Fintech is a greatly profitable modern niche that allows companies to provide regular services with lower fees through innovations. However, most of their budget is used to develop fintech software in-house or outsource it to a fintech software development agency .
There were more than 12 000 fintech companies in 2019. The same year, the industry received more than million in funding. And in 2022, the global banking sector is expected to invest around trillion .
That trend makes startup and business owners look for budget-saving shortcuts, which often leads them to outsource fintech development . Let’s examine the main advantages of taking that cost-efficient yet productive route.
Why is fintech turning to outsourcing?
Similarly to all other types of IT outsourcing, fintech development outsourcing brings many benefits for profiled company clients, some of which include:
- access to talents with knowledge of new technologies
- optimize IT processes without additional investments
- reduced software development costs
- reduce work for in-house staff
- save the organization’s workspace
- fast adaptability to the particular niche’s development requirements
Many fintech companies may be restricted in terms of budget and other essential resources, like time, the number of qualified employees, and the available working space.
Hiring new full-time employees to cover as many areas as possible means loads of new taxes, organization of workspace, or even new office rent. At least, you must be sure that you will be able to supply them with enough workload. In a nutshell, you lose flexibility when you hire new people.
Outsourcing in the fintech industry can be a real game-changer for many companies that need to deploy some custom software in the shortest terms without sacrificing either huge parts of the budget or the quality of the end product.
Who needs fintech software development outsourcing?
There are several benefits to hiring remote engineers, whether you're a reputable financial service provider or an established fintech company.
Enterprise-level businesses frequently delegate both long-and short-term initiatives to remote workers to maximize internal resources and save costs.
When the organization expands, there is a requirement to draw in experts with the necessary degree of tech expertise. Regardless, well-known companies cannot let the fear of reputational harm prevent them from providing exceptional services and adding value to their customers. The major advantages outsourcing brings to enterprise-level companies are:
- Gradual innovation of legacy systems. The full renovation of a fintech solution of a large company can cause disruption and commotion, create bottlenecks, and impact crucial business processes. With a reliable tech partner , a large fintech institution as well as an international corporation can create a sustainable innovation plan. Thus, a company is able to run crucial business operations and reengineer their solutions part by part.
- Lower cost of software development. In fact, outsourcing your development will allow you to create larger teams with lower budgets. The engineers will be recruited temporarily, and your chosen business will handle the benefits, taxes, and holidays.
- Bring in subject-matter expertise. New specialists may assist you in comprehending the industry from the customer's viewpoint, and this knowledge may prove to be priceless.
- Spend less time recruiting experts. The entire hiring process for a software outsourcing team may take the same time or less than hiring only one developer for your in-house team.
- Access to a large talent pool. Top talent can not only get you where you need to go. Still, it can also improve your project by pointing out any possible weaknesses or generating fresh, original ideas that benefit the project.
- Increased project scalability and flexibility. Software development outsourcing has the fantastic ability to provide you with "on-demand" service. This can help you visualize the freedom you have with this chance. Just think of a scale between talents and expenses. Scaling your project as needed will save you time and money.
Fintech software outsourcing is a great option for mid-sized businesses to assign in-house experts to other crucial duties while outsourcing software development. Around 37% of mid-sized companies outsource. Typically, mid-sized businesses have a lot of ongoing initiatives that need help and attention.
As a result, you may engage specialized fintech developers or a fintech outsourcing business, relieving your staff of extra work. Additionally, you may outsource these duties at any project stage and save money by eliminating hiring fees and team member onboarding.
Mid-sized companies profit from outsourcing their IT, accounting, customer service, sales, or administrative services, even if this may not be marketing. This enables them to manage their workloads without taxing their own teams or going over budget to acquire more staff.
By outsourcing software development, fintech companies can focus on your main business objectives rather than being bogged down in coding and development techniques. Thus, it relieves some of the pressure on your company's workers and frees them up to work on other main projects.
Working with an external software development firm opens access to technological improvements that may be unavailable to your internal development team. The newest trends and technological advancements are typically kept up with by businesses specializing in technology and software development.
Furthermore, inadequate planning, an improper development team, and ineffective resource management are the main causes of failure for nearly 80% of mobile companies. Therefore, selecting the best development company and building up an effective and economic fintech app development process is crucial.
Every fintech company has resource and financial limitations and a lack of prior expertise. As a result, there is a considerable need for alternate methods of creating digital goods in the financial software sector. Startups seek strategies to save project expenses and lessen the likelihood of failure.
