Why Should Fintech Businesses Outsource Their Tech Needs?
Fintech is a highly rewarding leading-edge business niche that gives companies the opportunity to leverage new technologies and solutions to provide financial services with lower fees. However, most Fintech startups have a rarely moderate budget. This trend is forcing business owners to look for ways to save costs. In turn, it guides them to outsource financial technology development.
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In our article, we start with reasons why today it is critical for your business to have the advantage of Fintech-technology opportunities. After, you get acquainted with the pros and cons of technology outsourcing for specific-industry businesses as well as the meaningful trends affecting the development of the financial industry.
Reasons to use Fintech-technology opportunities for your business
The industry of financial services has undergone radical changes in the past few years. The technology gap between traditional organizations and Fintech companies is becoming increasingly difficult to close. Besides, Fintech’s definition today encompasses not just startups, but any company connecting with financial services and being innovative in its business.
Using new IT technologies should pay off by gaining extra advantages, and Fintech technologies offer such opportunities to business:
1. Creating the best innovative products and services with better price offers.
Fintech startups often create more optimal products and services than their classic competitors. Through the use of advanced technology and cost-effective processes, Fintech companies provide highly relevant services to various segments of the market. They are leveraging increased consumer demand and declining trust in major traditional financial service providers to create better-priced offerings.
2. Improving customer experience.
Fintech companies use customer experience as a key differentiation point, giving businesses a real advantage in acquiring and keeping customers. User-friendly UI / UX, automation of routine tasks for the client, such as entering a card number manually, user onboarding process, login maintenance, fast payment solutions, AI chatbots, AI-based identity verification solutions are just some of the innovative Fintech services. They significantly enhance your customers’ reliance and their superb experience.
3. Optimization of business processes.
Using big data technologies in Fintech allows making effective decisions in a short time. Artificial intelligence and machine learning technologies ensure continuous improvement of the quality of business solutions.
4. Variety of the development products.
Depending on the business demands and goals, the developers of Fintech programs can create both a global digital financial system and an inexpensive mobile application. With their help, for example, your clients can order goods and services and pay for them in real-time.
Pros and cons of outsourcing technology
A Fintech startup and business owners who outsource tech processes to IT companies should take into account not only the great opportunities they will get from the external management but also the possible risks. Knowledge of the merits and demerits of the service allows you to more accurately assess the picture.
Attracting competent professionals.
IT outsourcers are professionals in their field. They, like no one else, cope with highly-specialized tasks that are significantly crucial in the development of Fintech systems. Besides, the external vendor’s level of professionalism is multiple times higher and reliable than the one with internal employees.
Saving money resources.
The outsourcing vendor takes the responsibility for the technological part of the business. That leads that the company gets rid of the wasting costs of maintaining developers in its in-house staff. Downsizing decreases the total payroll. This, in turn, reduces the cost of social security contributions and tax payments. You also don’t need to provide office space and all the overhead costs associated with keeping an internal employee.
Opportunities to formulate requirements and get results on time.
Can you imagine that you no longer need to motivate staff to achieve any goals? You just need to indicate to your IT outsourcing partner what you want to get from its engineering team and enjoy the delivered results.
The ability to smoothly change requirements.
Let’s say you don’t know the exact amount of IT employees needed for the development. Or in a while you change the points about certain functions of your product, etc. In any case, your IT vendor can adapt to your changeable needs and provide necessary service at a cost sufficient for this. That is indeed so valuable for growing Fintech business. Thus, you don’t need to distress about the influence of unexpected turnings.
Maintaining the company’s legal status.
Developers, designers, QA engineers, testers, etc. serve your Fintech startup or other specific-industry company. However, they officially work for the vendor. That means you still meet the requirements of a small business and its benefits, even though having many professionals work on your project.
Absence of human factor.
Employees of IT outstaffing and outsourcing companies are interchangeable. Therefore, the time and quality of work are not affected by the personal life situations of the staff. No matter illness, vacation, individual issues, etc. – expert IT vendor has a wide choice of professionals to replace the colleague if needed.
