Design a mobile banking app backend

Q: Design a mobile banking app backend

This is a System Design interview question from Capital One for Software Engineer roles. View the full question and solution on PracHub.

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Question

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Scenario

Design the backend system for a mobile banking app.

Users can:

Sign up / log in
View balances and transaction history
Transfer money between their own accounts
Send money to other users (P2P)
Pay merchants via a third-party payment processor (e.g., card rails / ACH / external PSP)

The system must include:

Authentication & authorization (MFA, session management)
Integration with a third-party payment system
Fraud detection / risk controls before executing payments
Auditability and compliance expectations typical for banking

Requirements

Functional

Account management (profiles, KYC status as a stub)
Balance + ledgered transactions
Payment initiation, status tracking, and reconciliation
Webhooks/callbacks from the third-party payment provider
Customer support features: ability to trace a payment end-to-end

Non-functional

Strong consistency for balances/ledger
Idempotent payment APIs
High availability and safe degradation
Security: encryption, secrets, least privilege
Observability: metrics, logs, traces

Deliverables

Describe:

APIs and core services
Data model (ledger vs. balance)
Payment flow (including idempotency and retries)
Fraud detection placement and how it interacts with execution
Failure handling and reconciliation