Delegate your fintech product to our engineering team
Delegate your fintech product to our engineering team
Technologies that a fintech provider can outsource
The most common reason for an IT company to go for outsourced developers’ services aren’t all about saving money. The need mostly appears when there is a lack of local experts with sufficient expertise.
Companies commonly outsource the development of blockchain, AI - Artificial Intelligence, machine learning (ML), big data for delivering
Preserving control over the customer experience, and establishing a strong ecosystem of payment software solutions.
E-commerce payment methods
Secure online payment software solutions that prioritize the customer's needs.
Software development for POS
Speed up checkout, add loyalty programs, and create data-rich client profiles.
Payment security PCI DSS
Include anti-fraud measures for EMV, swipe, and card-not-present payments.
Mobile application for e-wallets
Complete transactions as they see fit and boost consumer loyalty, revenue, and profitability.
Binariks engineered a fintech solution based on block chain
Cryptocurrency Betting Platform
Binariks engineered a fintech solution based on block chain
What about the popular technologies and languages in fintech?
- Banks and other financial firms use Java to create sophisticated software solutions. It is all about stability and safety first.
- Python is currently one of the most widely used languages in the financial industry. It’s loved for the ability to promote modularity and code reuse since it supports modules and module packages.
- C++ has been used by businesses, especially financial institutions, for many years. It’s used to create software, operating systems, and other goods. C++ has been used in various sectors, including banking and fintech ones.
- Ruby is simple and efficient. This is why businesses, particularly startups in digital banking, employ Ruby and its Ruby on Rails framework. The ease of use (which saves time and money) and the framework's integrated security measures are cited by developers as the main factors in their favor.
- SQL creates websites or applications and uses databases to their full potential, it is crucial to banking and fintech, making it a necessary tool for anyone in the industry.
Pros of fintech outsourcing for fintech companies and banks
About 65% of companies that have outsourced in the past or do today want to increase their outsourcing. It proves that companies realize the advantages of outsourcing and choose to explore outsourcing are impressed by its financial advantages, speed, and flexibility. Let’s explore what’s good about outsourcing for fintech companies.
A large pool of competent tech experts
Outsourced developers are always qualified experts in their niche, efficiently handling tasks of any complexity in a particular field. There's a talent shortage in tech in developed countries and that they will benefit most from hiring experts from other outsourcing directions like Eastern Europe.
There are 4,500 to 6,500 outsourcing providers. More than 4,650 suppliers who offer IT outsourcing services are listed on Clutch. It is roughly a million software engineers, and each of the local talent pools is renowned for specializing in a specific technology in addition to the most well-liked and in-demand ones.
- Poland has 295 000 developers for fintech development outsourcing
- Romania, known as the "Silicon Valley" of Eastern Europe, has more than 200,000 IT professionals, including 110,000 programmers.
- Ukraine is recognized as having one of Eastern Europe's largest talent pools with 212,547 IT professionals.
- The Czech Republic counts 125,000 software engineers.
59% of businesses outsource to reduce expenses. Cost-cutting is the second reason that makes organizations turn to outsource. The smaller staff you have at command, the more minor expenses you need to handle. It is that simple in this aspect.
Managing the workflow
Outsource partners have in-house administrative staff: recruiter, HR managers, project managers, bookkeepers, financial directors, and office administrators – people who run all processes on their side, letting your company focus on other crucial aspects. Outsourced companies pick and train the staff to handle certain tasks on their side. You can rest assured that specialized experts manage all business processes.
Your contractors take up all the managing responsibilities. The desired results in developing, deploying, and further technical support of your software are achieved with external efforts with a minimum participation of in-house specialists.
Growth of the main in-house domain’s efficiency
Outsourcing allows companies to eliminate the need to handle functions in which they don’t specialize directly. That way, they can concentrate on enhancing their primary focus of expertise.
Professional relationships reinforced with a contract
A contract always backs an outsourcing partnership between a contractor and a client. The signed agreement mentions all the responsibilities and rights of both sides and other important cooperation issues.
Fintech companies sign an NDA contract with a provider that aids businesses in preventing the disclosure to a third party of the private information shared with their contractors. Also, the code belongs to the client, and their collaboration can only be revealed at the contractor's request.
Payment upon results
Your in-house employees may always get a chance to waste some time acting busy; that’s a common working ‘sin.’ Outsourced experts strictly follow their processes and deliver maximum value per hour. Outsourcing companies always make sure that each programmer does the necessary job. That is why they have planning, they have PMs, BAs, quality assurance engineers, and the rest.
