How to Create a Money Lending App: Complete Guide
The loan market has experienced significant structural changes in recent years. The world situation, economic uncertainty, and the interest rate increase have changed borrower needs, creditor priorities, and approaches to making deals.
Overview of the Market for Money Lending Applications
Alternative lending has strengthened its position and is expected to grow further, with a CAGR of 10.1% till 2027, reaching US $971.6 million by 2027.
Macroeconomic changes will continue throughout 2024, so more flexible and customized private loans will continue changing the landing market.
Digital solutions allow a fast and hassle-free process of borrowing money, often a decisive factor for those who urgently need money. So, if you know how to create a money lending app, you can offer innovative solutions to meet the needs of both borrowers and lenders contemporaneously.
The ostensible proof that money lending app development has huge potential nowadays is that in 2022, the solution segment attained the highest market share. It will grow, outperforming the service segment in the next decade at minimum. According to Strategic Market Research, the global digital lending platform market will witness a robust CAGR of 25.97% and is expected to reach $47.85 billion by 2030.
What Is a Money Lending App?
A money lending application runs on smartphones and tablets, allowing users to borrow funds on demand with digital technology. Such software solutions link the lenders, who have means, and borrowers, who need them. These applications allow users to easily get money without visiting a bank, loan broker, or financial institution. At the same time, a client avoids borrowing from family or friends. Money lending apps may offer business and personal loans, mortgages, and auto loans from banks, credit unions, or individuals.
Furthermore, the platforms determine whether an applicant is eligible for a loan. If the answer is positive, repayment is also realized through the app.
How Do Loan Mobile Apps Work?
Instant loan applications make the borrowing process instant and seamless. Users download an app from the AppStore or Google Play Store and register using their mobile phone. The next step is to provide their basic information:
- date of birth
- employment status
- income, and credit score.
These details allow the app to deem a user eligible for the loan. As soon as this happens, the user can choose a type of loan using certain filters. The amount and repayment term can be chosen at this stage. Then, a user should submit the necessary documents, such as proof of identity, income, bank statements, etc.
All the documents are uploaded through the app to evaluate the client’s creditworthiness. As a rule, they are quickly reviewed, and the procedure can be completed after approval. The customer gets funds directly to the bank account and can immediately use them.
This is the basic user scenario for an app that loans you money, but why build it? What do you get out of it?
Why Create a Money Lending App?
The loan market and the market of money lending mobile applications overview prove that lending app development is well worth it. Before we check how to create a loan app, let’s also find its benefits.
Firstly, when there is an app, the service can be accessed from anywhere, which is a huge advantage for borrowers and lenders.
Speaking about the borrowers:
- Online lending platforms and apps allow them to avoid or minimize contact with financial institutions or banks.
- A mobile app is available 24/7 and in any emergency.
- You do not need to visit a bank or office in person, so you can apply anywhere.
- Loans and cash receipts can be managed instantly, no need to wait long for approval.
- The user’s financial and personal data is well-protected.
Lenders are also the ones who benefit from mobile lending applications because
- Market reach is wider.
- Software solutions enhance user experience and make the service more affordable, increasing the number of users and moneylenders.
- There is no need to communicate with the clients directly, so operating costs decrease due to automation.
- Technology-driven apps enable quick loan processing and disbursing of funds quickly and efficiently.
- The software checks the credit scores and documents of the borrowers, preventing fraud and bad loans.
- Human resources can focus on the increased number of loans and servicing customers.
- Modern AI technology improves credit products and attracts even more customers.
- The next question is how to create a money-lending mobile app. To answer this, you should know the types of solutions in the market.
Money Lending App Types
The type of software determines the specifics of development, cost, and features to develop a money-lending mobile app. Knowing the most popular types and the solutions with the highest potential, you can choose the mobile app you want to build. So, let’s get to it.
Startup business loans
The name is quite eloquent. Such loans are for startups who aim to jump-start their businesses. They allow quick funding of over US $5,000. You can connect businesses and lenders by developing an app for startup business loans.
