A scalable financial technology (FinTech) stack is a seamless integration between software, SaaS solutions, and technologies to help enterprises to automate their economic activities.
As the businesses in the BFSI sector grow, there will be a large amount of data and money that the financial systems have to manage, store, and process in real time. Although recruiting more resources and creating an excel spreadsheet mess can be tempting and less expensive, it won’t be able to accomplish the current business goals. Legacy ways to execute financial operations (FinOps) have become obsolete, and consumers need a digital customer experience.
A few enterprises embrace various SaaS applications based on their requirement to streamline and automate certain operations aspects. Implementing multiple SaaS financial applications will make it complex and tedious for the users to accomplish operational goals. It is challenging for finance industry veterans to scale Accounts Payable (AP), payroll, and accounting systems to manage the ever-increasing flow of financial data and money efficiently. Once the organization starts growing exponentially, the amount of financial data it must process, such as expense reports, payroll, reconciliations, credit cards, and invoices, will also scale. A scalable FinTech stack must be integrated to simplify business processes and track data and cash flow, which helps to mitigate this.
Scalable Finance Technology Stack
A robust FinTech stack simplifies workflows and integrates accounting into processes that gather, segment, and evaluate financial data for budgets, plans, and predictive analytics. A scalable finance IT infrastructure offers businesses better data accessibility and enhanced capabilities to execute daily operations accurately. It is crucial to have scalable solutions that adapt and grow with the business needs.
Let’s look at the best strategies that business decision-makers can consider to develop a scalable financial technology stack:
Customization
One crucial aspect before embracing technology to streamline FinOps is aligning business goals and requirements. Use cases should be the foundation of any digital transformation initiatives. Choosing and implementing FinTech tools to drive real business impact is one of the initial steps businesses must take. However, before the decision makers embark on a journey to develop a scalable finance IT infrastructure should consider their unique needs and their change over time. Hence, while exploring the market to implement FinTech tools, it is crucial to evaluate its customization capabilities to make the right decisions.
Every business in the BFSI sector will have unique needs and challenges based on industry and size. Moreover, they must comply with various regulations based on their demographics’ needs and regulatory bodies. FinTech solutions must have customized features to accomplish business goals.
Ensure Scalability at the Architecture Level
Enterprises that want to develop a scalable FinTech stack must think beyond the current operational challenges and needs. While creating an IT infrastructure for finance, it is crucial to consider all the future channels businesses might leverage. Instead of simply implementing multiple ‘point’ solutions that transform analog practices into their digital equivalents, enterprises can partner with a FinTech vendor that helps them to revolutionize their lending processes. One another aspect of evaluating while selecting a tech service provider is its ability to deploy without hampering other services.
It is essential to seamlessly integrate all the FinTech stack tools to ensure streamlined operations without compromising security.
Businesses should not be required to install new technologies to address a new challenge. Keeping scalability at the architectural level allows the organization to adapt to the growing business needs. Organizations with scalability at the architecture level can do minor and major tweaks in their IT infrastructure to enhance their operations without spending too much.
Agile FinTech Stack
Lenders in the BFSI sector need to anticipate the customer needs and respond quickly to acquire the customers. However, businesses need robust data analytics capabilities to respond immediately. Companies must develop a financial technology stack with behavioral and product analytics tools to monitor, store, and evaluate user behavior at all customer lifecycle stages. A few businesses evaluate this data through an in-house team, while others store that data in the repositories. Financial institutions must have effective data tools that provide valuable proactive insights and maintain clean and organized data. Lending is a challenging business model with tremendous risks; just one solution provider usually won’t overcome the operational bottlenecks. Decision makers need to integrate agile FinTech solutions and allow seamless third-party integrations to enhance the efficiency of the entire IT infrastructure.
Also Read: The BIS Innovation Hub inaugurated in Paris and Frankfurt
Fraud Detection and Anti-Money Laundering (AML) tools
There is a tremendous surge in digital fraud, including phishing and spoofing to account and transaction fraud in the BFSI industry. Successful fraud will create mistrust in the customer base and might harm the brand. While developing their FinTech stack, businesses need robust technologies to detect and mitigate fraud to enhance security. There are various fraud detection tools that BFSI organizations can leverage to minimize fraud and other inherent risks. Ensuring that the finance technology partner has made enough space for fraud detection tools that inbuilt cognitive learning capabilities that recommend necessary changes through machine learning models are crucial. Data privacy is one of the top concerns for the BFSI sector and needs to be dealt with vigilantly. The FinTech stack needs to have robust security tools to ensure the customer’s right to privacy.
Implement Compliance Tools
One of the most significant aspects businesses need to consider while developing a scalable FinTech Stack for businesses is compliance adherence requirements. Compliance for BFSI can be tedious, time-consuming, and challenging, which can disrupt business processes and might have legal implications. While developing a scalable FinTech stack, it is essential to integrate tools that allow businesses to audit whether the compliance requirements are met. Moreover, decision-makers must cross-check if the IT infrastructure considers all the compliance before executing the transactions.
Developing a robust FinTech stack is essential for businesses in the BFSI sector. These strategies mentioned above will help the decision-makers to make strategic decisions.
