggestions to users, helping them make more informed investment decisions. 

  • Collaborations and partnerships: Forming alliances with other fintechs, traditional financial institutions or technology companies can open up new market opportunities and improve service offerings. 

Example: Plaid is a fintech that provides an infrastructure that allows financial applications to securely connect to bank accounts. Plaid has partnered with numerous fintechs such as Venmo, Robinhood and Coinbase, facilitating the integration of financial services into their platforms. 

Do you want to develop fintech applications and mobile experiences on equal footing with the big players in the market?

At ThinkUp we can help you. For almost a decade, we have been developing exceptional mobile applications and user experiences. We create world-class digital products for startups and enterprises, with the goal of transforming and strengthening our partners’ businesses. 

Contact us now! 

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