Most platforms operate locally, so developing a solution that is available worldwide can enhance your competitive advantage.
Small personal loans
Small personal loans are for those with poor credit scores who need quick money. They are usually under US $10,000 and paid back in monthly installments.
When developing a small personal loans app, consider the best options available now and explore them further.
Small loans for cash advances
As a rule, small cash loans are under US $500 with fast funding and minimal fees. They are instant, and some apps recommend loans based on the borrower's profile without a credit check. Some services charge fees for loan processing, and some charge small margins added to interest installments. It’s up to you to decide how to monetize your app and make it most appealing to your users.
Why Are Loan Applications So Popular?
Life is full of unexpectedness: accidents, urgent repairs, unforeseen hospitalizations, tax bills, and many more reasons we need money. These make quick loans a popular means of solving monetary problems.
Money lending applications are useful instruments for getting funds right away. They allow the borrowers to apply, submit documents, get approval, and finally, have the money deposited directly into their accounts.
The process is hassle-free and can be completed anywhere and anytime without visiting the bank or any other financial institution. There is no need for paperwork or physical presence, and there is no restriction to applying only during business hours.
A loan app is a tool always on a smartphone, and all the borrower needs to get financial assistance is an internet connection.
For a lender, it’s also a perfect tool to get profit and raise the capital they have.
How to Create a Money Lending Mobile App: What to Start With?
Analyze the market
You should start with market analysis. Carefully examine the existing lending applications and determine their benefits and drawbacks. Check user feedback and reviews; they can be found on various sites and on YouTube. A good idea is to get first-hand experience with some of them. Try different approaches to get a clear picture of the present-day market you will enter.
Besides the existing applications, study the target audience, their pains, preferences, and needs. It will help you figure out user characteristics, the concept, and the key features of the app.
Check how your competitors have already realized this and where they have failed. This will also help you clarify your app idea.
Decide on the app type
As soon as your research is finished, decide on the app type. We have discussed the 3 types of money-lending apps above. The type of software solution, target audience, and basic features will determine the tech stack and the development cost. To target mass consumers, you can go for a cross-platform app and develop the product in less than 6 months.
Find a development team
When the idea and concept of your product are clear, it’s high time to find the professionals who will bring it to life. Generally, there are 3 main cooperation strategies in the IT world: hiring an in-house development team, working with freelancers, or outsourcing.
Your goals, objectives, and financial opportunities will determine the choice, yet hiring a dedicated team is the best. A contract with such a team will give you more guarantees of achieving the planned result, which may be risky with freelancers. More than that, they have all the resources, knowledge, hard software, and experience (check it in your niche) to develop a leading-edge app and provide prompt technical details.
Choose the tech stack
This is the practical step that development experts should decide. They should choose the best technologies for your application security, infrastructure, UI/UX design and implementation, backend and frontend development, and database management.
The best security practices should be implemented to ensure the safety of private and financial data, which should be encrypted.
Select features
We advise you to prioritize features according to your strategic goals, market trends, and budget. If you develop an MVP, select and implement the must-have features first. If you build a product, start with the must-have features but make it flexible and scalable. Form the core user experience and alter it later on if necessary.
The next group should have features. They are good for user satisfaction and enhance usability, but can be implemented in the second iteration.
Could-have features are non-essential, they are beneficial, but not critical. You can add them whenever you have time or a budget for this.
Finally, some features, which are nice to have, can be postponed. They are usually third-party integrations or advanced analytics, which become more actual with the growing user base.
Create UI/UX design
A good intuitive design is the key to your audience loyalty. A simple and easy-to-navigate interface will keep your users engaged. You can add gamification to make getting credit points more exciting.
Development part
This part includes all the traditional back- and front-end development tasks. While the front end is focused on UI, application layout, buttons, menus, and webpages, the back end deals with the server side. It includes database development, dealing with the app’s logic, and building APIs for backend-frontend communication.
