MARCH 15, 2023
19 min read
Investing has long been considered a powerful tool for building wealth, but for many people, the barriers to entry can be daunting. However, with the rise of micro-investing platforms, the world of investing is becoming more accessible than ever before. Micro-investing platforms are currently solving the problem of limited access to traditional investment opportunities for people with smaller amounts of capital.
A micro-investing platform is an online platform that allows users to invest small amounts of money in various investment products. If you want to learn more about micro-investing platforms, check out our previous article.
In this guide, I will share my personal experience and cover the fundamentals of micro-investing, the advantages of developing a micro-investing platform, and the crucial steps you must take to establish a prosperous platform. Whether you are an entrepreneur or a technology expert, this guide will equip you with the necessary understanding and perspectives to embark on my micro-investing path.
Understanding the Micro-Investing Market
The micro-investing market has been growing rapidly in recent years as more and more individuals seek accessible and affordable ways to invest their money.
The rise of mobile technology and applications that allow users to invest from their smartphones has lowered the barrier to entry for consumers. In fact, a recent survey by Acorns revealed that 79% of millennials invest through their mobile devices, underscoring the appeal of mobile-first investment solutions. The growth of micro-investing has also been accelerated by robo-advisors, which offer algorithmic investment advice and portfolio management services.
Examples of successful digital investing platforms include the Stash app, which has over 6 million users, and Betterment, which manages $22 billion in assets as of 2023. These examples highlight the significant potential for automated investment management solutions in the micro-investing market.
Target Users for Micro-Investing Platforms
The target users for the fractional investing platform are typically individuals who are new to investing or have limited financial resources. This includes:
- Young people;
- Those who are just starting out in their careers;
- Individuals who are looking for more flexible and convenient ways to manage their finances;
- People who are interested in socially responsible investing;
- Those who want to align their investments with their values.
With mobile apps and other digital tools, app-based investing platforms offer users the ability to invest on the go and track their investments in real-time. This has made micro-investing popular among millennials and other tech-savvy investors who value convenience and accessibility.
Many micro-investing platforms offer investment options that are focused on environmental, social, and governance (ESG) issues, allowing users to invest in companies that are making a positive impact on the world.
Types and Technologies of Micro-Investing Products
Micro-investing is the practice of making small investments in various financial instruments, such as stocks, bonds, and mutual funds. When designing a micro-investment platform, it’s essential to select the right technologies that meet your business goals and your target audience’s needs.
Some types of micro-investing platforms include:
- Crypto micro-investing platforms allow individuals to invest in cryptocurrencies such as Bitcoin and Ethereum through fractional ownership. These platforms are based on blockchain technology, providing a secure and transparent method of investing in digital assets. However, building a crypto micro-investing platform can be difficult, requiring expertise in blockchain technology and security.
- Crowd investing platforms, in contrast, provide a means for users to invest in small or medium-sized businesses seeking funding. Crowdfunding platforms are one of the best ways to raise funds for startups and nonprofits. They allow entrepreneurs and organizations to connect with a large pool of potential investors who are interested in their projects. Some of the best crowdfunding platforms include Kickstarter, Indiegogo, GoFundMe, and Crowdfunder. Equity crowdfunding platforms like SeedInvest, StartEngine, and Republic allow investors to buy equity in startups and small businesses. They are ideal for companies looking for seed funding or early-stage investments.
- Platforms adhering to MiFID II regulations offer a wide variety of investment products, including stocks, bonds, and funds, to retail investors. These platforms aim to provide transparency and safeguard investors’ interests, but doing so requires adherence to complex regulations. Building a MiFID II-compliant platform demands extensive comprehension of securities law and regulations, as well as proficiency in financial technology.
Key technologies used in micro-investments:
- Artificial Intelligence (AI): The machine learning algorithms used by these robo-advisors can analyze vast amounts of data to make investment decisions based on a user’s risk profile and financial objectives.
- Blockchain: Fractional investing is now possible thanks to blockchain technology, which allows users to invest in small portions of assets like real estate or artwork. This technology guarantees transparency and security during the transaction process.
- Big Data Analytics: Data analytics can provide personalized investment recommendations and insights. By analyzing user data, micro-investing platforms can offer targeted investment options and customized advice.
- Cloud Computing: This technology provides secure and scalable infrastructure. With the help of cloud services, these platforms can handle significant amounts of data and provide smooth user experiences.
