How to Choose a Reliable Fintech Software Development Company for Outsourcing

The financial technology sector has been rising in popularity as more people adopt tech solutions in various aspects of their businesses. Technologies like e-wallets and “neobanking” have also changed how people approach financial topics.

For companies that want to scale, financial software development services are indispensable, it is a no-brainer. But the question remains open – whether the fintech software developers team should be in-house or whether your company should consider finding a fintech development outsourcing partner.

If your team lacks the expertise to develop a fintech product, don’t sweat it. This article discusses the benefits of fintech software outsourcing

But first, let’s go through some fintech app development statistics.

Fintech development market overview

According to Statista, the global usage of finance apps has grown during the COVID-19 pandemic, with Japan leading the charge. Projections also estimate the potential value of the financial services market at 26.5 trillion USD in 2022

Source: Statista

As of 2019, over 60% of SMEs in China have adopted at least one fintech product development initiative. 

Source: BalancingEverything

Also, countries in the Americas have over 10 000 fintech startups as of Q3 2021, 48 of which are unicorns. Besides, based on current consumer trends, mobile banking (and transactions) will increase by over 28% in 2022. 

In the Kingdom of Saudi Arabia, innovation in fintech is supported by the Saudi Arabian Monetary Agency (SAMA), ensuring favorable conditions for startups and entrepreneurs to be competitive on the world arena. This is proven by the adoption by the Saudi government of the UK’s financial service model that will be a factor helping to form the new fintech Saudi. 

For more info on the topic, check out our post Top European fintech software development companies.

Fintech development outsourcing vs in-house fintech development team

Judging by the stats mentioned above, companies can only stay ahead of the curve by investing in fintech product development. However, the options for your company’s software development initiatives are limited to the following choices:

• an in-house team of fintech systems development engineers, design and tech specialists;
• outsourcing software development services to a provider that specializes in building customized digital solutions.

Let’s explore each of the options for a better perspective.

In-house fintech development pros and cons

Ideally, you delegate your fintech product development to a dedicated team of in-house developers.

The benefits you receive are numerous: 

• Greater control over the project
• Better communication
• Higher quality standards
• Increased security 

But here are a the disadvantages of this strategy:

• In-house software development is expensive and stressful.
• You might not have the time and resources to train inexperienced fintech developers.
• Understanding documentation, industry standards, product libraries, and compliance guidelines is a massive, time-consuming challenge.
• In most cases, it is enterprise-level companies for which this is a viable option. 

So, that leaves the option of fintech software outsourcing. But before endorsing this strategy, let’s explore what advantages it may potentially bring to the companies that go for this variant. 

Fintech software outsourcing: key advantages and challenges

Advantages of outsourcing financial software development

Outsourcing can help you save on development costs as you only need to pay for the services you require and offer the flexibility to scale up or down your fintech development outsoursing team as needed. This can be helpful if your business experiences sudden growth or unexpected changes in demand. Consider more benefits it brings along.

Access to skilled resources with FinTech software development outsourcing

Developing fintech software is a complicated process that requires years of hands-on experience with payment services to perfect.

Unlike other forms of web and software development, you need specialists with industry-specific expertise for your fintech development.

Fintech development outsourcing allows companies to tap into the expertise and experience of specialized development teams. These teams often have a deep understanding of fintech trends, technologies, and regulatory requirements, which can accelerate the development process and improve the overall quality of the product.

Let’s assume you want to build a white-label banking app. Only specialized fintech developers can create this product to meet contemporary industry standards.

Even the most skilled software developers will struggle to cope with the rigors of fintech product development because it focuses more on backend development. Your experts need to understand several layers of product security, API endpoint integration, and other industry guidelines.

If your company does not have a team of fintech developers, consider outsourcing the project to industry experts. With their expertise, they will complete your project, factoring in the intricacies of effective fintech software outsoursing. 

Saving costs

Fintech software outsourcing can help you save on costs as you would not need to invest in hiring and training in-house resources, the expenses on which can boil down to a significant sum. 

Fintech software outsoursing allows companies to access a larger pool of talent globally, often at a lower cost compared to hiring and maintaining an in-house team. This is particularly beneficial for startups and small businesses with limited budgets.