A lending app deals with finances, so you should consider the 3rd party integrations of the necessary services, accounting systems, and payment gateways, like e-wallets, bank cards, PayPal, Stripe, and alike, through the necessary APIs. Check everything that should be integrated to ensure your app’s leading-edge functionality and security for your customers.
This stage also includes quality assurance and testing before launching.
App launch and maintenance
Finally, when the steps above are all set, and your app is functional, intuitive, and operates smoothly, it’s time to deploy it. Launch it in the App Store, Google Play, and other platforms and monitor the feedback. Pay attention to what users say and how they like your app. Implement the necessary modifications and fix the bugs if there are any. Update your app regularly to keep it functional.
Must-have Features
When prioritizing features, you should be careful when selecting the must-have functionality of your app for your MVP. Later, it will become the core and backbone of your app.
Let’s think over the list of such features together.
Registration
Registration and authentication go without a question for a loaning money app. The registration process should be simple and hassle-free. However, require complex passwords to ensure data safety. Consider adding up two-factor authentication or verification through biometric data.
User Profile
Users should safely store their personal information and important financial details in their profiles. A profile can contain credit card credentials, bank account details, government-issued IDs, and much more.
Encryption
Any confidential data transferred through the loan mobile app must be encrypted both in transit and storage. Ensure the servers are protected from attacks and privacy leaks.
Loan application form
This is the key feature of the whole app. Application forms for borrowing money should be well-structured and divided into stages, yet simple, intuitive, and clear to every user.
Transactions
As soon as the loan is received, it should be repaid. Offer your users the option of linking their bank account and the loan to make regular monthly payments. Implementing auto payments is a good idea.
Payment log
There should be a specific tab, dashboard, or journal where the borrowers can review their payment history, check the payments pending and due, and fix the amount of the debt remaining.
Notifications
Notifications as to the payment’s due time should be implemented to remind the users to keep to the schedule. Also, notifications about refinancing promotions or new profitable loans should be considered.
Support
Users should feel safe and free to ask questions if they need to clarify something. To resolve technical and financial questions, you can chat with a support service and also consider one with a lending manager.
Security and legal compliance
We’ve never mentioned that the highest level of security is necessary when it comes to finances, so be ready to meet the strict demands. Protect personal and financial data and transactions. Make your app fault-tolerant and protect it against the most widespread risks, like broken authentication, cross-site scripting, SQL injections, etc.
Let’s delve into the legal aspect a bit deeper.
Development of an Application for Lending Money: Legal Aspects
The legal requirements should be carefully studied before the development of the money lending application. The trickiest thing is that the legislation and regulations differ from region to region. That’s why global money lending apps are rare.
The list of regulations below will help you avoid big fines, but study the local laws as well.
In Europe — make sure your app-to-be complies with GDPR.
In the USA — make it meet CCPA (California Consumer Privacy Act), CFPB (Consumer Financial Protection Bureau) requirements, and Agencies with Fair Lending Authority regulations.
Counties and sometimes even cities covered by your app may have specific requirements for such businesses. The GLBA (Gramm-Leach-Bliley Act), for instance, specifically requires that all US businesses set standards to protect the security and privacy of customers’ NPI (Nonpublic Personal Information).
Loan guidelines change frequently, so it's a good idea to hire a legal consultant to monitor legal changes in this segment.
Things to Consider Before Loan App Development
Before developing any software, you should carefully consider all the challenges that may await you. These considerations are much more serious with fintech apps and money lending solutions. They require a much more delicate approach to security, 3rd party integrations, and legal aspects.
Fintech regulations
Figure out the regulations your software solution should comply with and how you will implement it. Do not overlook any essential detail, as it may cost you a fortune.
Stack of technologies
When you develop an app, you should choose a platform. Your target audience determines it. The development team should evaluate what development approach and technologies to choose. Your budget is another aspect that influences this choice.
