It seems that FinTech has taken the tech – and real – world by storm.

This article is an introductory guide on FinTech, the process of developing it and companies that do so. Dig in.

What is FinTech?

Long story short, FinTech – short for Financial Technology – refers to using technological innovations to automate and manage traditional services in the finance sector.

Long story long – here are the solutions that hide under the term.

Types of FinTech solutions

Some of the most popular and widely used FinTech solutions include:

Digital banking

Most banks offer a web and mobile application that you can use to handle various services that once were available only in the traditional, brick-and-mortar way. Some of them operate solely in the mobile banking digital space, without a physical bank branch you can visit.

Thanks to this FinTech solution, you don’t have to go to a bank to open or close an account, make a transfer or exchange currency – you can do it online, sipping coffee at home in your slippers.

Payments

Online payments are now the standard. 

Whether it’s paying your bills, doing some online shopping or paying a friend back for a launch you two just had, more often than not it’s done through some kind of software or app.

Lending

In the Fintech era, lending has become extremely easy. Consumers can apply for a loan in a matter of minutes on their phone using mobile banking apps.

For lenders, it’s easier as well. Adding technology to the equation allows them to make an informed decision faster, without a human digging into tons of papers and asking the customer probing questions about their financial past.

Thanks to FinTech and peer-to-peer solutions, it’s also possible to lend money from an individual you don’t know, entirely cutting out financial institutions from the process.

Insurance

Another new spin on a well-established service, insurance changed thanks to FinTech, too. 

Customers typically expect a quick response from the insurer. With tech, it’s easier. They can also easily compare various services.

Insurance technology is growing and even got its own shortened name – InsurTech.

Capital raising

You no longer have to turn to established financial institutions to get funding. Thanks to FinTech, alternative ways of raising capital have been created, one of the most known examples being crowdfunding. Even individual investors can put their money in a project or a product, in exchange for interest rates or equity.

Benefits of FinTech solutions

The biggest benefit of FinTech solutions is that they’re convenient for both ends: businesses and consumers.

It’s easier and quicker to pay via a mobile bank application than going to a bank to order a transfer. It’s often also more accessible and affordable for users.

For businesses, automating certain services equals cutting costs and reducing the time to perform them.

Some people have voiced their security concerns, and choose traditional ways because they have been tested and proven to be secure over the years they’ve been followed. 

The new tech way, though, is being heavily invested into, and is rising in popularity all the time. This means that the tech and security measures will only be getting stronger as time goes by.

FinTech software development process

Here’s what a software development process looks like:

Planning and analysis

The process of developing FinTech software starts with getting aligned on the requirements and outlining how the application will work. That’s crucial to map out the scope of the project.

Design and architecture

The next phase is structuring the product and creating the first designs. At this point, you should be able to give early feedback before your financial software developer partner goes full steam ahead.

Development and integration

Most FinTech software dev companies work in an agile process. This means the development and integration of the product with your systems are divided into smaller chunks (iterations).

Testing and deployment

When that’s all done, your software partner puts all their focus into testing and fixing potential bugs before the product is deployed.

Best practices in FinTech software development

Security and compliance

Keeping sensitive data safe and secure is key in all industries that deal with it – and finance is one where there’s a lot of sensitive data being dealt with.

It’s a non-negotiable that FinTech software has to be secure enough so no cyberattack goes through.

The same goes for compliance – FinTech software needs to be in line with all regulations that apply – period.

We cover both of these points in more detail below, in the challenges section.

Scalability and flexibility

FinTech software has to be able to handle an ever-growing number of users and volume of data. It has to stay fast and easy to use, even when the number of financial transactions scales rapidly.

Adding to that, it has to be flexible so it can take in new features without any hiccups.

And – keeping in mind the point above – it has to be scalable and flexible without compromising on security.

Some ways to create a scalable and flexible product are using cloud services, a microservices architecture and implementing horizontal scaling.

User experience design

UX specialists’ job is to design an app that will bring value to the users and will be easy to use.

With every project, they dive into research to learn how users deal with the issues they have, and how they engage with the FinTech application.

Some of the best practices UX specialists follow include separating the sign-up process into small pieces, so it takes less effort, adding gamification elements to the app to make it more engaging and pleasant to use, and making sure copy is clear and points users to the desired action.

Top technologies used in FinTech software development

Cloud computing

As we already mentioned, keeping sensitive data secure is a challenge in FinTech software development. Cloud computing can help with it.

It’s much more reliable than traditional ways of storing and managing data. It’s more likely to prevent leaking data or any type of fraud.

It also allows you to securely share data. All in all, it can make a digital transformation easier, smoother and more secure.

Blockchain

Blockchain is a distributed peer-to-peer database that stores information in blocks. The blocks are connected together with cryptography and can’t be altered once they’re created. 

Since they’re immutable, the issue of trust with any third parties is eliminated. You don’t have to worry about a human error being made along the way.

It’s mostly known for being used in cryptocurrency systems. That’s not its only use, though – it’s also used to build NFTs (non-fungible tokens) and DeFi (decentralized finance) applications.

