Put on Your Boxing Gloves: 3 Challenges in Fintech Development Outsourcing

What Are the Benefits of Outsourcing Fintech Software Development?

If your in-house team is experienced enough, they can easily support and maintain the existing projects. In this case, third-party assistance is redundant. However, if you decide to scale your projects up and need more people fast, an in-house team alone will not suffice. Instead, you need to opt for outsourcing because it’s all about rapid expansion.

If the idea of entrusting software development to external specialists doesn’t seem attractive to you, take a look at the benefits that fintech development outsourcing offers:

• It's a cost-effective solution due to lower hourly rates of outsourced fintech software developers. Moreover, you can save money on recruitment, bonuses, insurance, office equipment, computers, software licenses, etc.
• You get access to an unlimited talent pool which consists of unique specialists with rich and versatile expertise from around the world.
• Outsourcing fintech application development companies have more experience in the domain than in-house developers. Their competency allows them to work faster and deliver better results. This speeds up the product launch.
• Your external team will use the latest technologies for your fintech solution. The more up-to-date the tech stack is, the more stable, future-proof, and user-friendly the final product will be.
• If you choose to partner up with a fintech outsourcing company, you can focus on core business processes instead of day-to-day tasks.

As you can see, entrusting software development to a third party makes a lot of sense. However, it is vital to do it right: otherwise, you might face serious damage to your reputation and finances.

To help you avoid that, we analyzed the current risks of outsourcing fintech app development services. There are three main challenges to keep in mind if you are looking for an outsourcing partner or in the midst of the collaboration process: security, quality, and lack of control.

Let's take a closer look at each of them.

What Should You Be Ready to Overcome When Outsourcing Fintech Development?

#1. A Fintech App Starts with Security

In the realm of fintech software development, security is the whale that holds the world of sensitive data on its back. One wrong move — and the realm collapses.

It might seem that injecting your fintech app with a quality security serum is not that hard: just use secure coding practices, and spice things up with multiple layers of user authentication and authorization. Unfortunately, with outsourcing fintech development, it takes a lot more than that to brew the potion.

NuData Security reports that “Fraudsters increasingly rely on sophisticated attacks that imitate human behavior to fool common bot-detection tools that focus solely on device IDs and fingerprints… 40% of sophisticated attacks use clean IPs that aren’t associated with suspicious activity. These attacks can also manifest using automated scripts that mimic human typing or workers at human farms that can easily bypass authentication challenges, like CAPTCHAs.” To prevent breaches in the system, “most banks will spend at least 10% of their total budget on cybersecurity,” as NoWires writes. “For large institutions, such as Bank of America, this represents a figure well over $1 billion.”

Evidently, the more complex security measures become, the more hackers evolve. Thus, if you choose to outsource fintech software development services, how should your partner overcome the security challenge and ensure your customers' data privacy?

• Apart from secure app architecture, well-arranged app logic, compound authentication and authorization, outsourced developers should take care of your web servers and databases. Third-party API integrations that tie your fintech solution into a single ecosystem have to be secure, too.
• To achieve that, make sure that your fintech development partner can provide you with a dedicated team of cybersecurity experts. They need to be on the System/Software Development Life Cycle (SDLC) as well as stay on board after the project's release. The mission of this team is to monitor the market for new threats and update your fintech app accordingly.
• The work progress of your cybersecurity team can be checked with penetration testing. That is an imitation of a hacker's attack. An expert uses a set of tools to detect breaches in your security system to get inside, and then provides advice on how you can remove those vulnerabilities.
• Finally, it's essential for a fintech software development company to know all about regulatory compliance. As APIsec reports, “Regulators won’t hack you or steal your data, but they will impose severe penalties if you suffer a data breach due to lax security or compliance.” Thus, regulatory compliance isn't a part of the security challenge in itself, but it can restrict your product from entering desired markets. To prove their ability to meet the data security standards, your potential fintech software development partner should have the ISO 27001 certification. The KYC (Know Your Customer) and AML (Anti Money Laundering) compliance are also vital. Together, they protect financial institutions from fraud, money-laundering, corruption, and terrorist financing.

A poor security level undermines the overall quality of a fintech solution. Thus, another challenge with outsourcing fintech development is that an external team may not provide the excellent quality of your product.

#2. The Quality Question in Fintech Software Outsourcing

Specialists in a good fintech outsourcing company know what they're doing. They won't put you in a position where the resulting software doesn't comply with the regulations or imposes risks on your customer's data privacy. However, even if everything's fine with the security, there are still a lot of things to consider. For example, whether the outsourcing fintech company you're partnering up with can turn your vision into a proper solution.

How can you make sure that the team's expertise matches your needs, and they are capable of quality fintech app development? Check if they have:

• Experience. The portfolio of a fintech business in question includes case studies of projects similar to yours.
• Reputation. See if there are reviews from the company's previous partners. Make sure the company that is going to provide you with fintech development services was not involved in dubious projects or scandals. Your outsourcing partner has to be trustworthy and reliable: their actions can both cast a shadow over your product and undermine its quality.
• Skills (see the table below):

You can determine whether the skills of a fintech development team match your requirements during an interview.

Now, when we've had the quality talk, let's discuss how you can make sure that things will go smoothly once the development process begins.

*For more insights on fintech product development, check out our guide on how to build a neobank.

#3. The Art of Preserving Control over Your Project

Let's say the development outsourcing providers of fintech services that you've found are great, and you plan to shake hands with them.

But when you start the outsourcing journey, how do you remain in the captain's seat?

To avoid the lack of control and keep the wheel of the ship in your hands at all times, it is crucial to think through the following aspects of the outsourcing process:

• List your ideas, requirements, and goals for this collaboration. Share them with the partner to make sure they understand your needs.
• Make sure both the external and in-house teams understand their roles, responsibilities, and the chain of command.
• Host regular Scrum meetings with the product owner and developers to get a clear idea of the current stage of the fintech product development process and possible challenges. Keep the communication honest.
• Use a CRM system (such as Jira) to access everyone's tasks and progress.

It's vital to make sure that all the things you want to be involved in, as well as the terms of your partnership with an outsourcing company, have been spelled out in the contract.

Leaving the Ring

Outsourcing fintech app development is hard. One mistake — and you can easily lose both money and reputation, with a devastating bill arriving at your doorstep overnight. But if you know what challenges to expect, you can prepare beforehand and ensure that your fintech solution is spectacular.

Research the market to find the best partner, conduct interviews with developers, and be upfront about your requirements and ideas. After all, it's not the boxing ring that's scary, it's the right hook you didn't know was coming.

However… now, you do.

If you would like to outsource fintech software development, please feel free to contact us. We're here to consult you and transform your bravest ideas into the finest fintech solutions.