Develop A Banking App Like Monzo: Cost And Feature

Users demand convenience and immediate access to their finances. Plus, some of us also wish to have all sorts of financial aspects, like multiple crypto, investment, insurance, etc., in one place for better control and less complexity over each transaction and transaction-history. We have several apps that can help us in one way or another, but Monzo is something that makes a difference. However, this app also has some loopholes that can be addressed in a new way to fulfill the user’s needs. But, the challenge here lies in building a solution that is close to “perfect” like Monzo yet better, affordable and user-centric.

In this blog, we will guide you in developing a banking app like Monzo with cost considerations and feature suggestions so you can deliver exactly what your customers are looking for. We will lay out everything you need to understand the requirements, frame a perfect roadmap, and execute the development process with experts.

Monzo: Overview

Monzo is a digital bank based in the UK that provides a fully mobile banking experience. It was introduced in 2015 by Tom Blomfield. Monzo aims to simplify the banking process, and it is designed so that it can facilitate the entire operation exclusively through its app. This was the major USP as it removed the need for physical branches.

Monzo’s main features include a no-fee current account with no monthly or foreign transaction charges. This feature enhances cost-effectiveness for users. The app offers immediate transaction notifications, which allows users to track their spending in real time. It also includes various budgeting tools, such as expense categorization and financial analytics, which help users manage their finances more effectively.

This platform works on a simple approach that addresses common issues found in traditional banking, like hidden fees and slow service, which is why it primarily focuses on transparency and user experience, which is also responsible for driving its rapid growth and appeal, both within the UK and internationally.

What Makes The Monzo Unique?

Monzo offers a suite of standout features that simplify financial management, like:

1. Password-Free Login: Log in securely without needing a password, thanks to magic links sent to your email.
2. NFC Card Activation: Activate your card just by tapping it on your Android phone.
3. Easy Peer-to-Peer Payments: Transfer money to other Monzo users quickly and easily.
4. Bill Splitting: Split and keep track of bills with friends effortlessly.
5. Card Freeze/Unfreeze: If you lose your card, you can freeze it right away and unfreeze it when you find it.
6. Shared Tabs: You can manage and track shared expenses for group activities or with housemates.
7. Real-Time Notifications: You’ll get instant updates on your spending and balance.
8. Early Salary Access: Get your salary a day before payday.
9. Round-Up Savings: Automatically save spare change by rounding up your purchases.
10. Organizational Pots: Set aside money into different pots for various goals or budgeting needs.
11. Interest-Earning Savings Pots: Earn interest on your savings in dedicated pots.
12. Fee-Free International Spending: You can use your Monzo card abroad without extra fees and withdraw up to £200 in cash every 30 days for free.

Key Market Takeaways For Banking Apps

The global mobile banking market is expected to hit $7 billion by 2032, with a compound annual growth rate of 16.8% from 2023 to 2032.

Another report highlights that the global mobile banking market was valued at approximately $772.96 million in 2022. It is projected to grow to $2,092.36 million by 2031, achieving a CAGR of 11.70% during this period. 

If we talk about the UK in particular, the Net Interest Income for digital banks is forecasted to reach $106.30 billion in 2024. This figure is anticipated to grow at an annual rate of 3.70% from 2024 to 2029, resulting in a market volume of $127.50 billion by 2029.

Additionally, the global core banking software market was valued at $14.54 billion in 2023. It is expected to expand from $17.00 billion in 2024 to $62.75 billion by 2032, reflecting a CAGR of 17.7% during the forecast period.

Business And Revenue Model Of Monzo

Monzo functions as a fully digital bank that focuses mainly on delivering banking services through its mobile application, without physical branches. Here is a brief overview of Monzo’s business and revenue strategies:

Monzo’s Business Model

Monzo’s offerings are categorized into several key areas:

1. Personal Banking: Offers current accounts, savings accounts, and joint accounts designed to meet individual needs.
2. Business Accounts: Delivers banking solutions customized for small and medium-sized enterprises (SMEs).
3. Credit Facilities: Features include personal loans and overdraft facilities to help users manage cash flow.
4. Financial Management Tools: Features budgeting tools, expense tracking, and savings pots to help users manage their finances effectively.