Developing and Launching Your Micro-Investing Platform
Due to increased market demand and user expectations, a powerful and advanced investment app is now a necessary addition to mobile devices. To remain relevant and competitive, it’s crucial to adopt a structured approach to developing a functional and easy-to-use app.
Here are the 13 steps you should follow to eliminate any concerns about creating the best possible mobile investment app.
#1 Conduct a Market Research
- Start by clearly defining what you want to achieve through your market research and what questions you need to answer. This will help you focus your efforts and avoid collecting irrelevant data.
- Select the most appropriate research methods to gather the data you need. This could include surveys, focus groups, interviews, online research, or other methods.
- Collect data using your chosen research methods and analyze the data to identify key trends, patterns, and insights. Use data visualization tools to help you understand and communicate your findings.
- Based on your analysis, draw conclusions about your target audience, the market, and your competitors. Use these conclusions to make recommendations for your business strategy, product development, and marketing efforts.
- Continue to monitor the market and your target audience over time and adjust your strategy as needed to stay ahead of changing trends and customer needs.
#2 Identify Your Target Audience
Understand the demographic you are targeting, their age group, gender, education, income level, etc. This will help you create a product that appeals to your target audience.
#3 Select the Best Business Model
During financial planning, it is important to create a business model that includes determining the cost of your services and the commission percentage you expect to receive. For instance, Acorn can be used as an example of an investment platform that charges its users $1 per month to access its services. Moreover, Acorn allows its users to benefit from transactions through its pockets and recommendation features.
Micro-investing platforms are a convenient and accessible way for individuals to invest in the financial market using their mobile devices. Take a look at the models used by micro-investing platforms:
- Round-up model: Users’ investment accounts are linked to their credit or debit cards, and the platform rounds up each transaction to the nearest dollar, investing the spare change in a diversified portfolio of stocks and bonds.
- Subscription model: Users pay a monthly fee for access to investment services, including access to a robo-advisor that provides algorithmic investment advice and portfolio management services.
- Fractional share model: Users can invest in fractional shares of stocks and ETFs with as little as $1, either by selecting from a pre-defined list of investment options or by creating their own custom portfolio.
- Cashback model: Users earn cashback rewards for their purchases, which can be automatically invested in a portfolio of stocks and bonds.
- Social trading model: Users can follow and replicate the investment strategies of successful investors on the platform.
- Partnerships: Micro-investing platforms may earn revenue through partnerships with financial institutions like banks and brokerage firms, which provide access to a broader range of investment products and services and generate additional revenue streams for the platform.
#4 Decide on Core Features of Platform
Identify the key features that your platform must have. This could include a user-friendly interface, a seamless investment experience, risk assessment, real-time tracking, and so on.
- User sign-up and enrollment process. The investment tracking app should verify user documents for authenticity and provide a walkthrough for users after registration to highlight key features and investment pipelines.
- KYC. This process is used by financial institutions to verify the identity of their customers. This process is critical for micro-investing platforms because it helps prevent fraud and ensures that the platform is not being used for illicit purposes. It also helps the platform comply with regulations and prevent money laundering
- Risk Management. Because micro-investing typically involves small investments, it is important for users to have confidence that their investments are safe. Risk management can include features such as diversification of investment options, monitoring market trends, and setting investment limits to help users avoid over-investing and taking on too much risk.
- User profiles and account information. Users’ portfolios, payment methods, and personal information should be part of their profile, which can include customizable settings. Ensure that the account creation process is simple and user-friendly to prevent user frustration.
- Tools for managing finances. Add money-management tools to your investing platform to help users manage their finances effectively. Provide intuitive and interactive dashboards with insightful visual aids like pie charts and infographics. Deliver consistent daily, monthly, and quarterly reports to enhance user retention.
- Options for withdrawing funds. To comply with regulations, your investment app should allow users to withdraw their investments into their bank accounts. You need to integrate a bank account into your app development for this purpose.
- Data security. For any investment application, data protection is crucial. Incorporate a strong IDPS that includes encryption techniques, anti-spam, two-factor authentication, phishing protection, and DDoS attack handling to improve the user experience.
- Notifications. Include push notifications,performance updates, portfolio monitoring, real-time alerts, and personalized reminders in your investment app to notify users about their account status, promotions, deals, and asset value changes.