Cons of fintech outsourcing
Even though outsourcing has numerous advantages, you shouldn't pursue it unless you weigh those advantages against reviewing why outsourcing fintech development might not benefit your company.
Risks of insufficient quality
Everybody claims to be a real professional in their field. In contrast, the actual performance quality can only be witnessed and assessed when the project is finished. Pay attention if your project introduces highly advanced technologies like fintech big data outsourcing. Think in the direction of the rich portfolio, certifications, references, and credible outsourcing company websites to obtain a high-quality end product.
Risks of incompatibility with your corporate style
An outsourcing contractor does its job according to all the expected standards. Any corporate specifics, however, must be thoroughly explained or even interpreted by your partners.
Data leak risks
Data privacy terms are specified in the contract and are legally approved. At some point, there will always be risks of in-house information leakage. To avoid that risk, collaborate with companies that cybersecurity certifications like AWS Select Consulting Partner, a Gold Microsoft Partner, and a Google Cloud Partner, ISO 9001:2015, ISO 27001:2013.
Value of outsourcing and in-sourcing
Hundreds of European and American companies have increasingly used outsourcing to Eastern Europe to solve particular business issues.
Your outsourcing contractor takes up the responsibilities you would’ve otherwise assigned to your in-house department. The contractor nitially possesses deep expertise in the field. It allows them to implement your project with a sufficient level of quality, follow the industry standards. As a result, they will claim fewer expenses as opposed to all the corporate organization affairs you might need to handle.
There are still potential risks related to outsourcing in fintech, but you can avoid them if you find a reliable partner.
Destinations for fintech software development outsourcing
These days, outsourcing gives so many possibilities that it's simple to become perplexed. Some businesses offer to grow your internal staff with their programmers, while others operate on a "turn-key" basis. Now companies have the option of outsourcing their operations both onshore, nearshore, and offshore.
For those new to the fintech sector, selecting the ideal location to outsource fintech development might be challenging. Finding a reliable outsourcing partner to construct your product by quality standards and business requirements is essential because the stakes are so high in fintech projects.
There are three location-based outsourcing models:
- Offshore outsourcing: you could encounter when choosing an outsourcing firm. It entails moving IT operations to a foreign nation and, frequently, a continent.
- Nearshore outsourcing: software development is carried out by a group or individual in a neighboring nation or a time zone similar to their own.
- Onshore outsourcing: domestic outsourcing assigns jobs to a person outside your company who resides in the same nation.
Due to the time and cultural differences, nearshore and offshore outsourcing definitions typically imply higher cost savings but need more stringent management and planning. Now you know more about location-based outsourcing models, but do you know how to create location-based applications ?
Cooperation models for fintech development outsourcing
Working with an outsourcing firm at first may seem unknown how everything will go on about talent pool, prices, and cooperation. In reality, you should be able to pick the partnership model that works best for you when you hire a reputable fintech development outsourcing business. Clarifying the benefits and drawbacks of the most popular ones, let's review them.
In the dedicated team model , an outsourcing provider assembles a team that focuses solely on the client's project. The project-specific details, such as the work scope, the technological stack, and deadlines, determine the size and organizational structure of the dedicated team. Others will profit more from a small group with a few professionals, while specific projects call for a team with multiple developers, QA specialists, business analysts, and a project manager.
A fixed price contract stipulates the project's scope, length, and overall cost between the client and the contractor. Any modifications after the project have begun necessitate the execution of new agreements or related contract amendments. A fixed pricing model is perfect for projects with a known scope, established project management processes, and specified requirements.
Time and material
The customer pays the contractor depending on the time spent working on the client’s project. The price of the materials used is also covered under the contract. There are benefits of the time and resources outsourcing model.
- Fixed financial limit. Thanks to this pricing model's flexibility, you may balance your budget and the outsourcing services you wish to receive.
- Irregular workload Control of how much work an expert does for an hour or a project.
- Long- and medium-term projects. Compared to the dedicated team and fixed pricing models, a contract based on a time and materials model enables you to start your project immediately and maintain development flexibility.
Every pricing strategy for software product development is unique. The details of your project will determine which method is ideal for you. At Binariks, we effectively implement all three models to cater to the client’s needs.
Examples of fintech outsourcing
Let’s look at the following two successful cases of fintech startups implemented by our team of experts to provide a complex of high-quality services.
