Mobile Banking App Development Costs: The Untold Aspects

Think a luxury car is pricey? Imagine a banking application costing less but transforming your cost-to-income ratio to soar. 

Would you invest in a top-tier online banking app for the price of a new Tesla?  

And heads up! The average cost-to-income US bank ratio, which is considered to be well-equipped with banking technology, is 60%. Let’s face the fact, many of bankers dream of improving it by 5-10%.

What if I told you there is a chance to reach 30%, and it’s achievable with building a banking app? Does it sound to be too good to be true, right?  

However, there are several banks that already have managed to reach this level. They have brought dramatic changes in banking software over the past few years.

Who hasn’t heard about innovative banks like Revolut and N26? Just imagine their cost-to-income ratio is around 30%, and about 25% for N26.

Incredible?  

Is there a chance to reach that? And if so, what could it cost?  

In this article, we explore many aspects that can either increase or decrease the cost. On top of that, we will share some tips and tricks on how to reduce development costs by 10 to 20%.  

Ready to dig in?

How Much Does It Cost To Create Mobile Banking App

The short answer circulating among fintech developers is typically from 30k to 300k.

How about the cost of apps like Revolut and H26? The brief answer: it’s hard to say. 

The owners keep it in secret, but we can estimate it based on our more than 11 years experience in mobile banking app development. 

The Mobile App Magic: The Undervalued Weapon in Banking Success

You might be curious about how Revolut, H26 achieved remarkable 30% cost-to-income ratio. The crucial cog of their banking business is mobile apps. The crucial cog of their banking business is mobile apps. As Statista claims, people are crazy about mobile apps and can’t get enough of them.

Here are the factors that mobile applications have a significant impact on and improve cost-to-income ratio and other bank performance indicators. 

Cost Reduction. With the help of mobile apps, banks can significantly reduce such costs by:

• Automation: Most importantly, mobile takes over most of the routine processes, thus reducing staff and increasing efficiency.
• Paperless Banking: The next thing that can be achieved with mobile apps is to reduce printing, paper and mailing costs.

2. Revenue Growth: 

• Transaction Fees: Upgrading or offering new services like instant payments, bill payments and super-apps with its consolidated services gives an opportunity to generate additional fees;
• Customer Acquisition: A well-planned, user-friendly and feature-filled app like Revolt just beckons customers, especially millennials and generation Z, which undoubtedly leads to increased market share.
• Cross-selling and Up-selling: Precisely personalized offers allow you to sell more services through Cross-selling and Up-selling, which also leads to revenue growth.

Just a fraction of how mobile apps can generate revenue. The experts at Itexus are available to help you find additional sources of revenue

3. Improved Customer Experience:

   – Round the clock mobile concierge for not just account management, remitting funds or making payments but also a great convenience that customer will vouch for in their postPandemic era lives.

   – The Rise of Personalization: A new wave supported by the fusion of mobile and AI helps personalize advice on an individual level.

   – Self-service: Mobile banking also allows for self-service, using kiosks and ATMs to solve common problems without the need to visit a branch.

All of this immensely enhances the Net Promoter Score (NPS) of the bank.

4. Data-driven Insights: Mobile app offers insights into customer behavior that can be used to enhance strategy.  

Risk Management. Also modern mobile apps are also well secured and can find the fraudulent activities.

5. Competitive Advantage: AI-driven chatbots, open banking integrations and other features in mobile apps provide the bank a solid competitive edge. 

– Brand image: Strengthen the perceived reputation of your bank, especially among younger customers.

6 Operational Efficiency: 

   – Streamlined Processes: mobile apps simplify internal processes and reduce processing time. 

   – Employee Productivity: Employees freed from routine work can focus on personalized customer service, which also provides value-added revenue growth.

So, as you see mobile banking apps are slashing costs, boosting profits, delighting customers, and outsmarting competitors—all of which immensely improve the cost-to-income ratio. 

Key Factors Affecting Mobile Banking Application Costs

Needless to say, the more functionality you employ to an app, the more technical resource and labor it requires. Revolut, H26 or Monzo are apps that carry broad functions and are the cornerstone for the bank business in general. 

Let’s look at each factor in detail.

Feature Complexity: The breadth and depth of features and services, such as core banking functions versus advanced investment tools, directly influence the development effort and associated costs. To put it simply, a savings account feature will be less costly than an integrated wealth management tool.

Functionality: The more bells and whistles you add—like funds transfer, bill payments, and customer support chatbots—the more time and resources are required for coding and testing, driving up development expenses.

Platform Type: Developing separate apps for iOS/Android can be a money pit compared to using a cross-platform application framework like Flutter, which streamlines the development process by targeting both platforms simultaneously.