- Digital wallet functionality. Digital wallets should make it easy for users to fund their accounts, whether through bank transfers, credit or debit cards, or other payment methods. The platform should also ensure that all transactions are fast, reliable, and secure.
NOT a must-have feature:
Resources for financial education and AI-powered advisory services. An investment app with educational content and an AI-powered consultant can provide a competitive edge in the market. It’s important to offer engaging articles and videos on financial literacy as well as quick insights to help users make informed investment decisions, but it’s not considered a necessity and can perfectly work without this feature.
It’s important to allocate enough time for careful consideration and planning before creating your low-cost investing platform. Begin by questioning your company’s objectives. Do you truly need an investment app? What particular advantages and improvements do you expect? Is this the optimal path for your company’s advancement? Assess your company’s risk tolerance for different scenarios in the event of potential issues.
#6 Learn the Requirements for Compliance
It is crucial to comprehend the legal and regulatory obligations in the region before commencing the primary development stage of the investment application.
Regulatory bodies in different countries establish rules for the financial environment and internet space, although there are similarities in the basic frameworks, which usually include user privacy, intellectual property, marketing and advertising, and detecting money laundering.
Below is a compilation of regulatory bodies and their respective legal compliance requirements for different countries.
| — | — | | USA | The Anti-Money Laundering Act 2020, Security Exchange Act 1934 | | UK | UK Industry Act, The Rule Book of London Stock Exchange | | Canada | Commodity Futures Act |
#7 Find the Perfect Team for the Development Process
There are a few ways to organize the working process with professionals:
- Establish an in-house team. Opting for this approach provides the benefits of having full control over the development process and streamlined communication. Nonetheless, you will need to allocate time and resources towards recruiting and onboarding, as well as offer competitive salaries and benefits, to retain your employees. It is crucial to determine the necessary team structure for creating an investment application.
- Engage with freelance professionals. Developing a top-quality online investment application is a highly intricate process that cannot be accomplished by just one or two individuals. A team with multiple experts, such as designers, project managers, QA engineers, and investment app developers, is required.
Although freelancers can be hired, it can be challenging to manage the team and ensure they meet deadlines and remain within budget.
- Collaborate with an outsourcing development firm. This option offers the advantages of both worlds, as you only pay for the completed work, have the flexibility to expand or reduce your team as required, and are assigned a project manager to monitor and manage your expenses. Crowdfunding platforms for startups and crowdfunding platforms for nonprofits can benefit greatly from collaborating with an outsourcing development firm specializing in micro-investment platforms.
#8 Build Scalable Architecture
- Implement a microservices architecture. Break down your platform into smaller, independent components, or microservices. This allows you to scale each component independently based on usage and demand.
- Use a containerization platform. It can be a containerization platform like Docker to package and deploy microservices. This approach allows for faster deployment and scalability.
- Leverage cloud infrastructure. Use cloud infrastructure services such as Amazon Web Services (AWS) or Microsoft Azure to host and deploy your platform. They provide the ability to easily scale your platform up or down based on demand.
- Implement caching and load balancing. Use caching and load balancing to improve performance and handle increased traffic. Implement a content delivery network (CDN) to reduce latency and improve the user experience.
- Implement a monitoring and logging system. Create a monitoring and logging system to track and identify issues in real-time. This helps you quickly respond and scale up or down based on usage and demand.
#9 Choose the Right Technology Stack for your Platform
If you choose to collaborate with an outsourcing team, they select and approve the appropriate technologies that align with your project’s requirements. This ensures that your app is stable and scalable.
There are many third-party APIs (Application Programming Interfaces) that can assist in implementing particular functions and resolving technical problems related to investment app development. For instance:
- The Plaid API securely links bank accounts with fintech apps, while the Alpaca Stock Trading API manages investment accounts and regulatory complexity.
- Other commonly used APIs for accessing real-time stock quotes, indices, commodities, and currencies include Alpha Vantage, Bloomberg Market and Financial News, Xignite, Yahoo Finance, and Zirra.
- E*TRADE API can be utilized to manage user account data, retrieve option chains, search for exchanges, get quotes, and manage orders.
- Finbox and Tradier APIs provide stock market feeds, stock metrics, and research functionality.
#10 Designing Your Micro-Investing Platform
Designing a peer-to-peer investing platform requires careful consideration of various factors that can impact the user experience and, ultimately, the success of the platform. Follow these steps that can help you create the perfect design for a micro-investing platform:
- Choose a color scheme: Choose a color scheme that aligns with your brand identity and appeals to your target audience. Use colors that evoke emotions that align with your platform’s goals, such as trust, reliability, and transparency.
