Unlike its commercial counterpart, retail banking targets a wide audience. In general, it means providing banking services to individual clients of different social groups and ages. With ongoing trends, clients who enter the retail banking system are getting younger. Due to parents’ increasing desire to develop the financial literacy of their kids, primary school students now have access to modern banking products like cards, bank accounts, or digital wallets.
Retail banking software can make accessing such offers easy and seamless. Other benefits of retail finance software include:
- Availability of banking tools and services 24/7;
- Simultaneous access to multiple banking products;
- Increased operational efficiency;
- Improved quality of provided services;
- Reliable customer support;
- Enhanced security of data and assets.
With the development of banking tech, the popularity of digital banking is growing. While in 2021, in the United States, there were around 197 million users of digital banking solutions, it is expected that this figure will beat the level of 217 million by 2025. It means according to statistics, over 60% of Americans use digital banking solutions.
However, at present, the traditional retail banking market is significantly larger than the digital banking industry. The worldwide net interest income of traditional retail banks is projected to be almost $2.3 trillion in 2023. In contrast, the same figure for the digital banking market will be around $650 billion.
Types of retail banking software
The niche of retail software development is quite broad, encompassing various types of solutions designed to solve different tasks and streamline multiple processes. Let us focus on just a couple of them that boast the highest demand and adoption these days.
Financial operation management software
Solutions in this category are designed for bank employees and administrators, and help them better organize their finance-related processes. Typically, they offer a range of features for budgeting, accounting, and working with financial documents. By automating reporting systems and speeding up workflows, these apps help reduce the time needed for carrying out various internal procedures.
Administrative management software
The main goal of launching this type of retail banking solution is to facilitate various administrative tasks. These management systems typically cover processes and responsibilities such as creating schedules for bank employees, assigning tasks, checking staff attendance, and others.
Customer service solutions
This is the largest category of retail bank software. It covers core banking solutions that enable customers to access services in physical branches and via ATMs. These core services include, but are not limited to, mobile payments, online financial transactions, debit and credit card issuance, as well as loan management. All bank equipment is connected to a single server, allowing transactions to be processed in real time.
The second set of solutions in this category is CRM platforms. This software enables the accumulation of various data about customers and facilitates interaction with them according to their needs and demands.
Steps involved in retail banking software development
The development of any retail banking solution includes several key stages. Although these stages may vary depending on the approaches chosen by a development team, at Itexus we typically follow the steps outlined below.
Ideation and analysis
First, determine the goals you want to achieve by launching your solution. What existing industry issues do you want to address? What functions will your app fulfill?
Once you have an idea, research the market to find out if similar solutions already exist. If they do, analyze what they offer to users. You can also explore ways to increase profits with your software product and estimate the feasibility of your project. At this stage, it’s a good practice to define the current (as-is) state and the desired (to-be) state of things. This will help you track the success of the initiative.
Search for a reliable tech partner
If you do not have an in-house development team or if your resources are not sufficient for a project, it is time to start looking for a retail software development company.
What factors should you consider when selecting an IT partner?
There are several points that you need to keep in mind at the stage of choosing a software development team.
- The company’s industry expertise;
- Portfolio and specificity of successfully completed projects;
- Cooperation models that are offered to customers;
- Reviews from clients who have already worked with the company.
It’s important to assess the company’s technical proficiency and expertise. Make sure to pay attention and check if they are skilled in the technologies commonly used for building retail banking platforms.
- Frontend development (CSS, Vue, React, Angular, HTML5);
- Backend development (Java, PHP, Django, Ruby in Rails);
- Mobile app development (Swift, Kotlin, Java, Objective C, React Native, Xamarin, Flutter);
- Databases (MongoDB, MySQL, PostgreSQL);
- Cloud computing (AWS, Microsoft Azure, IBM Cloud, Google Cloud);
- AI and ML development (Apache Spark, Apache Hadoop, IBM Watson, Keras, Cortana, Salesforce Einstein).
Scope definition and roadmap creation
During the project’s initial stage, you will work closely with the development team to discuss project requirements and tasks. Choosing the appropriate development methodology is also important at this stage to ensure efficiency and effectiveness. Establish project timelines by breaking down tasks into manageable chunks and assigning deadlines.
