How to Create a Money Lending App: Features & Development Guide

2024 Money Lending App Market Overview

In 2024, the money lending app market continues to witness significant growth. As more individuals and businesses seek convenient and accessible financing solutions, the demand for money lending applications remains strong. By 2028, the Global Alternative Lending Platform Market is projected to expand to $8.2 billion, with a compound annual growth rate (CAGR) of 22.0% throughout the forecast period.

Allied Market Research forecasts a CAGR of 19.4% for the digital lending market from 2023 to 2032. What is the reason behind the rise of mobile lending, when traditional lenders still exist?

• Digital transformation: The financial sector’s digital revolution is driving the surge in money lending app adoption. As consumers seek convenient borrowing options, the demand for digital lending solutions is skyrocketing.
• Changing consumer behavior: A shift in consumer preferences, particularly among younger demographics, is fueling the popularity of money lending apps. Millennials and Gen Z, accustomed to technology, are embracing mobile lending for its hassle-free approach to accessing credit.
• Regulatory environment: Governments and regulatory bodies recognize the need to balance innovation with consumer protection, fostering an environment conducive to app development.
• Market Competition: Intense competition characterizes the money lending app market, with new and established players vying for dominance. To thrive in this dynamic landscape, companies prioritize innovation, customer experience, and regulatory compliance.

Banks and credit unions typically have stricter requirements and demand more mandatory documentation when applying for a loan. The table below illustrates the contrasting approaches of traditional financial institutions and borrowing apps.

As it is seen from the table, online lending platforms are more user-oriented and require fewer bank-related strict procedures to receive a money loan. Investing in the development of mobile lending apps offers financial sector developers opportunities for growth, and profitability in today’s digital environment. These apps provide lower APRs, faster loan approvals, flexible requirements, 24/7 customer support, diverse loan options, and higher approval rates, attracting a broader user base and increasing revenue potential.

The Main Types and Examples of Money Lending Apps

Various money loan apps have different types of offers. If you want to know how to create a loan app, get to choose your niche first. Borrowers can apply for such loans to cover their needs as:

• Home loans

A home loan or mortgage includes a specific sum of money needed to buy a home or a property. The sum and interest rate to be repaid are determined by your monthly payment ability. Most of the platforms that specialize in home loans provide such an option as the home loan calculator.

An example of a home loan app is Rocket Mortgage by Rocket Companies. Through the app, users can complete the entire mortgage application process swiftly and conveniently, receiving instant pre-approval and real-time updates on their application status. It provides accessible support from loan officers and customer service representatives directly through their app, ensuring that users have assistance whenever needed. 

• Car loans

Car loan apps make it easier for people to afford a vehicle without having to pay the full amount upfront. They offer loans to cover the cost of the car, which you pay back over time with interest. The interest rates and terms of the loan can vary depending on the app and your financial background.

Capital One Auto Navigator allows users to pre-qualify for auto financing, search for vehicles from participating dealerships, and customize their financing options entirely online. Users can compare prices, calculate monthly payments, and complete the financing process within minutes — all from their smartphone or computer.

• Student loan refinancing 

Student loans usually include borrowing money for a tuition fee to a college or university. Since some of the best colleges and universities have high tuition fees, one of the ways students can manage to pay them is to engage in a loan lending process.

Earnest offers a mobile app that allows users to explore student loan refinancing options in their individual financial situations. Users can check their eligibility, receive personalized rate quotes, and apply for refinancing. The app provides tools for managing and tracking student loan payments, as well as educational resources to help users understand their loan terms and repayment options.

• Medical loans 

These apps specialize in providing financing options for individuals facing medical expenses that may not be fully covered by insurance or who lack adequate insurance coverage. With different emergency cases of health deterioration or even obligatory surgeries, people can rely on the lending platform to get the assistance they require. 

While it’s primarily known for its services in student loans, mortgage loans, and personal loans, Credible also provides access to medical loans. Having a strong reputation and user satisfaction, Credible allows users to compare rates from multiple lenders for various types of loans, including those aimed at covering medical expenses. They can submit a single application and receive personalized loan offers from different lenders to find the best loan option for their medical needs.