Saving time

As it stands, thousands of fintech startups flood the financial market every year. With that in mind, the killer idea you have for a fintech app development might already be in the works. 

And what separates your company from potential competitors? Time to market. 

If your product misses the launch window, a competitor might capitalize on this opportunity and harm your bottom line. 

With a fintech development outsoursing team focused on fintech development, companies can benefit from shorter development cycles and faster time-to-market

So, instead of wasting time ironing out interdepartmental conflicts and scaling through bureaucratic red tapes, outsource your project to a fully-fledged fintech software development company.

These fintech app development experts will use agile development philosophy to fulfill your timeframe expectations and keep your product launch timetable on track. 

Challenges of software development outsourcing

When you use fintech development outsoursing services, you are essentially giving up control of the project to someone else. This can be a problem if the company you hire does not have a good track record or if they do not communicate well with you.

Lack of transparency

It can be difficult to get a clear picture of what is happening with your project, cooperating with fintech development outsoursing services. This can lead to frustration and delays if you are not kept in the loop about what is going on.

When working with an outsourcing fintech software development company, there may be communication gaps due to factors like language barriers, time zone differences, or cultural differences. This can result in misunderstandings, delays, and a lack of visibility into the development progress.

Misaligned incentives

The company you hire to develop your software may have different goals than you do. For example, they may be more focused on getting the project done quickly rather than ensuring that it meets your needs. This can create tension and conflict between you and the company you hire. It is crucial to align the incentives of the outsourcing fintech software developmentprovider with your business goals to ensure a successful partnership.

Cultural differences

Fintech development outsoursing can create cultural differences that can impact the project. For example, there may be language barriers or different ways of doing things that can make communication and collaboration difficult.

Different cultures may have varying working norms, such as attitudes towards punctuality, hierarchy, decision-making processes, and work-life balance. It can also impact the cooperation with outsourcing fintech software development company.

Potential risks of outsourcing software development in fintech

There are also a number of risks associated with fintech software outsourcing, which is why the decision to delegate software development to a third party company is not made quickly or hastily.

Overspending risk

Customers often fear that they might easily exceed the allocated budget for the solution they’re outsourcing and yet receive an incomplete or unworkable solutions.

Security risks

When sensitive financial data is involved, security is of paramount importance. There is a risk that data could be leaked or hacked if it is not properly protected. Contracts and non-disclosure agreements should be established with the fintech development outsourcing provider to protect intellectual property rights and prevent unauthorized use or disclosure of sensitive information.

Compliance risks

There are strict regulations that govern the financial sector. If a fintech company outsources its software development to a third party, there is a risk that the resulting software may not comply with these regulations.

Reputational risks

A fintech company’s reputation could be damaged if its outsourced software development project fails or results in subpar products.

How to eliminate risks when outsourcing fintech development?

The best practice to protect your company from an outsourcing disaster is to ask for a detailed proposal and ensure that the outsourcing company has the experience and capacity to meet your project’s needs, before committing any funds.

Since the most important aspect of outsourcing is freedom of development, be it fintech or any other sphere, it is crucial to strike a balance between control and the freedom to develop without too many restrictions for a third-party dev team. It is also essential to understand what each party’s responsibilities are, and ensure that their work does not conflict with one another.

Here are a few more rules that will help organize an effective collaboration with the company you outsource your fintech software to.

• Obtain a detailed project scope and timeline to ensure both parties are aware of the expectations and goals of the project
• Verify that the development team has the resources and capabilities needed to meet the project’s deadlines
• Verify that the development team is capable of meeting your quality standards
• Make sure you have a contract that specifies the terms and conditions of the project, including the payment schedule
• Have a backup plan in case of any problems during the project

Check this article to get more info about fintech software development challenges and solutions.

Features of a reliable fintech software development outsourcing company

Finally, when you are well aware of the ins and outs of employing a third party expertise to get your fintech project up and running, here are a few features to pay attention to when choosing your outsourcing partner company.

Portfolio showcasing fintech experience

Although expertise is essential, it is not enough when hiring a fintech outsourcing company. Always check out the company’s previous projects on their portfolio. This process helps you see what they have delivered to clients in the past.