Design & development
With all the preparatory work done, designers and software developers take center stage. They’ll create a functional and user-friendly app, with designers ensuring it’s visually appealing, intuitive, and easy to navigate, while developers guarantee smooth operation, integration, and data management. This collaboration is critical to meet the needs of the client and end user.
Testing & deployment
Testing helps detect and fix bugs before end-users interact with the solution. Typically, tests are performed during the development process. However, it’s also crucial to test the solution after everything is ready to ensure that it functions correctly. Once the environment is well-prepared and all business processes are adjusted to new conditions, the solution can be deployed.
Support & maintenance
Launching a solution is not the end of the work. First and foremost, it is necessary to continuously monitor its performance to eliminate any possible technical issues. Additionally, you should regularly analyze the needs of users to successfully enrich your software with new features.
Challenges of retail banking software development
The process of retail bank software development and implementation is often accompanied by some pitfalls. Banking software typically deals with huge volumes of sensitive data and is expected to instantaneously process huge amounts of operations. Below are some of the most common challenges that retail software developers may face.
Regulatory compliance
All financial and banking solutions should comply with the regulations in force in the relevant jurisdiction. These may include rules introduced by the US Securities and Exchange Commission or the European Central Bank, as well as national rules implemented by local authorities. To ensure compliance, a retail software development company should introduce an additional layer of testing and validation.
Traceability
All changes made to bank software must be managed and operated in accordance with established procedures and regulations. Developers should consider this during the planning stage to ensure the necessary traceability and visibility of all updates.
Security and privacy
Security and privacy should be top priorities for any banking software. Even the smallest vulnerabilities can pose a serious threat, not only to customers’ funds but also to the bank’s reputation and future. To avoid such risks, development teams must choose appropriate tools for monitoring security and testing all of their app’s features.
Transaction processing
Processing transactions in retail finance software can be challenging due to high volumes, scalability requirements, performance expectations, security concerns, integration complexities, regulatory compliance, and effective error management. Overcoming these challenges requires a well-designed and robust software architecture, efficient infrastructure, and continuous monitoring and improvement processes.
Complex algorithms
Banking software heavily relies on various algorithms to handle different tasks and processes. These include fraud detection, risk assessment, credit scoring, and others. These algorithms are complex and have specific requirements for scalability, accuracy, compliance, and other factors. Developing, testing, and maintaining these algorithms in banking software requires a combination of domain expertise, advanced mathematical and statistical knowledge, computational power, and ongoing research and development efforts.
Data interoperability
The data processed and generated by your retail bank software should also be used by other systems and platforms, such as document management apps or billing systems. One of the easiest ways to ensure this is to build APIs for your software and use them for data integration.
Future of Retail Banking Software Development
The industry is expected to undergo major changes in the near future. Here they are:
- Advancements in technology. Progress is moving forward and enabling retail software developers to deliver more feature-rich, effective, and secure solutions. In the banking industry, we can see the growing role of cloud platforms, blockchain, VR/AR, and AI tools.
- Increased demand for digital banking solutions. People are becoming accustomed to performing multiple everyday tasks with the help of web and mobile apps. This is especially true when it comes to banking services. Retail banks that want to stay afloat amid growing competition need to find ways to deliver their services in a format that is optimal for their customers.
- Focus on personalization and customization. Clients are becoming more demanding, and banks need to create more personalized experiences to attract their attention. By incorporating AI and ML-powered tools into retail banking software, banks can provide customers with services and recommendations that precisely address their needs. You can read more about personalized banking solutions in one of our blog posts.
Summary
Retail banking software has become a standard for the industry. Implementing such solutions benefits both bank employees and their clients. Banking organizations can optimize their processes and increase profits, while customers receive higher-quality services.
At Itexus, we have gained extensive knowledge and experience in building financial apps and retail banking software over the course of several years of dedicated work. Our team of experts has a deep understanding of the latest technologies and trends in the financial industry, which enables us to provide custom solutions that meet the specific needs of our clients. If you already have an idea or you are just exploring the space, do not hesitate to contact us. Our specialists will attentively analyze your case and do their best to help you.