Planet of Finance
This app is, in fact, a whole platform for investors striving to conduct financial operations as conscientiously as possible. In particular, it provides investment pro tips by experienced market players and helps to find projects with immense growth potential to invest in.
Pylink is a British startup that is, at its core, a web application for creating and storing financial models of structured financial products with version management capabilities. Pylink users have experienced analysts (experts at rating agencies, investment banks, investment funds, etc.) that possess a deep understanding of structured financing.
When can things go South?
Negative experiences during partnering up with an outsourcing contractor can arise due to various factors:
- From selecting an unreliable partner to work with: I checked some reviews on their official website, and they must be good, ‘their website looked pretty well, so I chose them, etc.
- To the insufficiently clear explanation of your requirements - ‘didn’t have time to specify this or that, ‘the requirements were changed halfway.
In any case, these experiences are followed by your expenses, and there’s no sense in choosing sides here. The only thing you can do to protect yourself from possible risks is to look for a contractor via a resource that guarantees the high qualification of all involved users like Clutch . Or, you can at least work with partners by the post-payment principle.
Fintech outsourcing trends 2023
By 2025, the worldwide fintech market will reach $305 billion, according to GlobeNewswire. This prediction demonstrates that the fintech wave is not just a fad. When multinational corporations implement new technologies, they simultaneously fulfill the demand for fintech products, increase productivity, simplify financial transactions, and guarantee security. Fintech app development will continue to be popular for at least a few more decades.
Modern technology has taken the place of outdated banking management techniques. Today's banking industry embraces digital transformation by creating a wide range of mobile applications and offering top-notch financial services. Let's examine the most recent developments in the field of digital banking.
Artificial intelligence is most effective at identifying trends in data. After that, AI-powered applications may provide recommendations based on results to assist consumers in minimizing or optimizing their expenditures. By gathering and analyzing data about their cash accounts, credit accounts, and investments, artificial intelligence (AI) enables financial businesses to track the financial health of their clients to offer more appropriate and individualized services. It helps to analyze spending patterns and create customized budgets
Security by blockchain
Ownership of digital commodities is becoming increasingly popular, thanks to non-fungible tokens (NFTs) and cryptocurrencies. It creates of keeping great security and providing financial infrastructure. Banking blockchain is the only technology that can sustain the economy of this virtual environment. While cryptocurrency payment options exist, NFTs serve as trustworthy evidence of ownership of a certain digital asset.
When you ask an artificial intelligence-powered device, such as a speaker or a smartphone, to make a payment, you are making a voice payment. As a result, the gadget will hear the vocal request, respond by acting upon it, and give confirmation.
When a bank employs point-of-sale terminals with biometric recognition, such as fingerprint scanners, it offers customer protection. Biometric recognition allows them access their accounts and manage their finances without being concerned about identity theft.
In one of our previous posts we already wrote about biometric security for banking , you can learn more about it if you are interested.
When an unbanked person wants to get financial support and expand their small companies is hampered by the absence of official borrowing history. To increase financial inclusion, some nations are testing alternative credit scoring techniques that may use mobile or psychometric data to correctly evaluate a person's credit worthiness.
Following at least one trend from the bunch will help you target leading market positions while helping financial companies solve long-standing business issues.
Tips on how to choose a fintech outsourcing solution developer
Last but not least, look at some pro recommendations to help you find reliable outsourced software developers.
Choose a partner, not a vendor
Software vendors are mostly interested in providing multipurpose products that would fit the broader scope of possible users. In turn, a partner will create a solution adapted to your particular business needs and support it throughout the whole product lifecycle. They will also take up the responsibilities of scaling and changing the existing product according to the changing industry standards. Thus, search for outsourcing fintech companies ready and willing to establish a full-scale contract.
Insist on defining services and levels of performance
The more specific your product requirements are, the better results you can expect from a hired outsourcing team. It would be best if you also kept in mind that no matter what means of remote communication we have at our disposal nowadays, you’ll still need to somehow interact directly with your contractor from time to time. Try to define your tiniest requirements before the get-go, preferably in person, to avoid risky on-the-go changes.
Choose a partner with experience in fintech outsourcing
There are numerous companies specializing in everything. Unfortunately, the narrow focus allows providers to truly excel at what they do. Try to work with experts that focus on your business niche or those with separate fintech departments.
Be clear about your budget
If you plan to establish transparent long-term business relationships with your partner, stay honest regarding the project budget. There are situations when companies look to implement some highly-expensive functionality and bit more than they can chew, having to sacrifice other essential features. If you initially talk over all the nuances, you can save yourself from unexpected situations that inflate your budget.
