How to estimate the costs of fintech app development

Naturally, when app complexity grows, so does cost. Every additional feature in an application increases the time it takes to develop (not to mention plan, test, optimize, maintain . . . you get it).

It’s easy to get carried away with nice-to-haves that, while nice to have on paper, don’t justify the paltry ROI they bring. To visualize this, imagine how even the tiniest, most seemingly inconsequential feature, like an in-app calculator or geolocation integration, will inevitably demand more work from:

• Developers, some of which might be stack-specific (thus, higher hourly rates)
• Designers
• Project managers
• QA testers
• Maintenance teams

All of which rightfully command professional-level pay. Depending on the feature, you might also need to dish out some more for third-party software, like an API license or other integration solutions.

And then, there are the ongoing costs. Any app, after delivery, will require constant support and maintenance to ensure operability. The more features an app has, the more work hours it will take to roll out regular updates, system checks, bug fixes, and security patches.

That isn’t to discourage you from creating the next Revolut ($1.7B in funding ain’t shabby). But it’s important to stay grounded regarding what is and isn’t possible with your budget. There’s simply no getting around the fact that the app development costs of extra features do add up.

Different age groups have different expectations, tastes, and behaviors when it comes to the technology they rely on. It’s no exact science, but knowing your audience’s age — or really, their generational cohort — can give you a better sense of features, offers, UX/UI, and marketing tools your users will expect from your app.

Here’s what that might look like for fintech: Baby Boomers grew up accustomed to traditional credit offers, such as credit cards and mortgages, while budget-deprived Gen Z has different financial priorities, which in turn impacts what attracts them, like buy-now-pay-later over plastic or options to do social good.

Gen Z, together with Millennials, value connectivity and personalization. Apps with a few simple features and standardized UI might cater perfectly for Boomers or the upper edge of Gen X, but retirement calculators alone won’t cut it with younger generations who grew up surrounded by video games, social media, and emojis. As we’ve mentioned before in the context of fintech app development, budgeting apps like Quirk and Fortune City get it: Blurring the lines between cumbersome chores and lighthearted fun hits Gen Z’s sweet spot when it comes to their expectations from a fintech app.

Successfully fusing fun and financial chores — the UI/UX and the backend — doesn’t come cheap. On the contrary. You’ll need top-notch designers, more prototyping, and a tad extra QA testing to set you up for success with your engagement and retention metrics, and each of these resources need to build into your financial app development process.

You can’t spell “fintech app” without “API.” Depending on which industry vertical you intend to operate within, an application program interface (API) — or many — could be the heart and soul of your fintech product development. A payments app’s functionality, for example, entirely depends on open banking APIs like Plaid. No APIs, no app.

And surprise, surprise: The more complex a fintech app is, the more APIs it will require. Those range from payment processors to accounting, data analytics, and customer checks — the list is extensive. What’s more, for every API included, your budget is affected on multiple fronts, such as:

• Licensing fees — Most popular APIs require licensing fees, either upfront such as Visa Direct (which additionally also charges per transaction), or subscription-based like Plaid or Stripe (a Vention partner, not that you asked). Highly specialized APIs, like multi-layered compliance solutions, tend to charge proportionally more than the famous jack-of-all-trades counterparts that borrow only bits from said solution.
• Prototyping and testing — Even the most out-of-the-box API will still demand some customization to be integrated into your fintech app, particularly if it also depends on other APIs to do its job, like data analytics. With more APIs comes the need for further prototyping and testing to ensure a smooth solution, meaning more time between iterations and a larger budget.
• Updates and maintenance — Every time one of your API providers updates their fintech product, you must update yours. When your fintech app counts on over a dozen APIs, maintenance efforts quickly become routine work — and in case of mobile app development, there're also the app stores to worry about. To avoid downtime, your development teams must monitor API performance and stay current on updates — or, even better, have an open channel with the API developers themselves. Costs for that time commitment and level of expertise can add up, too.
• Security — Fintech APIs have specific risks that arise from (bad) implementation. Data leakage, inadequate encryption methods, and unauthorized financial access are all common issues with poorly implemented APIs. The biggest risk lies in assuming that all API providers do thorough security due diligence for their fintech products. Don’t. Integrating API security testing to your project may raise your financial app development costs initially, but it saves you a lot more down the road.

In short, for every moving part you add to your fintech app, the more you need to manage and the tighter your resources become.

A lot goes into choosing a tech stack for a fintech app, including each stack’s associated app development costs. Popular programming languages like Java have more developers to pick from, so market demand balances out salaries. On the other hand, stacks that utilize programming languages with smaller communities, such as Rust or Ruby, will require hiring specialized developers — and the higher hourly rates that come with them.

Commonplace languages and their more extensive pool of developers, especially in mobile app development, also make it easier to recruit additional team members — or replace existing ones — mid-sprint if needed. Complex coding languages might increase the chance of downtime or the budget required to avoid it in an emergency.

Furthermore, established stacks come with troves of supporting material, such as plug-ins, libraries, publications, discussion forums, and tools. Our West Coast CTO, Dave Hecker, sums it up best: Mature stacks are robust ecosystems with tons of easily accessible resources, so they’re rarely a bad choice if they deliver what your app and your business need.

Security issues don’t start and end with APIs. You basically have two choices: Make the entire thing unassailable or risk having extremely bitter customers when your security standards fail them — not to mention bad press and penalties. Fintech apps don’t have the luxury of ever being sloppy about safety. Period. Bread-and-butter security solutions such as multi-factor authentication, encryption, and data backup can’t be treated as extra features but as core ones.

Nevertheless, not every fintech app carries every morsel of a customer’s financial data. Many budgeting apps, for example Goodbudget, rely on the user’s active input instead of an API directly connected to their bank accounts. Others, like couples-oriented Honeydue, are naturally immune to man-in-the-middle attacks because they convey payment data but don’t function as payment gateways and, thus, don’t process payments themselves.

Generally speaking, the more an app is entrusted with delicate data, the stronger its defense systems — and your budget — must be. Does your app process sensitive financial data itself? Then it should better have the whole suite of Know Your Customer (KYC) and PCI DSS compliance against fraud, preferably with redundancy.

Security costs will also depend on the legal and regulatory landscape of your markets. In Europe, where privacy laws are stricter than in the US (cue the GDPR), slipshod data protection may lead to a world of financial pain for companies. Even disregarding fines, there are few things worse to a fintech business than the tarnished reputation of a data leak.

In the end, there’s no way around it. Either you shell out a bit more now to abide by compliance requirements, or roll the dice and try your luck against the regulatory bodies later. (Reminder: In the long run, the house always wins.)

This is but the tip of the app development iceberg. The cost of developing a fintech product has as many variables as it does lines of code. We haven’t even delved into, say, the expected ROI difference between iOS and Android users or the discrepancies between how fintech’s so-called “super apps” are perceived in Asia versus the US.

Do a Google search on “how much does it cost to develop a fintech app,” and you’ll realize that every single answer is a different one. $20,000? $500,000? Perhaps it could have something to do with how irrelevant it is to give out a numeric ballpark for a process so dependent on nuance.

Ultimately, apps are built to solve business problems. Adequate financial app development processes require an understanding of the problems to be solved, way before quotes get handed out. And over here, we don’t quite believe it’s possible to understand it accurately without a good chat first.