• Small business loans

Small business loans are given usually after a thorough investigation of the business and its plans to grow. Such apps offer various types of loans to support different needs, such as buying supplies, hiring staff, advertising, upgrading equipment, etc. They also often have good deals on interest rates, which is great for small business owners who can’t get loans from traditional banks or need money quickly.

One of the examples of such applications is OnDeck. It provides small businesses with access to various financing options, including term loans, lines of credit, and business credit cards. You can apply for funding, receive real-time decisions, and manage their accounts conveniently. OnDeck offers quick approvals and flexible repayment terms. 

• Personal loans

Personal loan apps offer unsecured loans for various purposes, such as debt consolidation, home improvement, or medical expenses. Borrowers can typically apply for a specific loan amount and term, and the app assesses their creditworthiness based on factors like credit score, income, and employment history. Interest rates and repayment terms vary depending on the lender and the borrower’s credit profile.

Upstart‘s mobile app simplifies the personal loan application process, allowing users to swiftly check loan rates, apply, and, upon approval, receive funds directly in their bank accounts. By harnessing artificial intelligence and machine learning, Upstart tailors loan offers to individual borrowers, ensuring competitive rates. 

Tech Stack Used to Make Lending Apps ‘Smarter’

How to start a loan app without a tech stack? Exactly. Building money lending apps from scratch requires careful consideration of the tech stack, which serves as the foundation for its functionality and user experience. Let’s delve into the essential components for developing a successful loan app.

• Front-End Development:

Languages: Frameworks like React Native or Flutter are favored for creating responsive mobile apps, enabling a unified codebase for iOS and Android versions.

UI/UX Design: Designing an intuitive and visually appealing interface is crucial for a seamless user experience.

• Back-End Development:

Programming languages: Python, Java, or Go are commonly used for server-side development, managing core functionalities such as loan applications and data processing.

Databases: Secure and scalable databases like MySQL or PostgreSQL are vital for storing user data and transaction history.

• Data Analytics and Machine Learning (ML):

Data analysis tools: Tools like Apache Spark or Hadoop analyze vast amounts of user and financial data to understand borrowing patterns and assess creditworthiness.

Machine learning models: ML algorithms facilitate credit risk assessment and fraud detection, expediting loan approvals and enhancing security.

• Security and Integration:

API integrations: Lending apps integrate with third-party APIs for credit checks, identity verification, and payment processing.

Security measures: Robust measures like encryption and multi-factor authentication safeguard user data and financial information.

• Additional Technologies:

Cloud computing platforms: AWS, Azure, or Google Cloud offer scalability and security for managing app infrastructure.

Biometric authentication: Fingerprint or facial recognition streamlines the loan application process and improves security.

Chatbots and virtual assistants: These tools enhance customer support and user experience by addressing basic queries.

• Blockchain:

Streamlining loan processing: Smart contracts, self-executing contracts on the blockchain, can automate loan approvals and disbursements based on predefined criteria, making the process faster and more efficient.

Facilitating decentralized finance (DeFi): Blockchain can enable peer-to-peer lending, where borrowers can connect directly with lenders without the need for a central intermediary. This could potentially lead to more accessible and flexible loan options.

How To Build A Loan App: 8 Steps To A Custom Solution

Loan app development starts with a standout idea that sets you apart from competitors. Explore our 8-step guide of how to create a money lending mobile app, rooted in our product management expertise. 

1. Study your target audience

To embark on loan lending mobile app development, you must understand your target audience. Identify who your potential borrowers are and delve into their needs and preferences. Next, conduct thorough research on existing money lending apps to grasp the landscape: analyze their strengths, weaknesses, and areas for differentiation. 

Define your app’s USP — what sets your app apart from the competition and how it will deliver value to users. By considering these factors, you can lay a solid foundation for your app’s development and position it effectively in the market.

2. Choose a platform

It’s time to envision the essential features for your loan lending app development: will it be an app for cash advances, small personal loans, or business loans? This step is crucial for grounding your plans and shaping your ideas into a practical framework. Consider factors like development cost, team composition, outsourced services, and future app features, all of which will vary based on the chosen app type. 

Consider whether you want to build a native app for a specific operating system, or a cross-platform solution that works across multiple platforms. Each option has its advantages and considerations, so evaluate your target audience, budget, and technical requirements to determine the best platform for your money lending app.