Monzo’s Revenue Streams

Monzo’s revenue is derived from various sources:

1. Revenue comes from premium services like Monzo Plus and Monzo Premium, which offer enhanced features for a monthly fee.
2. The bank earns from interest charged on overdrafts and personal loans extended to users.
3. Monzo collects interchange fees from merchants each time a customer makes a purchase using their Monzo card.
4. Monzo collaborates with companies such as utility providers and receives commissions or referral fees to drive new customers to these partners.
5. Through third-party managed savings accounts, Monzo benefits from the difference between interest rates paid to customers and those received from financial partners.
6. Fees are applied to ATM withdrawals made outside the UK beyond a specified limit.

What Features Make Monzo Popular Among Its Users?

Monzo has become a favored choice for many due to its range of innovative and practical features. Here are some features that set Monzo apart:

1. Instant Transaction Alerts: Monzo provides real-time updates on every transaction. This feature helps users monitor their spending closely and stay informed about their account activity.
2. Comprehensive Budgeting Tools: Monzo includes robust tools for setting budgets, tracking expenditures, and categorizing transactions. These features make it easier for users to manage their finances and stick to their financial goals.
3. NFC and Card Freeze/Unfreeze Functionality: Monzo provides NFC cards that can be activated quickly by tapping it on an Android phone. Additionally, if a card is lost or stolen, users can immediately freeze it to prevent unauthorized use. Once found, the card can be easily unfreezed through the app.
4. Dedicated Savings Pots: Monzo allows users to allocate money into separate Pots for specific goals or expenses. This feature facilitates organized saving and effective budgeting.
5. Automatic Round-Up Savings: Every transaction is rounded up to the nearest pound, with the difference automatically saved. This feature simplifies saving without requiring additional effort from the user.
6. No Foreign Transaction Fees: Users can make purchases abroad without incurring extra charges. Additionally, Monzo allows free cash withdrawals of up to £200 every 30 days when overseas.
7. Bill Splitting and Shared Tabs: These features are designed for convenience in managing shared expenses. Users can easily divide bills and track who owes what among friends or housemates.
8. Early Salary Access: Monzo provides the option to access your salary a day before the official payday. This offers greater flexibility and control over finances.
9. Secure Login with Magic Links: Users can log in securely without the need for passwords by using magic links sent to their email, enhancing both convenience and security.
10. Monzo Plus and Monzo Premium: These subscription plans offer advanced features such as custom categories, virtual cards, and travel insurance, catering to users seeking additional benefits and services.

Innovative Features That Can Enhance An App Like Monzo

To further advance a banking app like Monzo, you can plan to include the suggested features to significantly improve user experience and functionality, such as:

1. Cardless ATM Withdrawals: 

Users can withdraw cash from ATMs directly through the mobile app while bypassing the need for a physical card. This feature streamlines access to funds and offers added convenience for users on the go.

2. QR Code Payments: 

You can implement QR code scanning to allow users to make payments quickly and securely at participating merchants. This feature simplifies transactions and reduces the need for physical payment methods.

3. Customized Financial Insights: 

Provide users with personalized financial advice based on their spending patterns and financial behavior. This personalized approach helps users make informed decisions about budgeting and saving. It can also help you with user retention.

4. Voice-Activated Banking: 

You can incorporate voice recognition technology to allow users to perform banking tasks through voice commands. This hands-free method enhances accessibility and convenience and makes financial management more intuitive.

5. Biometric Authentication: 

Strengthen security with biometric authentication options such as fingerprint and facial recognition. This advanced method ensures that only authorized users can access their accounts and perform transactions.

6. Comprehensive Financial Integration: 

Integrate a range of financial services within the app, including investment platforms for stocks, bonds, and mutual funds. Support for cryptocurrency trading and wallets can also be included. Additionally, provide options for purchasing insurance, such as travel or home insurance, directly through the app. This feature can significantly sound appealing to a broader user base on a global scale.

Cost Of Developing An App Like Monzo

Here is the approximate cost range for the development of banking apps like Monzo. The final amount can vary depending on your requirements and other factors that can affect the cost of the entire process:

Cost-Affecting Factors To Consider For Banking App Development

Developing a banking app like Monzo involves numerous factors that can significantly impact the overall cost. A thorough understanding of these cost drivers is important for accurate budgeting and effective project management. 

