Best practices for building an investment platform
If you’re building an investment platform, you’re likely thinking hard about what you can do to distinguish your product from the competition. Before you start going down that road, know this: Behind just about every successful investment app, there’s a handful of developers who know that the core features that enable investment platforms don’t differ that much — in fact, competitors often rely on the same APIs to perform the same functions.
That means that devs who are already experienced in fintech app development generally (or investment apps specifically) can prep skeleton builds without much sweat, saving their energy to tackle the optional features and custom details that will truly make or break a platform.
So what fuels ace devs like that? A particular skill set, an understanding of nuance when it comes to features, and a keen understanding of APIs, among other things.
Skills your team will need
Robust builds start with solid foundations: Great investment management platforms must be able to deal with the fast processing and large volume of data management inherent to these solutions.
For that, you’ll need developers well-versed in popular backend frameworks such as Python, Java, or Ruby. Plus, you’ll probably want multiple tech stack specialists depending on the platforms your app is intended for. A web application might go with technologies like React and Angular, while in mobile app development, common architectures include Swift (for iOS) and Kotlin (for Android.)
Next up, databases. In general, SQL types like MySQL and PostgreSQL trump NoSQL ones in fintech and are preferred to manage and store the data an investment management app will generate.
And let’s not forget about the frontend, manifested as UX/UI design, as it’s critical to the success of any application. A user-friendly interface crafted with tools like Sketch, Figma, or Adobe XD will get your investment management platform halfway there in terms of customer satisfaction, but to take it all the way, you need a design that conveys your brand’s personality without burdening users. In markets as overly saturated as fintech, no app can afford to look lame.
Anything that isn’t essential to the app’s functionality or particular business proposition, no matter how desirable, must be saved for later in the software development process. (If narrowing down an app’s core features down to the bone feels daunting, consider sketching out a minimum viable product, or MVP.)
Investment management apps should have, at the bare minimum:
- Account management – Beyond creating accounts, the platform must allow users to manage their profiles and access their detailed transaction history in-app without being rerouted to a separate webpage.
- Payment processing – Investment apps also act as digital banks of sorts, holding up funds for liquidity in transactions. Since users must transfer money among platforms, those require payment processing solutions, generally achieved via APIs; common ones include Braintree and Stripe (a Vention partner.)
- Trading tools – For traders to trade, they must be aware of market trends and investment opportunities, not to mention the tools to actually execute trades. APIs such as IBKR and TD Ameritrade provide integration with their respective trading platforms and enable investment apps to perform transactions within the app itself.
- Portfolio tracking – Investors must accurately track their investment performance, time- and volume-wise. Again, API technology to the rescue: Third-party providers like Alpha Vantage supply real-time data updates, while user-friendly data visualization is covered by experts like Barchart (also a Vention client.)
- Regulation compliance – Albeit compliance varies by region, most Western jurisdictions have similar requirements. API providers such as Okta ensure Know Your Customer (KYC) and Anti-Money Laundering (AML) compliance standards.
These optional features will pepper your investment platform development with distinction and personality in line with your target audience and goals. Not all of them will suit your app (and that’s fine!), but casual and power users alike expect a healthy mix of unexpected or novel functionality.
Automated trading – Perhaps the most in-demand but non-essential feature of investment platform apps, automated stock trading is underpinned by smart algorithms built with neural network technology. Users can prime those to execute trades when certain thresholds are met, like “sell when the price goes down ten percent.” Popular tools to build and train custom trading algorithms include Google’s TensorFlow and Microsoft’s Azure Machine Learning.
Robo-advisory services – Robo-advisors are the investment platform equivalent to the chatbots we all know and love. When properly coded, they can execute automated trading, improve investment portfolio strategies, and even optimize a trader’s taxes — all while minimizing human intervention.
Alternative investments – Stocks, bonds, and funds are the bread-and-butter financial services an investment app should provide for its traders in capital markets. Other assets, like real estate, private equity, cryptocurrencies, and NFTs, depend on the app’s scope and usually require specialized APIs. Crypto, for instance, is renowned for having its own analog API ecosystem.
Tax calculation – Running more than a single income source complicates tax math quickly. Accounting APIs like Quickbooks, despite their primary focus on business ledgers, can also track capital gains to minimize headaches during tax season.
Research and educational materials – With the sudden popularity of retail investment apps, so too grew the demand for content that teaches the basics to stock market newcomers. Video tutorials, technical articles, news services, and discussion forums are some add-ons used to entice users to online investment platforms. Note, however, that they require specific software (like video codecs) that wouldn’t otherwise be present in the app.
Social trading – Remember the GameStop craze of early 2021? That’s a prime example of social trading in action: Reddit users discussed and followed the investment strategies of their successful cohorts. Platforms like Freetrade and eToro let users participate in community posts in-app and, in the latter’s case, even directly copy the portfolio strategy of other traders.
