30 Jun 2021

A Developer’s Guide: How to embed banking functionality in your app

Whether you’re a legacy company adapting to stay ahead or you’re a startup creating your own inroad, embedded banking can set your business up to capitalise on the changing expectations of customers and clients. But how do you go about building that functionality into your app? 

Establish what you want to achieve

Before you go any further, it’s worth figuring out what kind of embedded banking is right for your business. Because your decision will affect every other step of the process. It will determine whether it is only your money you’re dealing with, or your customers’ money as well.

So consider: do you want embedded banking for your own business so you can automate processes that weren’t automated before? Or do you want to provide banking services to your customers? Your answer will create a different set of questions to ask yourself and a different set of problems to solve. For instance, if you want to create a self-contained marketplace solution, you’ll need to consider what kind of payment infrastructure will support it. 

Know who you’re creating it for

Are you dealing with consumers or other businesses? Your customer onboarding experience will be defined by the types of people you’re selling to. It may be that for a marketplace app you are creating functionality for both businesses and consumers – which creates another set of rules for you to work with. 

Choose the financial assets you support

This is where your options spiral out in all directions so you need some clarity before you take another step. The functionality you can offer will be framed by what you give your customers access to. 

Do you simply want to issue cards to customers or do you want to give them a crypto wallet? Do you want to rely on the accounts they already have or do you want to create new ones? Do you want to issue loans to create a buy now pay later function or do you want to make funds available that employees can spend according to a budget? The possibilities open to you are almost endless, so focus on what’s important to your vision.

Decide on what your solution will do

Depending on your goal, your audience and the financial assets you’re working with, you can begin drafting the list of functions you want for your solution. Do you need it to convert currencies or simply store payments? Do you need to automate transfers between a consumer and a marketplace? Will you offer your customers credit?

Here you can also get more specific with functionality, defining what your customers can and can’t do. If you’re creating invisible bank accounts for your customers, ask yourself what the limits will be on that. Will you allow money transfers in both directions between their existing accounts and your created account? Or do you want to ringfence the money once it’s in your domain? Do you want to limit when and where funds can be spent?

Search for your providers (or do it in house)

Once you’ve answered these questions you’ll be thinking about a provider. Probably. It is possible to create a solution in house but that’s a costly venture. One that requires a lot of time, expertise and maintenance. So the likelihood is you’ll need a specialist who can help you onboard customers, provide the financial instruments you need and depending on what you want your app to do, let you issue prepaid cards, IBANs, loans etc. 

You might want multiple providers to get multi-functionality. But because they’ll operate according to their own perimeters, they’re not going to be compatible out of the box. So you’ll need to figure out a way to make all the APIs work together – and you may want a specialist for this too. 

At this stage, you also need to be careful that various providers aren’t pulling your initial idea in a hundred different directions. Finding a workaround to yet another compatibility problem can eventually twist your vision out of skew. 

Consider your compliance

Regulations like PSD2 have defined the perimeter for developers. And while there is a lot of scope for what developers can achieve within those bounds, it can be very expensive and time consuming to get the green light from other players in the industry. 

Often you need to spend a fortune before a provider will give you confidence in compliance. They want to understand your business inside out so they can build a cage of compliance around it. This is not a fast process and by the time your startup has the go-ahead, you can miss your window on the market. 

What’s more, it’s possible to do all these deals, to talk endlessly with compliance teams, to go through all the right hoops – and still get shut down. If something goes wrong at launch, it is a common occurrence for the financial institution to panic and halt the program.

Huge multinationals might have the luxury of taking months and years to get everything right. But this means they aren’t agile enough to be reactionary to favourable market forces – which can mean they get left behind. Meanwhile, smaller businesses just don’t have the resources. So the business case often isn’t enough to make the risk worthwhile.

Is there another option?

We created a way to ensure all the rules are checked out of the box. The guard rails are already in place with built-in compliance, so you can get going quickly. Just say the word and we’ll script everything out and generate all the APIs you need in one go. 

Because we encrypt all sensitive data, you’re able to provide banking services for your customers without a licence. And as far as we’re aware, we’re the only API-first provider on the market. This means we can free you up to select the functionality you want, without compromising on your vision. Embedded banking opens up so many possibilities to businesses and developers. Don’t let its potential pass you by.

Get in touch with us to discover just how quickly you could be generating revenue and going to market.

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