Loan applications are in growing demand nowadays. But what makes them so attractive? On-the-go accessibility and the client’s ability to fulfill urgent needs are what make the loan platforms so unique and popular among clients. But how can a business create a loan app from scratch? In this guide, we will demonstrate the key steps of the loan platform development.
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A loan app is a digital solution for the client’s financial needs as they can make a request for financial assistance.
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The user has to upload the document proof of their identity, salary, and place of residence to receive a loan approval.
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Loan applications have to comply with Anti-Money Laundering-relevant regulations to ensure client security.
Step-by-Step Guide to Building a Successful Loan App
A future success of crafting the customized loan platform will depend on the elements in its development process. It is always important to keep in mind what technology stack the application will include, as well as what marketing strategies will be applied for its market promotion, because these elements will affect its practical effectiveness and favorability. Let’s find out how to make the loan app not only technologically secure and effective but attractive among the clients.
Step 1: Research and Planning
Prior to any development of an application for the loan requests, defining its target audience, marketing needs, and conducting competitor analysis are the key features to determine the overall project’s idea and its key elements to gain more market customer attraction.
Defining a target audience is a key factor, which is required to determine the category of people that will bring demand and value for the product.
Debt consolidation is one of the key factors that determines the loan app’s target audience. Additionally, underserved people serve as a loan application’s target audience.
Identifying marketing needs will be helpful in determining the audience’s desires.
The market needs of the loan apps are the alleviated process of receiving loans, easy and fast money transfer, and secure transactions.
Conducting competitor analysis is required to define the key loan application players that stand out on the market, determine their core strengths and weaknesses to utilize to make a personal application unique and attractive.
The basic steps of competitor analysis include:
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Competitors detection.
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App analysis (features, UX/UI design, types of loans, interest rates, etc.)
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Evaluate the client feedback (review Play Market or App Store).
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Assess the competitor’s marketing strategies.
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Evaluate the app’s unique value proposition.
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Analyze the security measures applied in the application.
Defining the App’s Core Features and Unique Selling Points (USPs)
When finishing analyzing competitors, it is essential to consider the overall loan app’s features and its basic USP to either reshape or apply them to further development of a personal loan platform.
In the research stage, the business owner should pay attention to the basic features of the loan apps like the client’s authorization, loan repayment, account management & user profile, loan calculator, etc. Defining the loan app’s can be helpful for planning the integration of the unique elements like gamification to make it more customer attractive.
Then, it is important to determine the loan app’s unique selling points that will assist the business owner in differentiating their loan app from the competitors.
The basic loan application USPs are as follows:
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Clarity in fee structure, which excludes hidden charges.
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Flexibility in repayment.
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The fast pace of loan approval.
Step 2: Legal and Compliance Considerations
Prior to developing the loan app from scratch, it is essential to pay attention to the global and local legal regulations to ensure the client’s data and finance safety.
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Truth in Lending Act (TILA)
Governed by the Consumer Financial Protection Bureau, TILA’s core aim is client protection and prevention from inaccurate and unfair credit card procedures and billing. The regulation discloses payment schedules, charges, creditor’s identity, penalties for payment lateness to fulfill the goal. TILA discloses information relevant to the transactions, like the required deposit, sales cost, insurance, and contact reference, to bring maximized transparency to the loan’s functionality.
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6AMLD: The Sixth Anti-Money Laundering Directive
6AMLD is a European Union anti-money laundering law, which obliges loan apps to set more strict customer due diligence procedures to prevent money extortion that might be provoked by the illegal crediting activities.
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Information Technology Act
The Information Technology Act of India imposes penalties regarding customer data breaches. This law is applied to prevent fake loan apps from gaining access to the user’s private data.
Step 3: Core Features of a Loan App
After analyzing the marketing needs, USP, audience, and legal requirements, the business owner should consider the following basic features that are a must to the loan apps.
User Registration and Login
This feature is a cornerstone of the loan app. The correct and fast identity verification and the security measures like 2FA represent the core elements of this feature.
Loan Application Process and Document Verification
This feature implies the practical process of client’s submission of their personal documents and app’s validation to receive a loan. The loan application process is as follows:
1. Reception of the loan application, which is required to start the document collecting process.
2. Document collection required to verify the identity:
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Photo Proof (passport, driving license).
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Residence Proof (utility bills and passport)
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Residence Ownership Proof (property and/or maintenance documents)/
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Salary proof (last three months of salary information).
3. The documents’ verification process takes about 1-2 days where the verification team checks the documents’ validity.
4. Setting the personal loan is the final stage, when the client receives a loan approval. The loan officer sends a personal loan agreement, where after signing, the client receives a loan 24 hours after.
Loan Calculator and Interest Rate Selection
Loan calculator defines the client’s credit score. Interest rate selection is based on the credit score, debt-to-income ratio and if these qualifying factors are good, the loan officer can offer a better interest rate.
Loan Disbursement and Repayment Tracking
Loan disbursement is a loan app feature that credits an agreed sum to the borrower’s account while debiting it in the lender’s account.
Loan repayment tracking is a loan application feature that enables the borrowers to manage their loans by checking the payment due date, see their loan status & details, and monitor the progress of their paying.
Push Notifications and Customer Support Integration
The push notification feature is one of the core features for enhancing borrower’s loyalty as it provides them with information regarding the upcoming payment deadlines and progress of payment.
Customer Support Integration includes the in-chat support element, which enables the users to communicate with the customer support team in the case of questions.
Security Features
The security feature of data encryption protects sensitive information to prevent clients from data breaches. Data encryption is used to secure communication between the client and lender officer, information about loans, and personal data, like residence proof, photo proof, etc.
