Fintech Development Outsourcing Services

Fintech is an ever-growing industry that combines the application of tech to the improvement of financial services. It helps companies and consumers manage financial operations and their overall lives directly through a computer or smartphone. 

Because fintech is so convenient, financial technology is booming, making this one of the most ambitious and in-demand industries in the world. To meet this growing demand, fintech industry leaders are now turning to third parties to delegate a few tasks, a practice called fintech outsourcing.

Fintech development outsourcing is a type of partnership that works as an effective solution for the industry’s needs. Outsourcing providers can help maintain fintech everyday operations and still add value to the produced work.

Fintech Development Outsourcing Services 4

What Is Fintech Outsourcing?

Fintech is one of the largest growing sectors in the finance industry. As of November 2021, there are over 26,000 fintech startups around the world. Forecasts presented by Statista show that the industry’s revenue will continue to grow at an average rate of 12 percent, reaching a value of nearly $200 billion by 2024.

To keep up with the continuously growing demand, fintech companies frequently rely on outsourcing providers to lighten their workload. Fintech outsourcing is a business strategy in which fintech companies hand over some of their operations to third parties.

This strategy helps in-house teams by reducing their duties and allowing them to focus on core business tasks. It can change the entire course of a company that needs to deploy custom software without having to commit to big internal sacrifices, including budget costs that could hinder the final quality of the product.

Fintech outsourcing is cost-effective even for startups and smaller businesses. Through outsourcing providers, companies have access to affordable experts without having to invest in recruitment, training, or infrastructure.

Does Your Business Need Fintech Software Development Outsourcing?

From financial startups to reputable enterprise-level companies, every company in the fintech industry can benefit from software development outsourcing at some point in their expansion.

According to the Harvard Business Review, more than two-thirds of startups don’t succeed. This happens because startup leaders usually face low budgets and poor planning, which leads them to choose the wrong development teams and use their resources inefficiently.

Outsourcing software development is a great strategy for startup fintech companies to save project expenses and increase their chances of success. Outsourcing fintech projects gives startups with financial limitations and no prior expertise access to talented professionals at affordable rates.

Midsize companies can also greatly benefit from outsourcing software development. Typically, these companies are working on several initiatives, which means that staff is usually overworked.

By working with outsourcing providers, midsize companies relieve their employees of extra work and still save money by eliminating hiring and onboarding fees. At the same time, in-house talent can truly focus on internal crucial duties while the outsourcing team works on software development.

Midsize fintech companies can profit from outsourcing many different services. Apart from software development, other departments that benefit from outsourcing include IT, accounting, customer service, sales, and administrative services. 

Even enterprise-level companies with lots of experience can resort to outsourcing software development. Although these companies are already usually fit with a team of experts, they can still benefit from outsourcing long-term and short-term initiatives to save internal resources and money.

Growing companies require more experts with increasing levels of technological expertise. This comes with increasing expenses that even the largest companies might not want to have, which is why working with outsourcing providers is extremely beneficial. Here are a few other advantages enterprise-level companies gain when outsourcing:

  • Innovation of legacy systems
  • Lower costs of software development
  • Increasing subject-matter expertise
  • Lower recruiting time and expenses
  • Access to a larger talent pool
  • Higher scalability and flexibility

Projects That a Fintech Company Can Outsource

Many areas in fintech can use outsourcing services to ensure quality products and great user experience. There are many technology-based projects that fintech companies can outsource.

Outsourcing financial apps for mobile devices and desktop platforms to manage stock portfolios, money transfers, and other banking or financial-related processes are some of the most common applications of an outsourced software development fintech team. Here are a few other projects that these teams can handle:

  • B2B fintech platforms – These fintech solutions offer new online payment systems, enterprise accounting systems, and platforms for managing assets.
  • Credit support apps – Credit support apps present users with scoring systems for credit solvency assessment. They can also relate to payday lending platforms and other lending marketplaces.
  • Financial transaction apps – Recent trends in financial transaction apps include risk assessment based on machine learning, automatic smart payments, peer-to-peer money transfer apps, and payment system providers (PSPs).
  • Investment apps – Investment app development includes projects for digital assets trading platforms, foreign exchange (forex) brokers platforms, and algorithmic trading using AI and high-frequency trading.
  • Digital banking – This is probably the most profitable type of product, considering people find it easier to use their smartphones rather than interact directly with their banks. These platforms allow users to invest, open and manage accounts, deposit funds, add beneficiaries, and more.
  • Personal finance management apps – This is another profitable app idea due to the increasing consciousness around personal earnings and savings. Users then categorize expenses and gains in real time, managing their finances efficiently.
  • Robo-advising software – Based on machine-learning software, this service offers users personalized advice at lower costs and in a futuristic manner.