- Create a wireframe: A wireframe is a rough sketch that outlines the layout and basic functionality of your platform. This will help you visualize the structure and flow of your platform before you start designing it.
- Keep it simple: The design of a micro-investing platform should be simple and intuitive. Avoid clutter and complex design elements that can confuse users.
- Prioritize mobile responsiveness: Many investors prefer to use their mobile devices to invest, so your platform should be mobile-friendly and responsive.
- Conduct user testing: Before launching your platform, conduct user testing to gather feedback from your target audience. This will help you identify any usability issues and refine your design accordingly.
- Iterate and refine: Design is an iterative process, so continue to refine and improve your platform based on user feedback and data analytics.
#11 Create the Core Application
This process begins when you start collaborating with the hired software development company to develop the app. The first step is to create a minimum viable product (MVP) for the mobile investment application. Once the app has the essential features to function, additional functionalities can be added, such as advanced security measures, gamification, and an improved user interface and experience.
#12 Test and Improve
Once the MVP is ready, programmers and QA engineers continue to test and improve the functionality of the application, gradually releasing all features based on their priority. The development stage culminates in a finalized app that is ready for purchase and download.
#13 Maintain and Provide Assistance for your Application
In addition to creating new features, it is essential to keep the existing features up-to-date. Maintenance tasks such as upgrading to new operating system versions, updating third-party services, and other activities typically consume between 20% and 50% of the original app budget on an annual basis.
Regularly upgrading library and framework versions is critical to prevent security vulnerabilities. Additionally, it is vital to frequently test the app for speed and security flaws.
Must know tips about Developing Your Micro-Investing Platform
Developing a micro-investing platform requires careful consideration and planning to ensure that it is high-performing, secure, and scalable. Here are some tips to keep in mind:
- Focus on User Experience: The user experience is critical to the success of any micro-investing platform. The platform should be intuitive and visually appealing. It should provide users with the information they need to make informed decisions about their financial future.
- Security and Data Protection: Security is paramount in any financial application, and micro-investing platforms are no exception. Your platform should use state-of-the-art security measures such as two-factor authentication, SSL encryption, and intrusion detection systems. It should also comply with relevant data protection regulations, such as the GDPR and CCPA.
- Scalability: Your platform should be designed to handle significant traffic and user demand as it grows. This means using scalable infrastructure, such as cloud-based servers and distributed databases, that can accommodate increased traffic and transactions.
- Customizability: Offering personalized investment options and services can be a major differentiator for your micro-investing platform. Consider building in customization features such as asset allocation and investment goals, as well as tools for tracking and analyzing investments.
- Integration with Other Systems: Integration with other financial systems, such as banks and investment brokerages, can improve the functionality and usefulness of your micro-investing platform. Think about integrating with popular financial apps and tools to provide a seamless experience for users.
- AI and Machine Learning: AI and machine learning can be powerful tools for improving the performance and accuracy of investment recommendations. Pay attention to using these technologies to provide personalized advice on crowdfunding platforms for investors and portfolio optimization.
Micro-Investments Platforms created by DashDevs
Our first case is Downing—the platform uses crowd investing to fund various projects, such as renewable energy and real estate. It’s a P2P platform with over 25,000 investors in the UK and supports businesses in different industries by helping them to deliver on the strategy and make a difference. Our team of 8 specialists used .NET and React technologies to develop the platform. We have completely restructured the entire platform, migrated legacy data, and implemented optimal data storage solutions. The old architecture was limiting growth, causing performance issues, and hindering productivity.
Through these changes, we have created a more efficient and scalable platform that will enable us to better serve our customers and support the continued growth of our business. The project spanned over a period of three years, at a cost of $500K, but we were able to release the first version of it within just six months of kicking off work. This accomplishment is a testament to our team’s dedication, efficiency, and expertise. We are proud to have been able to deliver results that exceeded expectations while also ensuring timely delivery.
**Pi-1 **is more than just a neobank app; it is a comprehensive platform that not only offers traditional banking services but also provides a seamless opportunity to invest in a regulated and transparent manner. By leveraging MiFID II regulations, the platform ensures that all investments are thoroughly researched and vetted before being offered to customers. This approach offers users the opportunity to invest with confidence, knowing that their investments are backed by thorough research and expertise. Whether users are looking to save for the short-term or invest for the long-term, Pi-1 provides a trusted platform that combines the best of banking and investing.