The biometric authentication security feature aims to reinforce the overall data protection of the loan app. Applying biometric elements like facial recognition can guarantee the credibility of their ID, which they provide as a photo proof. Additionally, applying fingerprints can benefit secured authorization.
Step 4: Technology Stack and Development Tools
The tech stack is a combination of tools, libraries, and programming languages required to build software.
Tech Stack for the Front-End and Back-End Development
Front-end relates to the client’s side of the product, defining the elements the client interacts with.
The client might consider various goals they wish their ultimate loan app could present. Some of them are outstanding performance, robust safety, and effective integration, where the native tech stack like Kotlin and Swift, etc. may be supreme for implementing.
On the other hand, if the client’s key priorities include simplified development, code reuse, and cost-efficiency, then React Native, Flutter, Xamarin, etc. will promote cross-platform development, enabling the achievement of those goals.
Back-end refers to the server side of the loan app. If the primary goal of loan app development is to ensure simultaneous maintenance of its versatile applications, then Node.js will be one of the key tech stack environments worth utilizing.
Additionally, due to its emphasis on the real-time processing of data and fast performance Node.js is a favorable back-end environment as it ensures fast performance due to the non-blocking I/O, asynchronous programming patterns, and built-in modules.
Cloud Solutions Third-Party Integrations
As a network of servers, cloud hosting aims to make the application available on the Internet. Cloud hosting servers like AWS, Hetzner, and Digital Ocean can be intertwined for the loan app's building, testing, and deployment processes to fulfill this goal.
A payment gateway is a third-party integration tool that can be defined as a technological platform that serves as an intermediary for ensuring the correct financial transaction process. Regardless of the correctness of the transaction, security is no less important feature of those gateways. PayPal, Blackbird, and Authorize.net can guarantee secure transactions as these payment intermediaries as they encrypt borrower/lender data and are PCI compliant.
UI/UX Design Best Practices
UX/UI elements are important tech elements for the loan app development as they craft an intuitive interface and promote a smooth system’s operability.
Importance of User-Friendly Interface and Smooth User Experience
The UX elements like accessibility, loading speed, and consistency improve the overall user experience by promoting the app’s smooth operation.
Accessibility
The accessibility builds the navigation by implementing features to alleviate its operability for people with disabilities. Loan apps that consider special needs generate additional market demand and enhance brand loyalty.
Loading Speed
The fast velocity of the app’s loading and functionality is a central element for the customer satisfaction as the clients prefer speed. The lagging functionality can distract users, and they may give up the app and they can give the app up.
Consistency
Consistency creates user-friendliness in the app’s design and functionality as the application manages to preserve its stable layout and features, excluding any sliding.
The UI visual elements like blocks, images, icons, color, font types ensure user-friendliness in the loan application’s interface, making it attractive and memorable to the users.
Key Design Elements for Loan Apps
Regardless of the importance of the aforementioned UX/UI elements, loan apps can benefit from intuitive navigation and ease loan tracking.
Intuitive Navigation
Intuitive navigation matters for the loan app as it can remove client’s frustration when they shift between the app’s locations (like shifting between the loan management and in-chat support, etc).
Ease of Navigation
The ease of navigation matters for the loan app as it can remove client’s frustration when they shift between the app’s locations (like balance and in-chat support, etc).
Loan Tracking
Loan tracking is a core UX element to ensure its client-centricity and foster attraction. The opportunities like checking balance and payment schedules, analyzing repayment process, managing deadlines & late payments can enhance borrower’s literacy on payment procedures, which can enhance brand recognition and client loyalty.
Step 5: Launch and Maintenance
The final step of an efficient loan app development is its launch to market and post-maintenance.
App Store Optimization and Launch Strategy
App Store Optimization (ASO) refers to the process of updating the loan app’s keywords, title, and meta description to enhance its overall visibility in search engines boost clients’ downloads.
The launch strategy for the loan app can be the combination of unique interest rates and the app's partnership with financial institutions. The aspect of unique interest rates increases their competitiveness as compared to the other application counterparts.
Post-Launch Maintenance: Updates, and Customer Feedback Loop
The post-launch maintenance implies continuous product updates after the loan platform’s release on the market. Regular updates are a must to keep client loyalty and retention as this strategy focuses on solving issues, eliminating bugs, and continuous updates of the new app’s functions.
A customer feedback loop represents the rigorous work with the clients’ reviews about the application’s tech functionality, UX/UI, and loan-relevant available in-app functions. The first step of the client feedback work is review collection (both positive and negative).
Then, it’s time for the feedback analysis, such as defining the similar patterns the clients like and dislike in the app. Regardless of the overall efforts of the development team, feedback analysis is a must to promote effective product updates and ensure that the product owner listens to the needs of the consumers.
Thirdly, the company implements changes based on the feedback analysis results. The penultimate step is results measurement or analyzing what impact has the alterations and modifications led to. This step matters as the loan app’s owner assesses whether the changes improve or deteriorate the application’s work. The final element of the customer feedback loop is the recurrence of the cycle in the form of gathering clients’ reviews.
Conclusion
In this guide we presented the key steps in tailoring the loan-request application from scratch. Marketing search, legal compliance, key loan app features, tech stack, launch, and maintenance are the core stages of its development.
The success of the loan application is based on the preliminary understanding of the product’s idea and the owner’s product value. This point is crucial as it enables further development of the architectural design that would stick to the client’s idea and value.
Agilie offers IT consulting services, which will considerably benefit the loan app development. Our specialists can prepare a decent architectural design, identify loan app’s potential challenges, and present roadmaps for their solutions. Agilie’s result-driven custom-tailored approach can help to build a unique loan product that would stand out on the market.
Wanna create a loan app that will stick out? Contact us for more!