1. Regulatory Compliance And Licensing:

Meeting country-specific banking regulations can increase the complexity and cost of development. These regulations vary by region and require thorough compliance checks, which may involve legal expertise. Additionally, strict data privacy laws like GDPR and CCPA demand significant investments in security measures to protect user data and ensure compliance.

2. Integration With Legacy Systems:

Integrating a new app with existing legacy systems is a challenging and costly task. Creating APIs that work seamlessly with older infrastructure requires time and expertise. Data migration adds another layer of complexity, involving the accurate and secure transfer of data from the legacy system to the new platform.

3. Security And Fraud Prevention:

Incorporating advanced security features like biometric authentication enhances user safety but adds to development costs due to the need for advanced technology. Developing fraud detection systems, especially those using AI and machine learning, also requires ongoing investment to adapt to new threats and maintain user trust.

4. Open Banking Integration:

Integrating with open banking APIs is essential for data sharing and third-party services, introducing technical challenges and added costs. Ensuring secure communication between APIs and maintaining compliance with open banking standards is critical, as any lapse could impact user trust and regulatory standing.

5. Localization And Internationalization:

Expanding the app to different regions involves translating content into multiple languages and adapting it to various cultural contexts. Accurate translation of financial terms is essential, and the cultural adaptation process requires additional development work. These efforts are necessary for reaching a global audience but add to the overall development cost.

6. User Acquisition And Retention:

Attracting and retaining users involves substantial marketing and advertising expenses. Effective strategies are important for gaining new users, and providing high-quality customer support is key to keeping them satisfied. However, these efforts can add significantly to the operational costs of running the app.

7. Emerging Technologies And Innovation:

Incorporating technologies like blockchain can improve transaction security and transparency but involves significant investment in expertise. Developing AI and machine learning features for personalized financial management and fraud detection also requires specialized knowledge and ongoing refinement. While these innovations can differentiate the app, they come with substantial costs.

Development Steps For Banking Apps Like Monzo

Developing a banking app akin to Monzo involves a strategic approach, and here are the essential development steps that you may need to follow:

1. AI-Driven Financial Management

Start with integrating AI to enhance financial management within the app. Implement machine learning algorithms to analyze user behavior, predict spending patterns, and offer personalized financial advice. Develop tools for setting and tracking financial goals and make sure that users have a clear view of their progress. Automate the categorization of transactions based on merchant data to simplify budgeting and financial tracking.

2. Gamification And User Engagement

Incorporate gamification early in the design process to keep users engaged. Design interactive financial challenges that reward users for meeting their savings and budgeting targets. Build social features like community forums where users can share financial tips and experiences. This will increase user retention and create a community-focused environment within the app.

3. IoT Integration And Smart Connectivity

Plan for the integration of IoT devices and allow users to manage their finances through smart home systems. Develop the app to connect with advanced payment gateways and enable secure and seamless transactions through smart devices. This step enhances the app’s accessibility and convenience and aligns with modern user expectations.

4. Blockchain Security Implementation

Implement blockchain technology to ensure transaction security and transparency. Develop smart contracts to automate and secure transactions and reduce the potential for fraud. Consider tokenization to allow users to invest in fractional ownership of assets and offer a modern approach to asset management within the app.

5. Sustainability Features And Green Finance

Incorporate sustainability features during the development phase to appeal to eco-conscious users. Build tools that track users’ carbon footprints. Offer green investment options that promote sustainable and socially responsible investing.

6. Voice Interaction and Accessibility

Once done with all the above implementations, you now have to integrate voice command capabilities using natural language processing. Design the app to allow voice-activated transactions and account management, which can improve accessibility for all users. This feature makes managing finances easier, particularly for users who prefer hands-free operation.

7. Biometric Security Measures

Incorporate biometric authentication methods to enhance security. Develop features like facial recognition for secure login and transaction authorization and provide alternatives such as fingerprint or voice recognition. These security measures should be integrated into the app to offer users multiple layers of protection.

8. Development of Innovative Financial Products

Focus on developing unique financial products like fractional investing and cryptocurrency trading. Build the infrastructure to support these offerings and allow users to invest in smaller portions of high-value assets and manage digital currencies securely. These innovative products can definitely help you differentiate your app in a competitive market.