Pros and Cons of Outsourcing Software Development for Fintech Businesses

So far, outsourcing software development for fintech businesses seems to be a beneficial solution for every company. However, every strategy has its downsides, so it’s only fair to analyze both the pros and cons of outsourcing software development for fintech companies.

The Pros

  • Reduced costs – Saving money is one of the main reasons fintech companies work with outsourcing providers. They give fintech company leaders access to a wide variety of talented experts at affordable rates. Working with an outsourcing provider also allows companies to save money by reducing onboarding, training, and infrastructure expenses.
  • An endless pool of talented professionals – Outsourcing providers can supply companies with entire teams of experts with the right skills and experience for the project at hand. This is even more appealing considering the current shortage in tech talent.
  • Great workflow management – Managing an outsourced development team doesn’t have to be a hassle for the company’s administrative staff. Outsourcing partners have recruiters, HR managers, project managers, bookkeepers, and other administrators who can run all processes and responsibilities related to the project.
  • Increased in-house domain efficiency – Outsourcing fintech software development talent relieves in-house teams from functions in which they don’t directly specialize. This also allows them to focus on improving their skills and concentrate on more important tasks.
  • Payment upon results – Outsourced development teams need to follow strict processes to deliver maximum value per hour, regardless of their task. Not only does this generate higher-quality products, but it also results in faster delivery and reduced time to market.
  • Better data management – Talent acquired through outsourcing providers has access to all the tools and infrastructure they need to work at their best capacity. This means that they’re equipped with high-end analytics tools and comprehensive dashboards that allow for better data handling.
  • Flexibility and scalability – Fintech startups require flexibility in their operations, and outsourcing providers can offer everything that a company might need to successfully run their business from the start. Third parties can also easily scale up or down to help companies meet their goals.

The Cons

  • Communication barriers – Most outsourcing providers work with experts from countries that are different from the locations of the hiring company. This means that, at some point, businesses might encounter language barriers. Companies should plan for how to deal with this and how much involvement they want in the process.
  • Wrong expert selection – Sometimes companies might not be sure of the type of skills they need for a project, or in some cases, lack of clear communication might result in choosing the wrong experts for a project. Fintech leaders should have a defined idea of what they’re looking for and spend some time looking through outsourcing providers’ portfolios and reviews.
  • Risk of low-quality products – Not everyone who claims to be an expert in their field is. And while outsourcing providers should filter the real experts from those who aren’t, sometimes companies still get stuck with inexperienced candidates.
  • Risk of data leaking – Even though contracts specify data privacy terms, there’s always a chance of a leak of in-house sensitive data. Companies should go over every detail of their contract and work with cybersecurity experts to avoid this risk at all costs.

    Technologies Used in Fintech Projects

    Fintech projects often use the latest technological and scientific advances in big data, artificial intelligence, machine learning, robotics, cloud technologies, biometrics, mobile technologies, and many others. 

    Popular programming languages in fintech projects include Java, Python, C++, Ruby, and SQL. Java helps fintech companies create sophisticated, stable, and safe software. Python promotes modularity and is the easiest coding language to work with.

    Ruby is also easy and efficient, which is why many businesses adopt the Ruby on Rails framework. C++ is great for creating software, operating systems, and other financial goods. And SQL creates sites and apps, using databases to help them reach their full potential.

    Cloud computing technology was also a major player in the fintech revolution. It made it possible for startups to avoid intesting in expensive data centers and allowed them to reduce their infrastructure costs. Cloud tech also enables fast innovation and scalability.

    Web technology like blockchain, artificial intelligence, the Internet of Things, big data, analytics, and others helped narrow the gap between consumers and traditional financial institutions. They made internet banking possible and, in the process, helped traditional banks cut down on some operational costs. Fintech companies also use web technologies for stock trading, cryptocurrency trending, and many other applications.

    Mobile technology made it possible for consumers to access financial operations from the palm of their hands. Mobile wallets, stock trading apps, personal financial management, and crypto exchanges are only a few examples of existing mobile tech.

