The FinTech industry is one of the most challenging for software development due to multiple regulations, requirements, and expectations. Your team should know the ropes to seamlessly integrate all the needed features and create a powerful project. SapientPro gathered its experience in this post to help you understand what to prepare for.
Fintech is a general name for a wide spectrum of modern hardware and software solutions. It includes banking, business, investments, and commerce. A fintech platform is a set of tools, which goal is to simplify financial services and make them accessible. Originally fintech was exploited innerly by huge commercial companies only. However, nowadays this tech has occupied the P2P niche, thus making smaller financial operations more affordable
Online insurance is a comparatively new branch of fintech. It is far more flexible than classic insurance services. Web- and app-located insurance services provide insurance for both long-term and short-term periods. Months or years, weeks, days, or even hours – not a problem. Insurtech is a great up-to-date solution for the modern age!
Another child of the modern era is online- or internet-banking. Delivered through web pages or native applications financial services are actively replacing traditional banking nowadays. Thereby fintech products for banks are in great demand. Online banks are becoming a thing, successfully competing with old-fashioned banks in their purview. Of course, common banks have started using banking apps lately. It doesn’t make them online banks though. Online banks and other web-based financial institutions are not yet so popular among people. Although, traders and self-employed people have appreciated their advantages.
Lending and mortgage
Mentioning fintech online banking we cannot ignore online lending. Lendtech is another part of fintech that is changing economics forever. Online lending and mortgage services aren’t banks, however, they can provide fast credits without extra time waste.
If there is any kind of fintech service everyone uses, it is surely paytech. This kind of web service is used both in P2P, P2B, and B2B relationships. Lots of those services don’t even demand your bank account data. There is a lot of paytech software nowadays. The most famous and popular are PayPal, Venmo, Google Pay, Cash App, and Zelle.
Blockchain and cryptocurrency
Undoubtedly, cryptocurrency is a big game-changer of modern global economics. With hundreds of cryptocurrencies exist and trillions of dollars being invested in the most popular of them such as Bitcoin and Ethereum. Why is cryptocurrency so important? It is a fast, safe, and ‘invisible’ way to transfer your money worldwide.
Another major class of the fintech market is personal finance. This tech replaces old-fashioned financial advisors via numerous apps. Those apps are usually maintained by fintech advisor companies. Some personal finance companies advise 24/7 on budgeting. Others may also help you with saving money for retirement as long as providing other money-management assistance.
If there is a financial market something has to protect, expand and regulate it. Another branch of the huge fintech tree – regtech. It is a system of cloud-based software from different companies that provide various financial services. They aim to shorten expenses and make financial operations quicker and more efficient. Machine learning and data analysis are the core of regtech.
There are a lot of web platforms for crowdfunding nowadays. Such services as Kickstarter or Patreon have gained popularity in the past years. They are convenient for raising money for independent content creators and for precise projects that would never make it without public or other financings. Thus, fintech improved not only economics itself, but also culture and science. Lots of young artists and scientists have engaged budgets they would never be able to without crowdfunding. The list of the projects to appear is impressive: blockchain techs, video games, TV series, medical tech, eco-tech, etc.
Fintech development is very specific and complicated. It is easy to commit lots of mistakes in this field. However, it is also a huge open gap of new techs and economics tactics. These days the new history is being written and everyone has a chance to bring something new! But what are those vitals one has to consider while developing a fintech product? Here are several crucial things:
Fintech is a branch of software solutions, where there aren’t any free turn-key tools and scripts in the public domain. Your fintech developing team won’t be able to use any kind of template to develop a fintech application or service. Due to this, you are going to need not just a skilled team, but one with vast experience in dealing with fintech development. The team should also be able to carry out professional, technological, and business expertise on the developing product. Hence a good team is a crucial asset while developing a fintech service.
Choosing the technologies
As with any software project choosing your tech stack is a thing of vital importance. In the case of a fintech project, however, keeping this balance may be harder than usual. There definitely are several extremely popular cutting-edge financial technologies like machine learning and AI data analysis. They are used as advising services for investors and businessmen. Among the popular novelties, chat-bots and other kinds of bots can be found. Blockchain has also been in trend lately. First, you should bet on the tech that can effectively power your service. You could try the MVP approach to choose the tech stack while developing your product and carrying out the research on the market’s needs. Cloud solutions will also simplify the development process and make your future service more accessible and efficient.
The fintech market has been growing rapidly since the 2000s. It is already densely packed with lots of various services. Pay attention to the uniqueness of your product, otherwise, it won’t be easy to conquer the market.
Software development itself is really expensive. Thus there is no need to mention how expensive fintech development can be. Consider that some typical capitalization and operating expenses connected to releasing a business cannot be ignored or shortened. There are also expenses connected with running your project such as bank integration expenses. Perhaps, you need to analyze your probable expenses before running the project, otherwise, you risk finding yourself aground.
Security of your customers
Security is a crucial moment when it comes to fintech services. Unfortunately, due to the nature of the data fintech companies deal with they are an ultimate target for hackers. Cyberattacks are a constant danger and you should be ready to fight this danger off the reel. Remember: your customer’s data will be under constant pressure. You have no right to give slack even for a moment or else breaches might be found in your security line. This may lead to losing valuable data. Once it happens you will effectively lose your customers’ trust.
One of the main reasons fintech is an extremely tough industry is the regulations held by the national governments. Starting your own fintech startup, you must pay attention to the differences between fintech policies in different countries.
Building a fintech startup one has to take numerous fintech regulations into account. Here is a brief list of the organizations one has to deal with while running a fintech company.
Fintech regulation in the US
In the USA there are several governmental organizations, controlling the fintech industry. The first one is the US Securities and Exchange Commission. It has no major demands and only regulates the scale of fintech companies’ activity. Another organization is called the Consumer Financial Protection Bureau or simply CFPB. The Bureau has jurisdiction over all providers of financial services within the country. As fintech companies deal with separate customers their activity is under CFPB’s authority. Thus the laws CFPB creates are automatically applied to the fintech companies operating in the US. To increase the collaboration with fintech companies CFPB has created an initiative called ‘Project Catalyst’. Other American federal institutions such as CFTC and FinCEN also take part in the fintech market control. In order to legitimately operate within the US, a fintech company has to be registered in the mentioned institutions and obey anti-fraud, anti-laundering laws, and customers’ rights supporting regulations.
Fintech regulation in the EU and the UK
The rapid growth of the fintech industry was noticed in Europe as well as in the New World. The fintech industry regulators are embodied in both national and international organizations throughout Europe. The biggest national organizations in Europe are the FCA in the UK, the AMF and ACPR in France, the BaFin in Germany, the CSSF in Luxembourg, the AFM and DNB in the Netherlands. The European Commission and the European Parliament are intensively trying to take the fintech industry under their authority to ensure uniform standards for all the countries in the EU. Such panEU organizations as the European Central Bank and the European Securities and Markets Authority or ESMA have publicly supported new regulatory initiatives. This was made to encourage innovation in fintech. Even though the UK has effectively left the European Union there is currently no difference between the EU and the UK fintech policies.
Making a successful fintech project is a great challenge for both the client and the fintech development team. Too many factors have to be taken into consideration. There is always a huge responsibility behind it. Fortunately, our company has a strong web-developing team with experience in fintech development. We confidently deal with e-commerce and fintech services. You can check out one of our fintech projects – TheBigDataChef. Contact us now to discuss your fintech project and we will be happy to provide you our service!