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How to start investment app development: benefits, challenges, solutions


Maryna Cherednychenko - July 6, 2020 - 0 comments

People often hesitate to invest because they are afraid to fail or think they do not have enough money to start. Mobile micro investing solves the problem. Various online services allow you to spend small amounts, minimizing risks to end up with nothing. Such tools are now in demand. That is why it may be a good idea to invest in their development. Before embarking on the development process, we suggest that you study the market and select your target audience. In this post, we will help you do so.

What is mobile investing?

Mobile investing implies using mobile technologies to invest funds in various fields in order to get revenue. It is a great way to make money without much effort. All you need to do is download an app, fill out the registration form, and connect a bank account. After that, you can transfer money and select stocks.

Mobile devices allow anybody to try hands at brokerage activity. With the internet connection, you can trade from home, office, country box, seabeach, etc. A big plus of the best investing apps is a low price. As a rule, you have to pay from 0.2 to 0.5% of the annual fee to use the service.

The reasons to put money in investment app

According to Bankrate research, two-thirds of smartphone users in the USA have at least one financial app. 17% of Americans have a pure investment app installed on their device. Besides, Statista claims people aged between 18 and 64 used an online investment service over the previous year. It gives statistics by age, highlighting three groups and showing the percentage of users in the given age category who used the stock market apps.

  • 18-29 years old – 12% 
  • 30-49 years old – 14% 
  • 50-64 years old – 10%

Who are the users of investment apps?

People of all ages use investment apps. However, they are especially popular among the younger generation. As a rule, this social group does not have significant financial resources. So, online services serve well to invest with minimal amounts.

To understand what people expect from the best stock trading app, it is worth recalling the typical demographic cohort, which sets millennials, gen X, and baby boomers. According to U.S. News, the first seek for low-cost mobile investment tools, while the latter two want to invest more to get higher dividends.

Why invest with online apps

There are many reasons why people want to invest. Let’s name a few:

Sense of security. With another source of revenue, a person feels more confident. He or she is less afraid of unforeseen events, such as, for example, job loss or natural disaster.

Findependence. Extra money opens new opportunities. A person feels less dependent on the main job. Moreover, he or she can turn the investment activity into the primary source of income.

Building wealth. For a person with average earnings investing might be the only way to get rich. In contrast to nine-to-five work, it requires less time and pays well.

Achieving goals. Big plans need big money. No matter what your purpose is, you can get closer to it by micro investing. Even small amounts can turn into reasonable sums.

 

why invest with stock market apps

Reasons to invest

Types of investment apps

There are hundreds of investment apps both in Google Play and App Store. However, you can break all of them into two groups:

  • Robo-advisors
  • Online brokerage

Let’s take a closer look at each group

Robo-advisors. Best investment apps for beginners

Robo-advisors use artificial intelligence to advise on smart investing. These are digital platforms that collect users’ data and apply mathematical algorithms to suggest the best way to make money work. In particular, robo-advisors ask users to provide such information as:

  • age
  • income
  • financial goals
  • investment period

Based on the inputs, they automatically manage assets on behalf of the client.

Robo-advisors have a few advantages over human managers. They are:

  • lower regular fees
  • less seed funding required to register an account
  • 24/7 accessibility
  • faster service

Main features of robo-advising apps:

  • individual investment strategy
  • dynamic rebalancing
  • investing schedule
  • goals-based scheme
  • tax optimization

Examples of the best robo-advising apps: 

  • Acorns
  • Personal Capital
  • Betterment
  • Wealthfront
  • WiseBanyan

Monetization models: 

  • wrap fee
  • interest on cash balances
  • selling financial products to clients (mortgages, credit cards, certificates of insurance)

Challenge: Developing a smart investing algorithm requires a lot of time and effort. You will have to hire true professionals and get ready to invest a lot in app creation.

 

types of best micro investing apps

Robo-advisors vs. Online brokers

Online brokers. Best investment apps for hands-on investors

An online broker should be understood as a human who works for the company that made a stock investment app. The company itself acts as a bank. It opens a virtual account to which the client deposits money. The client, then, manages this money on the exchange with the help of a broker.

The online broker app is needed to simplify communication with a broker. It helps watch the situation in the markets and gives access to the brokers working in this company.

There are two types of online brokers: full-service brokers and discount brokers. The former offers a wide range of services at a higher price, while the latter supports a limited number of options at a discounted fee.

Unlike robo-advisors, such services do not manage the client’s assets and do not invest on their behalf. They provide investment opportunities allowing users to build their strategy and choose the areas to invest.

Given this, online broker apps might be more suitable for experienced investors, while robo-advisors are a perfect fit for beginners.

The benefits of online brokerage are as follows:

  • you are your own boss
  • handy investment tools
  • continuous accessibility
  • online support

Main features of brokers apps:

  • stock trading
  • banking services
  • retirement planning
  • education and research
  • human broker assistance

Examples of the best brokers apps:

  • Charles Schwab
  • E*TRADE
  • Interactive Brokers
  • Fidelity
  • TradeKing

Monetization models:

  • charging transaction fee
  • acting as a bank (lower interest for deposits, higher interest for lending)
  • sharing net interest margin with a partner bank

Challenge: Online investment apps that work with human managers are easier to implement compared to robo-advisors. The point is that you don’t have to develop a complex algorithm for automatic investing. However, you will have to hire expert brokers and pay them regularly.

The roadmap for your investment app development

First of all, you need to decide what kind of stock analysis app you are going to make. As mentioned above, online services that bring together brokers and investors are simpler to develop. In fact, you need to create a convenient platform through which the user can choose financial products and quickly connect with a broker. Meanwhile, robo-advisors are a more tricky task. Developers will have to work on a computer algorithm that will be smart enough to manage financial assets effectively.

Anyhow, whatever path you choose, the app development will include:

  • building app architecture
  • producing a smooth user flow
  • integrating with the bank
  • adhering to a specific timezone
  • ensuring app security
  • creating a matching UI/UX design
  • providing testing and support

If you want to make the best stock app, get in touch. We will estimate your idea for free and advise on technologies that are right for your business.

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