The platform offers a range of banking products and services to help individuals invest, manage, spend, and earn more efficiently. DashDevs, in collaboration with a team of 65 talented specialists, worked tirelessly for a period of two years to develop the platform from the ground up, utilizing cutting-edge technologies such as .NET Core, Kotlin, Swift, React, and AWS. Despite the scale and complexity of the project, the team was able to deliver the first release of the platform with 40 vendors after just 9 months of intensive work. The CEO of Pi-1 commended DashDevs for their pragmatic approach, which resulted in a complex platform in less than 18 months.
Oleg Denysenko, lead architect on Pi-1 project and team lead of .Net team in DashDevs, shared his impression on building the Pi-1 platform:
The integration of various systems and functions is crucial to the development of any successful micro-investing project, and this was no different in the case of Pi-1. We leveraged the integration of GPS (Global Processing Services) card processing and Stripe to create a seamless solution for topping up cards. Additionally, our custom banking accounting system, coupled with our accounting system for client accounts, ensures efficient management of customer accounts and fund balances. Our successful integration of KYC Onfido ensured customer safety and protection. As a result of our professional development and integration of various services, the DashDevs team created a successful project that met and exceeded the needs of our customers.
INABLR is a platform that enables individual investors to access the sovereign bond market through blockchain. The platform divides large bonds into smaller units, lowering the investment threshold.
Developed by a team of 15 specialists over 6 months at a cost of $400K, DashDevs developed the micro-investment platform, using technologies such as .NET, iOS, Swift, and React.js. The CEO of INABLR praised DashDevs for their attentiveness, resulting in a fully functional product ready for market challenges.
The Bottom Line
Micro-investing is currently a popular trend in finance, leading to a higher demand for nano investing platforms. This article offers a concise summary of key factors that contribute to a successful investment app and provides tips on how to build one. By utilizing these suggestions, you can create a competitive mobile app for your investment company.
If you’re seeking a dependable technology partner to bring your mobile app concept to life, DashDevs has a skilled development team that can exceed your expectations in building a micro-investing app.
What is a micro-investing platform?
A micro-investing platform is a digital platform that enables individuals to invest small amounts of money in diversified investment portfolios. They typically use technology to streamline the investment process, making it more affordable for people with limited financial resources.
Users can sign up for these platforms and link their bank accounts. The platform then pools these small amounts from multiple users to invest in a variety of assets, such as stocks, bonds, and exchange-traded funds (ETFs), that are designed to match the user’s risk tolerance and investment goals. Such platforms often provide users with educational resources and tools to help them understand investing and make informed decisions.
How do I get people to invest in my platform?
As a professional seeking to attract investors to your platform, there are several steps you can take to increase your chances of success:
- Clearly communicate the benefits of your platform, including the problem it solves and how it differentiates itself from competitors.
- Develop a clear and compelling brand identity that resonates with your target audience.
- Partner with companies or individuals who can help you reach your target audience, such as financial advisors or influencers in your industry.
- Use social media to build your brand and reach potential investors.
- Offer incentives for people to invest in your platform, such as exclusive access to new features or discounted fees.
- Deliver exceptional customer service to build trust and loyalty among your users.
- Be open and transparent about your business practices, including fees and investment strategies, to build trust with potential investors.
What are the regulations in the micro-investing industry?
These regulations aim to protect investors and ensure that the industry operates in a fair, transparent, and ethical manner. Regulation crowdfunding platforms typically cover areas such as investor protection, disclosure requirements, capital requirements, licensing and registration, and operational standards. Compliance with these regulations is crucial for companies operating in the micro-investment industry to maintain the trust of their customers, avoid legal and reputational risks, and be in top crowdfunding platforms.
How to make money on a micro-investing platform?
Making money on a micro-investing platform involves investing small amounts of money into diversified portfolios of stocks, bonds, and other assets over a long period of time. The goal is to accumulate wealth gradually through consistent and disciplined investing.
Business crowdfunding platforms typically use a robo-advisor to automatically select and manage a portfolio of low-cost index funds based on an investor’s risk profile and investment goals. Investors can earn money on these platforms through capital gains, dividends, and interest earned on their investments.