UI/UX Design: Crafting an intuitive and visually engaging user interface demands significant design expertise, which can escalate costs. A seamless user experience is crucial for customer retention and satisfaction.

Incorporating Technologies: Incorporating cutting-edge technologies like AI and machine learning in your banking app necessitates specialized skills and expertise, further increasing development costs. These technologies can provide personalized banking experiences and advanced fraud detection.

Backend & Frontend: Utilizing a unified framework like Flutter for both frontend and backend development can result in significant time and cost savings compared to juggling multiple development tools.

Data Management: Ensuring secure storage and management of customer data, whether through on-premises servers or cloud solutions, entails substantial costs for infrastructure and ongoing maintenance. Efficient data handling is vital for regulatory compliance and customer trust.

Banking Regulation Compliance: Adhering to banking regulations such as GDPR, PSD2, and AML requires rigorous development, comprehensive testing, and meticulous documentation, which can significantly add to the overall cost.

Security Measures: Implementing robust security protocols, including encryption and multi-factor authentication, demands additional development time and resources, impacting the app’s overall cost. Strong security measures are essential to safeguard against breaches and maintain customer confidence.

A standard team to develop an efficient banking application must include:

Developer Location

The location of your app developer is an important consideration. Just as labor costs in California differs from labor cost in Nebraska, the developer rates in the States are notably different from those in Europe, Asia. This aspect can make a significant impact on the overall cost of a project. 

An everlasting dilemma: how to get a high-quality app at a lower cost? 

Why not consider outsourcing? Sure, in regions with a lower cost of living, developer rates are lower. But in many cases, the quality may suffer.

My suggestion: Look at international companies with an office in the States or Europe, and staff your own, I emphasize your own, development engineers in countries with lower rates. 

These companies are like an iceberg: the visible part is in the market, and the underwater part is in other countries.  

This approach provides market insight and allows them to create high quality products at reasonable rates, slightly above cheap regions.

Itexus is such a company. The tip of the iceberg is in Europe and the USA, and the engineers are in Eastern Europe. Yes, the rates there are slightly higher than in Asia or Africa.

Then why not in Asia or Africa?

Countries like Poland, Lithuania, Latvia and Estonia have deep math traditions that create excellent engineers. Another factor is culture and mentality. This is what ensures high quality and service, which more than compensates for the small increase in the cost of the project, as if it were done in Asia. 

The data shows that rates differ by an average of 20%, and sometimes even 30%. Provided that the costs of all other components are the same, developing overseas can save you those 20-30%.

And if your developer is seasoned and specializes in applications for the financial sector (this is very important), they can save an extra 5-10% by choosing the right components. I say this based on my own experience.

Not bad, right?

But beyond the above, let’s look at other important factors: quality and time.

Undoubtedly, there are many companies in Asia and elsewhere that create decent applications. However, at Itexus, we often have to take over apps for redevelopment from low-cost developers.

We have separated that type of service into a so-called ‘Project Rescue‘ to take over projects for further refinement.

The outcome? In the end, the final cost of the app and production time might increase by 30%. This is because you end up paying twice: first to a team that didn’t meet the task or compromised on quality, and then to a second team to fix the issues. All of this takes time, affects ROI, and ultimately impacts the cost-to-income ratio.

As the saying goes, you get what you pay for.

Is there a chance to save money while getting a high-quality product? Absolutely. It involves making smart choices.

If I were you, I would go for a reasonable ‘golden mean‘—high quality at an average rate. Agree that quality and clear deadlines should be a priority when selecting a developer.

Itexus experience in mobile banking app development

In January 2024, a digital banking company from San Jose wished us to develop a white-label mobile banking app. They planned to resell it under their brand. We pulled together a solid team of engineers for the job. The result? A customizable, scalable app that hit all the marks—on time and within budget.
You can find more details on the project in the case study.

Mobile bank transfer app

Later on, we built a mobile bank transfer app for a U.S. client. It allowed users to send money from U.S. cards to foreign accounts and pay international bills. The app is multilingual, with quick-switch options for English, Spanish, and French.

You can find more details on the project in the case study.

Conclusion

Oh, I know what you’re thinking: So, what is the right budget for a mobile banking app?  

You need to figure out the budget for a mobile app at a specific moment. Apps are always changing. New bells and whistles keep getting added. This changes the bottom line. So, what it costs today might not be the same tomorrow.  

The article gives rough numbers just to give you an idea.  

I dare you to contact us to get a cost estimate for a specific app or according to a list of features.  

However, the main issue is not the cost of the app, but the ROI and how it improves the financial performance, in particular the cost-to-income ratio.

Let’s transform your bank’s cost-to-income ratio together!

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