Competitive advantage
To gain an audience you should stand out because the industry is highly competitive. So, you need to figure out the competitive advantage. This unique proposition will also serve your marketing purposes.
Investor
An investor or a bank is needed to get this business off the ground. Be careful with legal regulations, especially with banks. Take care of fair partnership, ownership, and shares with investors.
Vendor
A trustworthy development team with relevant experience can also be a challenge. Choose the loan mobile app developers who have positive feedback from the clients in your niche and work with the necessary tech stack. They should also offer a transparent pricing system and a quick project accomplishment.
How Much Does It Cost to Build a Money Lending App?
This is an eternal question with no definite answer. The cost of developing a money-lending app depends on multiple factors.
The majority of them are:
- The team you cooperate with.
Here, there are also differences between the specialists' level, hourly rates, and the form of cooperation you choose.
- Region.
The most expensive developers work in the USA and Western Europe. Their hourly rates may range from US $50 to $250. Australian specialists charge from US $40 to $170 per hour, while in India and Asia, the rate is as low as US $10 to $40. However, the quality may suffer. The ideal balance of cost and quality can be found in Eastern Europe and Ukraine in particular. Ukrainian skilled programmers rank among the top 10 worldwide, specialize in various niches, and work with diverse technologies.
Create a Money Lending App with Stfalcon
The Stfalcon team provides a full cycle of financial software creation, including discovery, UI/UX design, architecture planning, development, deployment, testing, maintenance, and support services.
We offer a dedicated fintech development team that is experienced in the niche and ready to prompt our clients with the best solutions both from technical and business viewpoints. Our variable fintech projects fulfilled earlier allow us to create applications that fully comply with the client’s requirements.
We have had a successful project with the biggest French bank and one of the biggest companies. Our experts had certain technical limitations associated with the framework used; however, they fully satisfied the client’s expectations and went above and beyond the initial project scope.
Our company has also developed a ready-to-use SDK for a crypto wallet based on Kotlin Multiplatform. This SDK integrates business logic and encapsulates all internal encryption, storage, and authorization processes. So, we know how to implement the most up-to-date security measures well.
Conclusion
With Stfalcon, you can rest assured your technical sphere is well-handled by a highly professional development team and take care of business processes. Our expertise in the fintech sphere and the most modern technologies we work with make us the best vendor for your loaning money app development.
We can prompt you with the best tech decisions and create the best product in the niche to stand out among the competitors. If you still have doubts or questions, contact us right away and we’ll start the journey hand in hand with you.
FAQs about Creating a Money Lending App
How to build a lending app?
All you need to build a money lending app is to analyze the market, learn all the regulations in this sphere, decide on the type of app, and hire the right vendor for your software product. However, if you want to participate in the process, you should create the feature list and consider the tech stack and design specifics.
What is peer to peer lending application?
Person-to-person lending sounds much clearer. It’s the type of lending when people issue and receive loans without banks or other conventional financial institutions. So, a P2P lending app is a platform that links the borrowers and the lenders.
The latter are primarily individuals but can also be companies. The companies and intermediaries that create such p2p software can benefit from each deal in the form of a fixed payment or some percentage of the loan amount charged from both a lender and a borrower.
How long does it take to create a loan app?
The term of a loan app's creation depends on its complexity. An MVP can be created in about 3 months, while a full-fledged application with must-have features may take up to 6 months.
All the rest depends on the client’s wishes, requirements, and budget. If you want to implement should-have, could-have, and nice-to-have features to make your solution the best in the market, be ready for up to a year of work with continuous maintenance and support after it.
How do loan mobile apps work?
After the app is downloaded, a user should register and provide the basic info: date of birth, employment status, income, and credit score. When the app decides the applicant is eligible for the loan, the user can choose the type and amount. Then, the necessary documents, like proof of identity, income, and bank statements, should be submitted right in the app for review. If the decision is positive, the borrower gets funds directly to the bank account.
Originally published at https://stfalcon.com.