APIs and integrations are key
APIs are fintech’s most evergreen subject, and not without reason: Together with other third-party integrations, APIs are the often invisible cogs that enable most fintech apps to be developed by relatively small teams (and budgets.) Open banking in its current form only exists due to our modern API ecosystem, and investment apps aren’t an exception, ranging as they do from specialized integrations to all-in-one investment APIs, like our clients Vestwell and Upvest, respectively.
As previously mentioned, some features are just compulsory in investment management apps: payment processing, stock trading, and security, for instance. Their respective APIs will be in some combination in every successful investment platform.
Then, there are the near-fundamental API categories to most certainly be included, but that may require particularities depending on the target audience. We’re talking financial data APIs (track the stock market), analytics APIs (track user behavior), charting libraries to display said data intuitively, and notification systems, like Twilio, to inform users about portfolio changes in real-time.
Finally, there are market-specific APIs: niche integrations that cater to unique financial services. If, for example, your app targets climate change-conscious investors, then include weather APIs like Weatherstack (which provides weather history in addition to forecasts) to help them invest in agricultural commodities better.
Likewise, a platform that facilitates real estate investments could tap into geolocation APIs such as Yelp's Fusion to provide users with large volumes of data about business activity in particular neighborhoods. And if you want to incorporate social trading elements in your mobile app, you could include APIs from mainstream social media platforms such as Twitter or LinkedIn.
The demand for those optional types of APIs is often dictated by the ebbs and flows of hype cycles, with crypto as a standard example. “After a long downturn period, we’re finally watching the economy slowly come out of the latest crypto winter,” states Michał Bobczyński, senior fintech specialist at Vention. “As a result, requests for integrations that enable cryptocurrency trading, like Anchorage, have risen noticeably.”
Security and compliance
Beyond regulatory compliance, investment management apps are bound, by law, to abide by data privacy directives to safeguard their users' personal and financial integrity. In the US, that means both federal and state-level laws. So, if an investment app collects personal information from, say, California residents, it must comply with the federal Dodd-Frank Act and the California Consumer Privacy Act (CCPA).
Somewhat counterintuitively, US-based investment apps must follow the European Union’s hallmark GDPR as well if they’re processing data from EU citizens, regardless of whether those apps are available for EU users.
“If there’s an area where fintech founders can’t neglect when calling for guidance, it’s compliance,” cautions Ravi Srikantan, fintech strategic advisor at Vention. “Having multiple points of view, or legal opinions, is the best way for engineers to make the right choices.”
In other words, understanding the small print of rules’ implementation will help ensure your app is doing so correctly.
Beyond directives, investment app development should also follow some tried-and-tested best practices to ensure that the platform is reliable. This includes conducting regular audits to identify weaknesses and whether the platform complies with regulations and industry standards. Secure protocols are critical: Multi-factor authentication for users, encryption protocols to protect client- and server-side sensitive data, plus monitoring systems in place to alert against suspicious activity.
Establishing an incident response plan to mitigate the impact of hypothetical security breaches is also worth considering. By anticipating vulnerabilities with penetration testing, investment platforms can develop protocols to identify and contain attacks and restore full functionality as quickly as possible.
The ideal team composition
The perfect team size to create an investment platform will, of course, depend on the features you choose. “A specialist in high-frequency trading may not be the best for a customer-facing app, but they will know the market microstructure of how things work,” says Ravi. “Aligning experience with the types of products and outcomes will create a better result, with greater efficiency in the process.”
That said, some guidelines can be applied regardless of the scope. For example, investment management development usually requires one manager for every five developers. That limit can be stretched up to ten devs if the team is close-knit, but beyond that, it can get tricky.
Here’s a good breakdown ballpark for a team of ten:
- 2 project managers
- 2 backend devs
- 2 frontend devs
- 1 UI/UX designer
- 1 database designer
- 1 DevOps engineer
- 1 security expert
Plus, if your team is composed of qualified fintech engineers with previous experience developing fintech apps, they’ll know the pitfalls to avoid regarding regulatory compliance. That understanding will head off delays in meeting deadlines and delivery dates.
Platform development optimization tips
Simple investment apps may get away with using low- or no-code development tools, but in our experience, creating an investment platform is never actually simple. Intricate functionality, such as real-time data feeds, complex calculations, and integrations with third-party services, demands a high level of technical expertise and custom development, not to mention sector-specific understanding.
Competent developers know how to use lazy loading, caching, and pagination to keep the app working smoothly and avoid inelegant hiccups. Furthermore, the flexibility provided by cloud-based infrastructures like AWS, Google Cloud, and Microsoft Azure can be yielded by experienced engineers to improve overall performance (not to mention development speed).
Optimization can also come from the management side. Agile methodologies like Scrum and Kanban push for faster deliveries, constantly executing quality checks to build the product faster and on time. (If you’re drowning under waterfall-to-agile transformations, check out our guide for a smooth transition.)
And while we may be biased, the truth is that outsourcing your fintech app to a custom software development company is a surefire way to optimize the process. As long as your choice is committed to careful management, communication, and a reliable portfolio to back it up, your product will reach market heights quicker on efficient development costs.