Choose someone you can trust
Software creation is a long process. You cannot set up any essential long-term strategies with someone you can’t trust. Seek honest feedback on online resources to reduce dishonesty risks.
How to pick the right fintech software development outsourcing company?
1. Review the portfolio
While experience is necessary, it is insufficient when choosing a fintech outsourcing business. Always look at a company's portfolio to see what they have done in the past. You may examine what they have previously provided to clients through this procedure.
Consider organizations with a track record of successful digital banking and neo banking initiatives if you wish to build a digital bank similar to Revolut.
Your business has a better chance of finding a solution that meets the goals of your project by working with fintech businesses that specialize in a particular area.
2. Check security
86% of institutions experienced at least one cyberattack in the previous 18 months. Ransomware attacks caused delays in routine workflow for at least 69% of the impacted businesses.
One of the main tenets of developing finance software is security. Hackers and con artists can profit greatly from an unsafe banking platform. Your business also requires a fintech development outsourcing firm with airtight security because the potential human cost is enormous.
As someone once stated, data is the new oil, and this notion is still true today. You must invest in data science for fintech software development in this era of big data.
Developing your financial product includes data mining tools to get insightful customer feedback. Don't forget to offer opt-in options so consumers may manage the data you gather. You may develop prediction models using the data collected to foresee market trends and customer behavior.
When contracting out app development, it's critical to maintain the workflow's transparency to prevent unforeseen expenses and delays. Naturally, picking a developer with a solid reputation aids in the process, but don't forget to sign a service level agreement before beginning work.
Every development stage's deadlines, permissible downtime windows, data management & recovery procedures, and an emergency action plan should all be covered in depth under the SLA. Utilizing tried-and-true project management and test tracking systems like Asana, Jira, Trello, and others is another piece of advice.
Communication is essential, whether you want to outsource your whole IT department or simply a few specific tasks. Talk about the tools and procedures used by the vendor. If you decide to move forward, develop a thorough plan for routine interactions and pressing issues, and don't forget to identify important players on both sides for quicker problem-solving.
6. Risk management
Quality assurance is one of the initial steps in creating financial product. The fintech outsourcing business can find and eliminate issues before the launch stage by developing a foolproof testing life cycle.
Also, as your team progressively takes complete ownership of the product, fintech outsourcing companies offer you ongoing product support. By maintaining continuous custody, you can be confident that your financial software will give consumers the greatest possible experience.
7. Common values
When you hire an offshore development team from another country, you could run into an almost unheard-of situation with internal staff members: the pace and quality of the working process slow down due to cultural differences and working methods. Time zone variations frequently make the issue of cross-cultural disparities worse; as conference calls or instant messaging are not practical, communication is done via email. This may result in your project manager losing team control, not receiving timely project updates, and other issues.
How much does it cost to outsource fintech development?
Certain factors determine the cost of developing fintech applications. For example, the project's complexity and the developer's level of expertise will affect the development cost. Also, if the project involves the creation of a prototype, then the cost is affected. There must be more aspects that might impact the project's final cost, including business strategy, features, time to market projections, development strategy, team composition: Location, Size, and Expertise.
Binariks can help you in fintech outsourcing
In 9 cases out of 10, outsourcing is the single most optimal way to implement some fintech software in a company with a limited budget and/or access to only local labor resources. On the other hand, you must be utterly wary when choosing a company to help bring your business concept to life. Otherwise, you’ll simply waste time, and money, and don’t get the desired viable product.
Opt for well tried-and-tested financial technology partners, such as Binariks. We have been providing reliable, scalable, simple maintenance, and competitive custom software solutions at reasonable costs for foreign clients for years.
When it comes to payment software, we build innovative and reliable payment software solutions that allow clients to grow their core businesses while processing large volumes of credit card payments at lower rates. Our focus is on payment gateways, online payments systems, PCI DSS payment security, and POS software development, etc. You can also rely on our team in banking development services to make educated choices, reduce risks, streamline back-office activities, and improve operational efficiency through bank software development.
Contact our managers right now to find out the approximate costs of our fintech outsourcing services in terms of your particular project and see what we are capable of.
How to Conduct a Successful EHR Data Migration Process?Oct 11, 2022 · 11 min read · Ross Chornyy
The Role of EHR Reimbursement for TelemedicineOct 25, 2022 · 8 min read · Ross Chornyy