One industry that is flourishing post the Covid-19 pandemic is the FinTech sector.
According to research by BCG titled “Global Fintech 2023: Reimagining the Future of Finance,” currently, the FinTech sector holds approximately a 2% share of financial services revenue worldwide. The report also highlights that the market is expected to reach USD 1.5 trillion in annual revenue by 2030, comprising approximately 25% of all banking valuations globally.
The FinTech industry is scaling to streamline the operations of businesses in the financial sector.
However, not all advanced FinTech tools will help to enhance business processes. Decision-makers in the financial services sector must ensure they implement the best tools in the market in their FinTech stack to improve their business performance.
In this article, let’s explore the key considerations that decision-makers must consider while building their FinTech Stack from scratch. Following is the methodology that decision-makers in the financial services industry can consider to develop a robust FinTech stack:
Financial institutions have very complex business models, needs, and work processes. The more complexity of the business needs and work processes, the more they must conduct extensive research for their software development. Financial services are a multi-faceted industry, so extensive research for developing a FinTech stack should be one of the top priorities.
Before financial institutions embark on a journey to build a FinTech stack, they need to understand the region their financial services cater to and their needs. Moreover, government organizations and other regulatory bodies govern how financial institutions operate. Hence, it is crucial to determine the enforcement mechanisms, the laws and regulations set, and other legislative initiatives.
CIOs in the financial services sector need to understand the demands of their clients, which is their preferred device, and why they need an app to make strategic FinTech stack decisions.
They also need to understand the strategies, technology, and solutions offered by them to their clients. Developing a better FinTech stack than the competitors should be a priority of businesses in the financial sector to get a competitive edge.
Budget plays an important role while developing a Financial technology stack for the organization. Hence the project scope should be well-defined before embarking on a journey to develop a FinTech stack. Decision-makers should set realistic budgets and turnaround times.
Choose The Right Tools for the FinTech Stack
The financial sector is constantly evolving, and the majority of the businesses in the industry are adapting their processes to meet their customers’ needs. The FinTech stack should reflect these ideas and have flexibility while developing it. Choosing the programming languages to build a tech stack plays a crucial role.
Develop a Cross-Functional Team
Businesses should attract, hire, and retain professionals with expertise in designing, developing, and deploying FinTech products. Financial institutions that do not have budgets to hire and retain in-house resources can outsource them to third-party vendors. One of the significant benefits of outsourcing FinTech development is that it will help businesses to access the best talent and reduce operational costs.
In-house teams or outsourced third-party vendors should have expert professionals, including front-end and back-end developers, testers, business analysts, a project manager, UX/UI designers, and a product owner. The best FinTech stack development vendors can create cross-functional teams that understand the business needs and develop a robust tool accordingly.
APIs and Integrations
Most financial businesses think FinTech apps include functionalities like basic transactions, bill tracking, chat support, and integrations. Even if businesses decide to develop a FinTech stack from scratch, it needs the flexibility to support third-party APIs (Application Programming Interfaces).
Financial institutions have started focusing on delivering a top-notch user experience, and the users want to use their preferred channel to use the applications. Hence, businesses must implement APIs to ensure seamless integration of the applications on the FinTech stack.
Security Should be a Top Priority
The applications and tools on the FinTech stack will gather the financial and personal information of the customers. Hence businesses in the financial sector are one of the prime targets of cybercriminals. Data leaks can significantly impact businesses, resulting in a negative brand image and legal litigations.
The teams developing a FinTech stack should understand the rules, regulations, and laws enforced by the regulatory bodies. Security needs to be a primary focus of the development teams since the design phase of the FinTech stack.
Data encryption, role-based access control to reduce internal threats (RBAC), dynamic password changes, Multi-factor authentication (MFA), and adaptive authentication should be integral to any FinTech stack. Financial institutions can embrace the DevSecOps approach to strengthen the defense mechanism of their IT infrastructure.
Design User-friendly Interface
User Interface (UI) and User Experience (UX) should be the core elements of the FinTech stack, and it is crucial to ensure that all the functionality, features, and interface elements add value. Businesses that want more ROI should target all the users, service providers, and end customers to make strategic FinTech stack development decisions.
CIOs of businesses in financial institutions can consider the above-mentioned key considerations while developing a FinTech stack from scratch.