The way people prefer to manage their finances is changing.
Decades ago, visiting a traditional brick-and-mortar bank and speaking face-to-face with a banker was the only option people had when they wanted to open and manage a bank account.
Today, things are much different. Digital banking is king.
According to Plaid, “there are an estimated 169.3 million mobile banking users in the United States, of whom nearly 80% said that mobile banking was their preferred way to access their accounts.”
In a recent fintech impact survey, the fintech platform provider also found that “80% of Americans believe they can manage their money without going into a bank” and “56% who bank digitally say they could ‘never go back’ to the world of bank branches and paper statements.”
This shift from traditional to digital presents a big opportunity for emerging fintech companies, especially when you look at the predicted growth of the market.
According to one source, the size of the fintech market stood at 112.5 Billion in the year 2021 and is expected to grow to 332.5 Billion by the year 2028.
If you’re committed to capturing a piece of the market by developing a new fintech app this year, it’s helpful to first understand more about what a financial application is, what makes financial applications particularly vulnerable, and what kind of security measures you must put in place when building your application.
When we refer to a financial application, we’re talking about apps, software, and technologies that facilitate, manage, and document the movement of money from one place to another. Financial applications also securely store personal information, account information, and other sensitive data for users.
A mobile banking app for consumers is one example of a financial application, but there are many other types of fintech apps being developed and released today. Other examples of fintech apps include insurance apps, loan and lending apps, crypto apps, forecasting apps, bookkeeping software, accounting software, investing apps, budgeting apps, payment processing apps, digital wallet apps, financial advising apps, and tax filing apps.
Financial applications are mobile and web-based, which enables business and money management to happen from anywhere in the world.
The market size of financial applications and fintech is expected to grow steadily over the next decade. Vantage Market Research estimates that the global fintech market is “expected to grow exhibiting a Compound Annual Growth Rate (CAGR) of 19.8% during the forecast period.”
Investors are eagerly investing in fintech apps and platforms as the market continues to grow. Stripe raised an additional 600M in 2021 in a round led by Allianz X, Sequoia Capital, and others. Plaid raised 425M in 2021 in a Series D round led by Altimeter Capital. Freelance payments startup Formations raised 8M in 2022. Total venture capital funding in the crypto space was at $4.219 billion in May of 2022.
The demand for user-friendly fintech applications is at an all-time high among consumers.
According to a survey conducted by Plaid, “73% of Americans see managing the majority of their finances digitally as the ‘new normal’ following COVID-19.”
When Marqeta surveyed consumers about banking expectations, results showed that “21% of respondents said an easy-to-use mobile app is the most important feature a bank can provide.”
As the market continues to grow, developers should be prepared to act quickly. Need help jumpstarting your project? Crowdbotics can help you bring your financial app to market fast. We provide fully managed app development for accounting, insurance, investments, secure banking, mobile wallets, and more.
Financial applications are particularly vulnerable to attacks by cybercriminals. According to Imperva, “financial services hold the dubious title “most-breached sector”, accounting for 35% of all data breaches.” The company also found that “between January and May 2021, web application attacks on the financial services sector increased 38%.”
In 2018, Positive Technologies released a report that found that “the most common vulnerabilities in 2017 were Cross-Site Scripting and Insufficient Protection from Data Interception, which allow attacking bank clients (for example, by intercepting cookies and stealing credentials).”
The report also mentioned insufficient authorization and authentication, two-factor flaws, one-time password bruteforcing, code vulnerabilities, arbitrary code execution, and server authorization flaws.
In another report by Infosys, the authors highlight the 4 common financial application security challenges:
Knowing about these vulnerabilities before you begin building your financial application will help you put the right security measures in place from the very beginning.
Security is the most important feature you should be focused on providing when developing and launching a financial application. Everyone who uses your application—internal team members, consumers, partners, or 3rd-party vendors—needs to feel confident that the information stored, managed, and accessed through your application is protected at all times.
The main security requirements for financial applications can be split into several categories:
Authentication is a core security feature found in most applications, but it’s crucially important when you’re building and using finance apps. Authentication refers to the process of verifying the identity of the user attempting to access an account.
The most common authentication method is a password generated by the system or set by the user. Most financial applications today, however, add an extra layer of security by requiring 2-step authentication or multi-factor authentication (MFA). This feature requires users to input a one-time code after inputting their password. These codes can be sent and retrieved via email, SMS, or through an authenticator app.
Most financial applications do not allow multiple sessions because of the security risks it creates for users. By implementing this feature into your application, you ensure that a single authorized user is the only one able to access their account at a given time and that the session ends when they log out or the system logs them out.
Authorization creates and maintains access privileges within your application. These authorization controls or mechanisms could also apply to 3rd party vendors, integrations, and servers that need various levels of authorization for your application or user data.
The information stored within your system needs to be encrypted and protected at all times.
When you build your financial app with Crowdbotics, you get access to bank-grade encryption. In particular, data is secured in transit using 256-bit AES encryption and SSL technology, which is the same level of encryption used by financial institutions when transmitting secure information, and the US government when transmitting secret information.
Secure HTTPS endpoints are used whenever transmitting information. Additionally, users have access to encrypted databases, which provide encryption of all data at rest.
Secure hosting is another essential security requirement for financial applications.
Each app on the Crowdbotics platform runs within its own standalone isolated container and environment. In addition to being scalable, this means your app is separated from other applications and doesn’t share a backend, database, or runtime with other apps. Each application environment operates with its own isolated processes, memory, and file system.
When building your financial application, you should put tools and safeguards in place that allow you to detect intrusion in real-time.
An Intrusion Detection System (IDS or NDIS)) can monitor suspicious activity and send alerts when activity is detected.
When building your financial application, keep these additional security best practices to keep in mind:
Always evaluate and monitor third-party vendors and integrations to ensure they offer the same or similar level of security you offer with your application. It’s your responsibility to protect the data and personal information of your users.
Give team members the responsibility of performing, or building tools that perform, continuous threat monitoring on your application.
Help your users understand how to keep their own accounts safe. Teach them how to set strong passwords, encourage them to set up 2-factor authentication, and help them recognize fraudulent activity in their accounts.
Have a plan in place that allows you to quickly respond to incidents and attacks when they happen. This plan is meant to help give your team the tools and procedures needed to identify, eliminate, and recover from an attack. Your plan should also include communication strategies that outline how to interact with users if you find that their accounts have been compromised.
Finally, write secure code from day one and perform regular security checks and testing on your financial application.
Crowdbotics apps are built using the RADStack: React, React Native, and Django. Django has strong default protections against a variety of standard attack vectors, including CSRF, SQL injection, and more.
Ready to build your financial application? Find out why startups, banks, and fintech companies partner with Crowdbotics to build and bring their fintech apps to market.
June 10, 2022