Discover what technologies to use in cross-platform development

3. Decide on features

In a market brimming with loan app offerings, building a competitive app is essential for success. You can achieve this by integrating valuable features that resonate with your target audience and fulfill their financial needs. Let’s delve into the essential:

MVP features:

• User registration: streamline onboarding with a seamless registration process.
• User profiles: personalize experiences by allowing users to create profiles.
• Loan application form: simplify the borrowing process with a user-friendly application form.
• Payment log: ensure transparency with a comprehensive log for tracking payments.
• Notifications: keep users informed with timely updates on account activity.

Add-on Features:

• Biometric authentication: enhance security and user experience with fingerprint or facial recognition.
• 24/7 live chat support: provide immediate assistance and enhance user satisfaction with round-the-clock support.
• Credit score monitoring: empower users with insights into their financial health and promote responsible borrowing practices.
• Robo-advisors: offer automated financial advice and investment recommendations.
• Voice assistance: enable users to navigate the app and apply for loans using voice commands.
• Social proofing: enable users to see reviews and testimonials from other borrowers.
• Instant fund disbursement: offer immediate access to funds upon loan approval.

4. Find available SDK/APIs and libraries

There is an abundance of lending app builder blocks present on the Internet and free to use. The only thing here is to figure out which ones you need the most.For example, you can use Plaid — secure connection to bank accounts; Twilio — chat and two-factor authentication; Google, Apple, Facebook, and Twitter (X)  — quick login. 

The right pick of module combination can surely:

• Benefit in development
• Reduce costs
• Shorten the production time
• Enhance the app with useful features

5. Create your app’s UI/UX design

The right user-friendly interface and functional user experience can make your app successful from the start. By giving precedence to usability and design at every stage of development, you’ll strategically position your app for success amidst fierce competition in the market. For this reason, you need to create low-fidelity wireframes and high-fidelity mockups, carefully testing each screen. Consider developing a clickable prototype for a more intuitive interaction with the app’s features and functionalities. 

6. Develop an MVP

Once UI/UX is ready and verified, it’s time to bring your online lending app to life with an MVP version. This phase will require collaboration with a skilled software engineer who will spearhead the development process. You’ll focus on building a robust loan application system along with a user-friendly web portal for administering loans. 

Aim to incorporate as many essential features as possible during this initial phase to ensure your app provides value and functionality right from the start. That’ll give you a groundwork for further refinement and expansion as your app evolves.

7. Gather user feedback

After the app release, it’s essential to actively gather valuable feedback from your users. Pay close attention to user comments and suggestions, as they can serve as invaluable instruments for improvement. Every bit of feedback, whether positive or constructive, should be carefully considered and used to refine your app’s performance and user experience.

Track key mobile performance metrics — they provide insights into how users interact with your app and can help you identify areas for optimization. With these metrics, you’ll gain a deeper understanding of your app’s strengths and weaknesses, which leads to making informed decisions for its enhancement. 

Mobile app performance metrics you should be measuring

8. Stick to app maintenance

If you think that releasing your app marks the end of your journey towards customer satisfaction and financial success, think again. The pace of technological progress is insane: trends and features change at a staggering pace. To ensure your app remains relevant and competitive, regular maintenance and upgrades are essential. Stay ahead of the curve by keeping track of technological advancements, such as updates to Android/iOS versions and the emergence of new convenient widgets. 

To guarantee that your money lending apps stand out and receive top ratings, consider investing in a discovery phase. During this phase, experienced software engineers and business analysts will handle all aspects of your project, from concept development to implementation. With their expertise, you can refine your app’s features, enhance its user experience, and maximize its potential for success.

More on the discovery phase and how it can benefit your project

Loan App Development: Challenges to Consider

Developing a money lending app can be a promising, yet challenging venture. Here are some key challenges you might encounter:

Navigating financial sector

Within the financial sector, particularly in lending, complexities abound. To build a loan app that is bound to succeed, you must navigate the intricacies of lending processes, interest calculations, and financial regulations. Achieving this requires a profound understanding of financial mechanisms to create a platform that seamlessly combines user-friendliness with adherence to industry standards.

