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Software development for fintech startups – what you need to know.January 5, 2024
As software development in Sri Lanka continues for numerous industries and business volumes, fintech has paved its own unique path among development teams in the country. Apart from catering to numerous local clientele, IT outsourcing companies in Sri Lanka are building high-performance applications for leading international names in the industry.
As a software development company in Sri Lanka, EFutures has been able to observe the evolution of the trade in the country, together with the trends that shape the very same. Fintech is no exception. The past few years in particular have given rise to numerous fintech startups the world over, especially as more customers depend on online shopping and contactless forms of payment.
With cloud support services and SaaS, businesses have been able to adapt quickly and effortlessly, thereby leading to brand new fintech startups mushrooming around the world. Be they by individual entrepreneurs or as offshoots from larger enterprises, the vast number of fintech startups have now led to a business environment that isn’t just fast-paced, but also fierce, as they vie for the same customer’s attention.
In spite of the competition, fintech startups are here to stay – and it is imperative that applications are developed to be easy to use, while also being scalable for catering to future business growth. Ultimately, this is what will separate the best fintech startups from the rest, and prepare them to face any challenge in the future.
Here, we discuss four key factors that fintech startups need to know, when it comes to building the ideal product.
Big data and AI.
Just like any other application, fintech apps are also subject to amassing vast amounts of data with every transaction that users engage in. Therefore, fintech companies need to have relevant data management systems in place to store and manage all this data – while adhering to local and international compliance regulations where applicable.
Big data can also be a treasure trove of insights, if processed strategically. By filtering raw and unstructured data appropriately, analytics tools can help fintech startups detect patterns that can be useful for understanding customer behaviour, app performance, or any other statistic that needs investigation. Integrating data science into big data can also pave the way for insights of a similar calibre, which in turn can aid in future business decision making.
Just like how a business intelligence application can be integrated with a fintech product’s big data repository to reveal insights, AI and machine learning can also be integrated to advance the depth of insights obtained from big data. As machine learning algorithms require large amounts of data for being trained correctly, big data can be a valuable resource for the very same.
With AI and its many subset technologies, insights of a predictive nature can be obtained – which can help teams prepare for tasks and challenges well beforehand. AI technologies such as Natural Language Processing (NLP) can also conduct sentiment analysis on text-based data such as customer messages, to gauge whether feedback has been positive, neutral or negative, in the interest of improving customer experience within the fintech application.
Governance, Risk & Compliance (GRC).
As fintech applications essentially engage with confidential financial information from customers as part of a business model, fintech startups need to be familiar with adhering to relevant regulations and laws – as well as the risks involved lest an error is made. While larger, seasoned organisations that build fintech offshoots may be well versed with the fine print, the same can be challenging for fintech startups that are relatively new to the space.
Therefore it is of paramount importance for all fintech startups (irrespective of industry experience) to be familiar with the regulations and laws that apply to them, their customers and their data, so that compliance processes can be carried out accordingly. This may involve a team of legal specialists, as well as regular audits which can be prepared in accordance to guidelines laid out by applicable regulatory authorities.
Legal and auditory compliance is a key component of risk management, and of GRC as a whole. With confidential financial data being exchanged across their applications, the stakes for fintech startups are high. Owing to the probability of theft, money laundering and even espionage, fintech startups have to ensure that their data, operations and business models are viable, sustainable and secure enough to not just protect the identities of their consumers, but also provide them good value for their money.
With cyberattacks running rampant in today’s digital environment, no organisation, application or user is immune – fintech startups included. From phishing to exfiltration, risks abound, especially in an application environment that primarily deals with confidential financial data. As a result, incorporating cybersecurity in the fintech application’s infancy i.e. from its MVP (Minimum Viable Product) is recommended.
As customers depend on the application round-the-clock, conducting 24/7 threat hunting is important so suspicious behaviour can be immediately detected and remediated before any damage can be done. To ensure customers are gaining authorised access to their accounts, Identity & Access Management (IAM) solutions can help implement Multi-Factor Authentication (MFA), suggest strong passwords and control sessions to prevent possible identity theft, and keep customer data secure.
Anti-phishing capabilities are of immense importance for fintech startups, as customers are always prone to receiving suspicious links. Educating customers with the right messaging across their preferred communication channels also helps maintain stringent cybersecurity protocols, so no customer sabotages their data by their own hands.
Other cybersecurity capabilities such as penetration testing and ethical hacking are proactive measures towards building strong networks, so any loopholes are discovered by software development teams – before an adversary does. This way, security flaws are fixed well in advance, and rolled out as patches to customers.
While it is possible for fintech startups to internally manage cybersecurity requirements for their applications, dedicated cybersecurity companies can conduct continuous monitoring to fix any problems through swift incident triage and remediation. While most operations are generally conducted in-house by budget-conscious startups, cybersecurity could be an exception, owing to the risks involved.
A Continuous Delivery (CD) pipeline.
With consumer trends shifting rapidly in a digital business environment, fintech startups need to be able to adapt – else risk losing to their competition. It all starts with business development teams knowing what users are looking for, where and why. With this assessment concluded, software development teams can be briefed on the same, so they can architect the means for facilitating necessary objectives via the fintech application.
For this reason, software development teams constantly need to be at the forefront of what users are looking for, so they can accommodate the needful in the interest of improving the fintech product at hand. Establishing a CD pipeline is one of the most efficient ways to do so, as the testing process can be automatically initiated and executed, prior to deployment.
To take things a notch further, Continuous Deployment can also be established so that manual intervention isn’t required for an update to be deployed. However, this is something that should be closely discussed with your fintech software development team, to understand whether it is a viable option or not. As software development teams are now able to host, code and maintain application environments in the cloud, automating development, testing and deployment processes becomes easy and scalable.
Cloud computing also makes software development affordable, as cloud-based infrastructure can be used on an on-demand basis. However, with systems such as an AWS savings plan, purchasing services upfront for 1 to 3 years with a commitment for minimal hourly use can further slash costs – creating great value for fintech startups that are functioning on a tight budget.
Fintech startups have much to look forward to, as modern customers turn to online platforms for purchasing goods and services. Digital banking and money transfers have also gained popularity, as more customers depend on remote and contactless services for their daily needs. With so much potential available for the fintech industry, fintech startups have much to capitalise on.
However, the massive potential draws attention from numerous other competitors that are also keen on making it big in the fintech space. As a result, fintech startups are surrounded by excess competition, thereby raising the stakes. A stellar application that is backed by a unique yet sustainable business model is what will retain customer loyalty, and thereby distinguish great fintech companies from the rest.
Albeit challenging, addressing key factors pertaining to fintech software development can give startups the foundation they need to thrive in the marketplace. Cybersecurity and risk management are some of the most important variables for fintech startups in particular, as applications primarily deal with confidential financial data that belong to customers.
Using big data to reveal valuable insights is another component for successful fintech software development, since customer patterns can be identified and future trends can be predicted, for better business decision making. Last but not the least, establishing a Continuous Delivery (CD) pipeline can streamline regular updates, so your fintech app is always up-to-date.
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