Develop critical fintech projects without hiccups

Mobile applications are a staple in the fintech world — they give users instant access to their financial information. Almost all fintech solutions offer their customers a mobile app to manage investments or make transactions.
Web apps, otherwise known as online banking, usually give users access to more features than are available in the mobile application. A web application therefore exists in tandem with a mobile application. Companies can develop a web application to present more data in a readable manner (a smartphone’s screen is smaller, limiting the amount of data for convenient consumption).

Desktop apps are usually an extension to web apps provided by fintechs to make the service more stable and faster. Desktop apps can be written in the same technology stack as web and mobile apps (e.g., Flutter or React Native). This approach cuts development costs and speeds up time to market.

While mobile apps and web applications are the viewers of data, APIs are key to getting that data from a bank’s or an organization’s systems. In other words, APIs enable the connection between bank accounts to fintech applications to make transactions, verify identities, or share financial data.

For example, wealth management applications aggregate financial information from different user accounts into a dashboard to reveal insights. These apps need a secure way to connect with bank accounts and get financial data. Financing apps such as Klarna or online payment systems like BLIK let customers move funds from their bank account to make ecommerce payments or peer-to-peer transactions.

APIs unlock the data, letting fintech solutions bloom. Together with machine learning, AI, data science, and proprietary algorithms, APIs help banks and fintech startups deliver disruptive services and products. Another term for the use of APIs for the digitization of financial products using account information from financial institutions is open banking.

Despite growing digital banking adoption rates across generations, 55% of the US population still exhibits reluctance toward open banking. Even though there are increasingly strict regulations and laws governing fintechs, that doesn’t eliminate the risk for many customers who consider entrusting their finances to newcomers in the sector. While banks with an existing customer base that expand their offer to include digital products have an upper hand in the trust area, fintechs have to overcome a few hurdles to increase adoption

The main three reasons why customers are reluctant toward open banking are:

• Data leaks and security breaches
• Low transparency
• Habits and customs in doing banking

Improving the adoption of fintech products among traditional customers with specific banking habits involves understanding their needs and preferences, focusing on user-friendly design and functionality, offering seamless integration with existing systems, and providing personalized support and assistance.

Since everything is digitized and relies on data, cybersecurity in financial services is critical for the industry. However, over the years, multiple safeguards and encryption mechanisms have been created to ensure transactions are safe. Still, fraud is the leading source of loss for the financial industry — with $5.9 billion in losses in 2021.

Example security measures that can be implemented in fintech products:

• Data encryption
• Role-based access control
• Secure app logic
• Timed password changes
• Network monitoring for suspicious activity
• Short login sessions for users
• Testing and auditing with penetration tests

While appropriate technological security measures are key to making digital banking secure, it’s also a matter of strong awareness and preparedness efforts from financial institutions to make sure customers know how to spot fraud attempts. Teams working on financial technologies need extensive experience in best practices and security approaches that ensure the development of safe software.

Just like there are many supervisors that overlook traditional banks, fintech solutions are also regulated by government agencies, licensing bodies, and state departments. For example, in the US, robo-advisors might have to register with the Securities and Exchange Commission (SEC) that safeguards against market manipulation attempts.

Different countries around the world have their own requirements as to fintech technology. 

• PSD2 (European Union)
• AMLD (EU)
• eIDAS (EU)
• GDPR (EU)
• FCA (UK)
• APPI (Japan)
• Decentralized finance regulations (for cryptocurrencies)

Knowing the market and its regulation is key to meeting product requirements and developing fintech solutions in a specified timeframe. Experience in fintech regulation also helps identify which features can be launched in a specific market. For example, country-specific regulation like GDPR influences how a product collects and processes data.

Turning regulatory experience into product development opportunities can yield unique and well-researched ideas that are innovative but stay within compliance requirements.

According to IDC and other research firms, there’s a global developer shortage, which is likely to become more problematic to companies around the world. In highly sensitive sectors such as fintech, experienced engineers are critical to delivering reliable, stable, and long-term financial technology products that users can trust. 

The fintech industry is highly regulated, and financial technology products must meet strict compliance standards to ensure that they are safe and secure. High-quality software and thorough application testing are essential for meeting these standards and avoiding costly fines or legal liabilities.

Thinking about code quality long term ensures that performance stays reliable as the demand for the service increases. Future scalability needs and the ease with which they can be met is often the differentiating factor in outperforming the competition. Code quality ensures the software is also easy to maintain and integrate with other solutions.

The financial landscape has long shifted from that known for decades of traditional banking. Currently, customers expect more personalized experiences where they feel in control of their finances and have agency in managing them.

Digital banking has already become a crowded sector. Truly personalized customer experiences where the customer has access to real-time financial information with an added portfolio of different products such as investment, personal finance management, or peer-to-peer lending might help banks and fintechs attract loyal customers.

Human-centered design focuses on understanding the needs, preferences, and behaviors of customers. It gives direction in which to design products and services that are intuitive, easy to use, and provide value. This can help fintech companies create more engaging products and services.

The current volatility in market conditions, frequent data breaches, and increasing regulation should incentivize banks and fintechs to rethink risk management. Predictive analytics with close-to-real-time performance can help draw insights that flag various unfavorable scenarios ahead of time.

But banks with legacy technologies might have a difficult time benefitting from advanced threat analytics. The goal of the new generation of risk management should therefore be to fix data collection and storage to remove data silos and increase asset awareness.

Effective risk management is critical for fintech companies, as it can help them identify and assess potential risks, and develop strategies to manage and mitigate these risks. This can help ensure that fintech products are safe, secure, and compliant. Using risk management to protect fintechs from financial losses, legal liabilities, and reputational damage will keep the landscape of financial innovation attractive.

Cloud computing is a low-cost solution for banks to offload their infrastructure by storing and processing data. In cloud computing, banks get extended business operational capacity through products that can yield customer insights, spot cost-saving opportunities, and build and launch personalized products faster.

Cloud providers can help banks eliminate data silos that effectively prevent these financial institutions from getting insights on risk, regulation, and customers.

Fintech is enabling the historically underserved customer segments to discover and use financial products. By lowering barriers to investing, lending, saving, and digital payments, fintech products can become a revenue generator in untapped economic areas.

For example, fintech lending companies help low-income populations access financial resources without requesting credit history. Migrant workers have a low-fee option to transfer money abroad using currency trading solutions such as Wise.

Fraudulent activity costs the financial industry billions of dollars annually. Data breaches and credit fraud are the biggest concerns among consumers in the financial sector. While there are best practices that help develop secure fintech software, AI and machine learning can further help in prevention.

AI and machine learning can quickly perform an in-depth analysis of financial data and network behavior. Algorithms can be trained to detect anomalies and learn to recognize suspicious patterns. As the fintech sector evolves, AI will become one of the main security-strengthening tools.

According to McKinsey, analytics and AI tools decrease time-to-launch for campaigns and help organizations generate 5 to 15% more revenue. However, McKinsey also observed that only 8% of companies with documented investment in AI can effectively translate insights into consumer-focused campaigns. The successful future use of AI is therefore not only about implementing the technology but also the know-how to translate insights into opportunities.

As much as 66% of surveyed consumers express their interest in automated payments. Enabling cashierless checkout where payment is collected when consumers leave the store is an opportunity for payment providers and stores to create seamless customer journeys. With more affordable and accessible AI tech such as no-code AI building solutions, cashierless stores are the future of brick-and-mortar stores.