Access to the best technology.
Most Fintech startups and small businesses cannot afford to provide the latest technology to every employee. On the other hand, a professional IT outsourcing company is competent in present-day technologies and expertise to offer the most effective solution. That is because the more such tools there are in their offered services, the greater the vendor’s income is.
Enhancing of core activities’ efficiency.
This is one of the primary reasons to outsource work to an IT partner. Hiring and sometimes firing employees, along with accompanying requirements, testing, training, accounting, payroll, tax reporting, etc. is a headache. That is why more businesses, including the Fintech sector, outsource their tech needs to focus on their core competencies. Getting rid of performing non-core functions means an opportunity to concentrate on the main direction of the business and increase its effectiveness.
Information leakage risk.
It is important to ensure that your outsourcing firm has the capacity to protect your data and can provide some sort of safeguard against unauthorized access. However, here we can talk about the situation when even in-house employees can also disclose classified information. Such a case can happen after a conflict with management, or after leaving for another organization.
Faced with tough competition, IT outsourcing companies, on the contrary, are not profitable to risk their gained reputation as a reliable partner. Besides, in cooperation with professional outsourcing companies, nondisclosure of confidential information is prescribed in the concluded contract between you and the vendor.
The risk of poor-quality problem-solving.
According to its statements, the IT partner positions itself as a reliable and professional organization, while the actual quality of services can be assessed only after the done work. Thus, pay attention to what IT company you apply for the support, especially if it concerns Fintech big data outsourcing. Take into account the features and technologies the company provides. And don’t forget to check out the undeniable reviews and previous results on projects.
Risk of misunderstanding your distinct business style.
By all standards, the vendor can perform its services correctly and on pre-negotiated terms. However, the specifics of the business, in particular the Fintech market, are often associated with nuances that need to be clearly clarified to the partner. The right solution is to select the vendor specialized in your specific-industry business. That will minimize risks and you will be confident of the future outcome.
Why should you turn to the FreySoft outstaffing company to develop the Fintech software?
FreySoft team works both with the growing startups and successfully existing enterprises. We have vast experience in providing software development services for Fintech of any complexity – from sophisticated digital banking projects to small and relatively simple applications.
Technologies are rapidly changing in the financial sector. Similarly, the owners of Fintech businesses strive to keep abreast of these innovations. To know what to expect, and how to make the best from outsourcing the tech needs, we have compiled the list of key trends affecting the development of the financial industry.
Maximum customer focus.
In the financial market, banks, Fintech startups, and technology companies are fighting for the client. Against the backdrop of such competition, they simply have no other choice but to accept customer focus as a key concept of work. It is improving the customer experience that determines the design and essence of a huge number of Fintech-specific products.
The opportunities and benefits that innovative technology gives to the financial sector include a huge number of areas. To clarify, they include processing payments in real-time, blockchain, cryptocurrencies, wealth tech (money management technologies), cloud computing, voice banking, big data, internet of things, artificial intelligence, advanced analytics, machine learning, chatbots, and natural language processing.
Despite digitalization and automation, some areas of finance still require face-to-face interaction such as mergers and acquisitions’ transactions, consulting projects, product development, and management. In addition, do not forget that clients sometimes experience an acute lack of human communication while using Fintech systems. This means that not everything can be entrusted to chatbots and Robo-advisers. There must be an adequate balance between technology and live communication with your customers.
We are confident that large Fintech companies will acquire technology companies in order to reduce their costs and maximize their work efficiency. Therefore, it is worthwhile to prepare for the fact that players in the Fintech market will merge with companies engaged in other business sectors such as marketing, big data, and software development. By working together, companies can offer customers more involving products and services.
Shifting strategic priorities.
Even the most conservative banking institutions cannot ignore the fact that Fintech has changed the approaches in the financial industry. Therefore, now customer-centricity, “mobile-first”, omnichannel, long-term planning, seamless user experience are taken the top places in their strategies.