Ensuring regulatory compliance

Regulatory compliance is a significant challenge in money lending app development. Legal frameworks vary across jurisdictions, requiring thorough research and ongoing monitoring to ensure adherence. Therefore, adapting to diverse regulatory requirements, especially in multiple regions, adds complexity to the development process. Collaboration with legal experts is also crucial for navigating this multifaceted landscape and ensuring the app meets compliance standards for a secure and successful launch.

Establishing partnerships

Money lending apps can collaborate with traditional financial institutions to streamline transactions, manage funds, or ensure regulatory compliance. However, forging these partnerships involves a myriad of considerations: negotiations, legal agreements, and system integrations. It’s crucial to find partners that align with the app’s objectives and contribute to a seamless user experience.

Safeguarding users 

Any procedure involving money demands high levels of security. Therefore, ensuring the safety and security of the  loan lending app development is paramount. To enhance platform security, consider focusing on:

• Authentication. Implement secure authentication methods such as biometric authentication (face recognition and fingerprint scanning) and two-factor authentication (strong password and email or phone confirmation). Besides, use APIs to further protect user data.
• Encryption. Given the sensitive nature of loan transactions, it’s crucial to encrypt the money transfer route and customers’ personal data to prevent unauthorized access. Those mechanisms thwart potential cybercrimes and fraudulent activities. Encryption protocols like Rest and Transit adds an extra layer of security.

Future Predictions For Loan App Development

Technological advancements in money lending applications deserve a separate shoutout: breakthroughs like AI, ML, and blockchain are revolutionizing the lending landscape with astronomical power. AI and ML play pivotal roles in automating processes, evaluating creditworthiness, personalizing loan offers, and ensuring a seamless borrowing experience for users. Meanwhile, blockchain technology promises to enhance security, transparency, and trust in loan transactions.

A report by PwC highlights the transformative potential of AI in loan app development. AI is projected to redefine risk management, customer experience, and product innovation, indicating a broader impact beyond just loan approvals. This suggests that as lending app builders continue to leverage AI and other advanced technologies, they will unlock new opportunities for innovation and growth in the lending industry.

Why Choose Inoxoft? Our Expertise In Building Money Lending Apps

Inoxoft is a fintech software development company that specializes in building customized money lending applications. We are dedicated to providing top-notch lending software development services — our comprehensive range of functions ensures that your custom lending software is equipped with everything you need to streamline operations, mitigate risks, and drive business growth. Our features include, but aren’t limited to:

• Loan origination: Streamline application processing and reduce errors.
• Loan servicing: Efficiently manage disbursements, payments, and collections.
• Risk management: Minimize default risks and ensure regulatory compliance.
• Documentation management: Automate document generation and management.
• Reporting and analytics: Gain real-time insights to drive informed decisions.
• Compliance management: Stay compliant with AML, KYC, and Fair Lending laws.
• Security: Protect your data with encryption and multi-factor authentication.

At Inoxoft, we excel in cooperating with the financial industry and seamlessly integrating payment systems into mobile and web applications. With a decade of experience, we have honed our skills to deliver exceptional solutions for our clients in the financial sector. 

Our success is evident through the satisfaction of our clients, who receive a product for their business growth in the form of a sophisticated, innovative, and user-friendly application that significantly impacts users’ daily lives in a simple yet effective manner.

Being your partner, we are committed to delivering sophisticated applications that leave a lasting impact on both businesses and end-users alike. Contact us to kickstart your money lending app development project and revolutionize your lending business.

Summing Up

Knowing how to build a loan app involves a comprehensive approach, including factors like defining the target audience, selecting the right tech stack, or ensuring regulatory compliance. To successfully create a money lending app, developers must leverage advanced technologies to offer personalized experiences and robust security. 

By staying informed about market trends and user preferences, you can build loan apps that meet the evolving needs of users in today’s dog-eats-dog market. Having a trusted partner, — a reliable development company, — can greatly aid in navigating the complexities of app creation and ensuring its success.

Inoxoft has extensive experience in developing fintech products, enabling us to build secure solutions, identify security weaknesses, and promptly address them. With our expertise, you can confidently create money-lending apps that prioritize the safety and privacy of users’ financial data. Get in touch with us to discuss how to create a money-lending app you desire.