    Artificial intelligence is another game-changer in fintech projects. Abilities like machine learning, natural language processing, and robotic process automation allow fintech companies to offer “intelligent” products to their consumers. At the same time, AI helps companies internally by optimizing production processes and reducing costs.

    Outsourcing Services for Fintech Development

    Apart from outsourcing software development, fintech companies can also outsource a wide variety of services. From IT services to customer services, outsourcing providers can help companies with both short-term and long-term tasks.

    • IT outsourcing – Outsourced IT talent can work on anything from building complete technological infrastructure to working on specific smaller tasks for applications. Common IT outsourcing services include IT product development, fintech software maintenance, tech support, and data management services.
    • Call center outsourcing – Fintech companies can outsource both inbound and outbound call center services, allowing customers to properly communicate with the brand. Typical call center outsourcing services include customer support, multilingual support services, omnichannel support, surveys, and telemarketing.
    • Back-office outsourcing – Back-office duties are often left behind when companies can only focus on tech development. Outsourcing these tasks relieves talent from the extra work and allows them to streamline product creation. Back-office outsourcing services include digital marketing, sales, recruitment, accounting, legal services, and HR.
    • Fraud prevention outsourcing – Many fintech companies work with sensitive user data and might need external help to enforce security protocols. This is why fraud prevention is a major outsourced service in this industry.

    What to Consider When Selecting an Outsourcing Service Provider

    There are many factors to consider when selecting an outsourcing service provider. Choosing the right provider to partner with will guarantee that the company will achieve all of its goals affordably and cost-effectively. Here are some things to take into consideration when choosing an outsourcing service provider:

    • Service provider experience – Providers with higher levels of industry experience will likely be more knowledgeable regarding different challenges. They will also have developed their techniques over time to deliver high-quality services.
    • Portfolio review – Sometimes, not even the most experienced providers have the best portfolios. This is why it is important to review the provider’s past work to determine if they’re a good fit. Fintech is a very specific industry that requires dedicated skill sets, so it might be best to look for outsourcing providers that specialize in this niche.
    • Staff quality – The value of an outsourcing provider lies in the quality of the talent they work with. Good outsourcing providers constantly prioritize the improvement of their staff, providing them with extensive training and monitoring their performance.
    • Technology quality – Good technology is also important, considering that fintech companies work with outsourcing providers to avoid investing in infrastructure. Companies should have an understanding of the tools and platforms used by the outsourced talent to make sure they’re suitable for the project.
    • Safety guarantees – Fintech companies work with sensitive user data and need guarantees that it will remain safe. They need to choose outsourcing providers with strong data security measures that fend off any cyberattacks.
    • Cost-effectiveness – Companies should work with outsourcing providers that offer high-quality services at reasonable prices and that ensure fast delivery. Providers that can offer a good mixture of these three qualities will help companies obtain good quality-to-price ratios.
    • Transparency – Workflow transparency is key when working with outsourcing providers. This helps build trust and prevent unforeseen expenses and delays. To ensure transparency, fintech companies need to search for providers with solid reputations.
    • Communication – Open communication is fundamental even before signing a contract with an outsourcing provider. Companies need to be clear about their needs, goals, and expectations throughout the entire process.
    • Risk management – Outsourcing providers should have risk management protocols established to quickly find and eliminate any issues that might surface before the deployment stage.
    • Common business values – Even when a company is hiring a team from across the world, it should always try to find providers that understand and share the business’s values.

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    Fintech combines technology with financial services, allowing users to access and manage their finances and investments from any device. It is an ever-evolving industry that continuously comes up with new products to keep up with the advances in technology.

    This can make it hard for smaller companies to keep up with demand, especially for startups that have smaller budgets and a lack of experience. This is why fintech companies adopted outsourcing strategies.

    Fintech outsourcing involves working with third-party providers that offer expert talent at affordable rates. Some of the pros of outsourcing software development for fintech businesses include reduced costs, increased in-house efficiency, flexibility, and scalability.

    However, working with outsourcing providers also has a few cons. Fintech companies working with third-party providers have to work around communication barriers and avoid choosing the wrong professionals. At the same time, there’s also the risk of obtaining low-quality products and experiencing data leaks.

    Choosing outsourcing partners that value transparency, open communication, and safety and also provide cost-effective services is the best way for fintech companies to ensure that they’re getting the best out of this strategy.

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