Tech Stack For Monzo Clone App Development

Developing a banking app like Monzo requires a robust and secure tech stack to ensure smooth performance, data security, and a seamless user experience. Here are some key components of the tech stack:

Top Revenue-Generating Methods That Are In Trend For Banking Apps

Here are some top revenue-generating methods for banking apps:

1. Subscription-Based Premium Services

Banks are increasingly offering subscription plans with various levels of service. Users can select from different tiers, each providing added features such as enhanced customer support and exclusive benefits like airport lounge access and travel insurance. These premium plans generate consistent revenue while offering enhanced value to subscribers.

2. Transaction And Card Fees

Revenue from card transactions is a major source of income. Banking apps collect interchange fees from merchants when customers use their debit or credit cards. They also charge foreign exchange fees for currency conversions and ATM fees for withdrawals beyond a specified limit. These fees contribute to the app’s financial stability.

3. Investment And Advisory Fees

Apps that offer investment services charge fees for trading activities, such as buying and selling stocks, bonds, and mutual funds. They may also provide investment advisory services, charging for personalized advice and portfolio management. Some banks use robo-advisors, which provide automated investment guidance and generate additional revenue.

4. Loan And Overdraft Charges

Interest from loans is a key revenue source. Banking apps charge interest on personal and business loans, as well as fees for overdrafts when users exceed their account limits. These charges help users manage their finances and contribute to the app’s overall revenue.

5. Data Monetization

Monetizing user data is becoming more common. Banks can sell anonymized data to third parties for market research or use open banking APIs to share data with other financial institutions, creating new revenue streams through collaborative services. This approach leverages valuable data while maintaining user privacy.

6. Partnerships And Affiliations

Forming partnerships with retailers or other brands to offer co-branded credit cards is another revenue method. These collaborations provide mutual benefits and shared revenue opportunities. Additionally, banking apps can engage in affiliate marketing and earn commissions by promoting third-party financial products and services.

7. Emerging Technologies

Exploring new technologies presents additional revenue opportunities. Banking apps are incorporating cryptocurrency services, which allow users to trade and manage digital currencies. Some apps are developing platforms for non-fungible tokens and investigating DeFi products to walk hand-in-hand with emerging market trends.

Conclusion

Creating a banking app like Monzo offers both great potential and challenges. With the rising need for digital banking, focusing on unique features and careful cost planning is key to growing and earning a fortune. It’s important to balance ease of use with strong security to build an app that easily meets user needs and stands out in the market. Moreover, it is important to address factors like legal requirements, system integration, and using advanced technologies, which can lead to a banking app that provides convenience, safety, and value. By considering these key factors, you can develop a banking app that is both successful and reliable in serving its users.

Looking To Develop Banking Apps?

We have 10+ years of experience in developing secure and user-friendly banking apps. With over 200 completed projects and more than 50,000 working hours, we’ve successfully worked on notable platforms like Jabapay, EQL, and several other fintech and banking apps. Our team is skilled in designing apps that offer simple financial transactions, better security features, and a smooth user experience. So, if you’re planning to develop a banking app, we can help you turn your idea into a reliable and efficient solution that meets your needs and stands out in the market. Connect with us today to get started.

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FAQ

How much does it cost to create a bank app?

The cost of developing a banking app mostly ranges between $10,000 to $100,000. Factors influencing the cost include app complexity, features, platform (iOS, Android, or both), and the development team’s location and expertise. Advanced security features and compliance with financial regulations can further increase the cost.

How do I make my own bank app?

Creating a bank app involves several steps: defining the app’s core features, selecting a reliable technology stack, ensuring compliance with financial regulations, and hiring a skilled development team. The process also includes designing an intuitive user interface, integrating secure payment gateways, and performing thorough testing to ensure the app’s functionality and security.

What software does Monzo use?

Monzo primarily uses a microservices architecture built with technologies like Kubernetes, Docker, and Amazon Web Services (AWS). The backend is mostly written in Go (Golang), while the frontend uses Swift for iOS and Kotlin for Android. This tech stack ensures scalability, reliability, and quick deployment of updates.

How long does it take to develop a banking app?

Developing a banking app can take 6 to 12 months, depending on the app’s complexity, features, and the development team’s size. Initial phases like planning, design, and prototype development can take 2 to 3 months, while coding, testing, and deployment may require another 4 to 9 months.