Artificial intelligence

Predictions around AI state that it’s going to become more effective and quicker than a human could possibly be – so no wonder it’s being invested in so many branches of tech, including FinTech.

Artificial intelligence learns to adapt based on data and create new data to improve its functioning.

In FinTech, AI can for example be used to spot and prevent attempts of fraud. Another application of AI in FinTech could be including an AI-powered chatbot in customer support service.

Data analytics

Data analytics is the process of examining data to find any trends which you can draw conclusions from. 

Businesses of all kinds, including FinTech, of course, use it to make guided decisions that will maximize performance and boost profit for the company.

Challenges in FinTech software development

Regulatory challenges

One of the biggest issues FinTech software development companies face is keeping up with compliance and security regulations.

These regulations have been put in place to keep consumers safe from fraud and other crimes. It’s a no-brainer that we need them and that the consequences of not keeping up with them might be dire. You break them, and there are serious legal and financial issues waiting for you.

The thing is, these regulations evolve. They’re changing all the time. Keeping up to date with them can be really hard.

And if you add maintaining workflow speed and agility with the above, you get a mixture that’s even harder to balance out.

How to deal with regulatory challenges

Any software developer building a FinTech solution should make sure they’re implementing technologies and precautions that are in line with the regulations – advanced security protocols and data protection solutions. They should always be testing and running security checks regularly.

Data security challenges

It goes without saying that data security is a big one for software development companies. Sensitive customer data is prone to be targeted by fraudsters. We’ve all seen how data leakage can affect a company’s reputation (and make it get rid of millions of dollars when the lawsuits start coming in), and it might be even more serious when the said company is in the finance industry.

That’s why FinTech software developers must build secure applications that can prevent potential cyberattacks.

How to deal with data security challenges

Using measures such as data encryption, multi-factor authentication and real-time notifications is a must for FinTech companies.

Besides implementing technologies and protocols that keep the data secure, they need to run regular audits and vulnerability checks.

Integration challenges

Integrating new FinTech solutions with legacy systems that financial institutions used to work on, makes digital transformation tricky. It’s easy to overlook a gap that cybercriminals are looking for. 

This means financial software companies need to be extra careful and attentive to every little detail when they’re integrating a modern system with an older one – especially in regard to APIs.

How to deal with integration challenges

Developers need to make sure API endpoints are secure at all times – not only during the digital transformation but also after every code change.

List of the top financial software development companies

Vention (formerly iTechArt Group)

Location: HQ in New York, USA (with offices around the world)

Company size: 1000+ employees

Founded: 2002

Vention offers access to a huge talent pool of top engineers. The team syncs with your in-house software engineers to advise and execute the product vision. They help you accelerate the roadmap, innovate and scale operations.

Praxent

Location: Austin, Texas, USA

Company size: 100+

Founded: 2000

Next up on the list is Praxent – as they put it, “FinTech UX design and engineering partner to financial companies determined to lead in digital”.

They help FinTech and financial services companies to get and maintain their customer relationships through the latest in human-centered design, front-end engineering and FinTech product integration.

Yalantis

Location: Offices in Poland, Ukraine, Cyprus and Estonia

Company size: 400+

Founded: 2008

Yalantis – apart from designing and delivering stable and scalable digital products – offers to share the wide-ranging knowledge of their developers as a consulting service.

Saritasa

Location: Newport Beach, CA, USA

Company size: 100+

Founded: 2005

They serve clients from innovative startups, financial organizations, and enterprises. They aim to bridge the gap between technology and business by creating a technology company with a business mindset.

GoodCore Software

Location: Croydon, UK

Company size: 50+

Founded: 2005

One of the leading software development companies in the UK, they serve both a local and oversee client base – multiple offices allow them to offer a hybrid onshore/offshore model.

Woodridge Software

Location: Golden, Colorado, USA

Company size: 50+

Founded: 2012

Woodridge Software is another software development company that can connect you to the world of FinTech. They specialize in custom software, digital transformations and complex integrations for enterprises, financial institutions and startups.

CSHARK

Location: Wrocław, Poland

Company size: 300+ 

Founded: 2014

They help enterprises with end-to-end digital transformation and startups with mobile and web development, turning their ideas into products. Based in Poland, they operate all around the world.

SPEEDNET

Location: Gdańsk, Poland

Company size: 200+

Founded: 2000

SPEEDNET is distinguished by their extensive expertise in the financial sector. They support globally known enterprises as well as medium businesses. As they put it, “simply name your idea and we’ll translate it to zeroes and ones”.

OpenGeeksLab

Location: Stockholm, Sweden

Company size: 50+

Founded: 2015

OpenGeeksLab has been repeatedly recognized as a market leader in diverse categories by independent research companies. They serve clients across the US, Canada, Europe, UAE and Asia.

DigitalMara

Location: Tallinn, Estonia

Company size: 70+

Founded: 2012

DigitalMara builds unique software solutions for small and medium-sized businesses. They specialize in supporting European and American clients.

Miquido

Location: Kraków, Poland

Company size: 250+

Founded: 2011

Miquido calls themselves a “one-stop software development company”. They’ve delivered over 150 projects for clients in industries such as FinTech, e-commerce, entertainment and health.