For example, if you want to create a digital bank like Revolut, focus on companies with a proven portfolio of digital banking and neobanking projects. 

By choosing companies that specialize in a given aspect of fintech, your company stands a higher chance of getting a product that suits your project objectives.

High level of security

According to a CyberEdge report, 86% of institutions suffered at least one cyberattack over the past 18 months. At least 69% of the affected companies experienced disruptions in the regular workflow due to ransomware attacks.

Source: CyberEdge

Security is one of the core pillars of fintech software development. An insecure fintech platform is a goldmine for hackers and scammers. And since the potential human cost is high, your company needs a fintech development outsourcing agency with air-tight security. 

A reliable fintech software outsoursing company preempts these security flaws and mitigates risks in the product’s core architecture. 

Besides, they can implement PCI DSS (Payment Card Industry Data Security Standard) and OWASP (Open Web Application Security Project) to meet the financial industry standards.

Data science technologies usage 

Someone once said that “data is the new oil,” and this statement remains relevant today. In this age of big data, you need to invest in data science for software development in fintech. 

When working on your fintech product, integrate data mining capabilities to gather valuable insights from users. Don’t forget to provide opt-in possibilities to enable users to control the data you collect. From the collected information, you can create predictive models to anticipate market trends and consumer behavior. 

And this is where machine learning enters the equation. Every modern fintech software development outsoursing solution needs machine learning algorithms to automate trading, provide financial advisory services, and analyze massive datasets. 

Risk management

One disadvantage of using in-house financial software development is that the DevOps methodology in place is often “too green” to withstand the rigors of a complicated project.

But when you outsource the project to experienced experts, you mitigate the potential risk factors involved in fintech app development. Some of the common risks in outsource fintech software development include:

• Malware attacks
• Cyber breaches
• Server failure
• Broken authentication
• Buffer overflow
• Broken access control

Quality assurance is one of the first steps in developing a reliable fintech product. By creating a fool-proof testing life cycle, the fintech outsourcing company can detect and crush bugs before the launch stage.

Also, fintech outsourcing agencies provide you with continuous product support while your team gradually gains full control of the product. This continuous custody ensures that the users enjoy the best experience when using your fintech software. 

Robust knowledge transfer plan 

Before hiring a fintech software outsoursing company, ensure that they have a plan to transfer the knowledge base to your software developer fintech team. 

Let’s suppose that you outsource your neobank project to a fintech product development agency. You still need to maintain and run the software in-house after launch. Else, your company will experience bottlenecks when working with the software.

So, the outsourcing company should craft a continuity initiative to transfer the codebase, database, admin rights, system documentation, and operational procedure to your team.

Pre-developed software – an alternative to fintech development outsourcing 

Fintech software development is a process that involves painstaking attention to detail within a specific timeframe. Although you can outsource your fintech project to an external team, there’s an alternative way of getting through all the way to the launch – using a pre-built softtware platform from a trusted vendor. 

It lies in using a stable ready-made core platform from a reliable vendor that has all the necessary functionality for building a payment or banking product and is perfectly customizable. 

Buying a fintech solution from a vendor works well for companies that have at least a small team of fintech developers available. The idea is that your in-house team might be enough to take over the pre-developed solution and implement the company’s product vision based on it. This considerably reduces the development time and can help accelerate the product launch by providing a reliable software foundation for further development.

SDK.finance is the vendor offering a payment platform available in two formats – a SaaS version for a quick and affordable start, and a source code version, available for purchase anytime, which gives you total independence from the vendor.

Our 15+ years of experience in fintech products development makes us a proven partner for building the digital banking and payment products of the future. Get in touch to discuss your payment product requirements and find out how our platform can help launch it. 

As a side note – in case you don’t have an in-house team or yours is focused on other essential tasks, we can connect you with SDK.finance trusted outsourcing partners  who will be able to bring your product ideas to life.

References:

• Fintech – statistics & facts 
• Cyberthreat Defense Report 2021
• Alarming Cybersecurity Stats: What You Need To Know For 2021  
• How a fintech software development company can take you to the next step 
• Planning for Knowledge Transfer in an Outsourcing Project 
• 10 Common software security weaknesses