What’s FinTech anyway?
Let’s start with the basics. FinTech (financial technology) involves the use of software to provide financial services. There is a wide spectrum of verticals within this one branch. It embraces payments, investing, lending, banking, insurance, crowdfunding, blockchain, money transfers, assets, expense tracking and more.
Fintech verticals; source: CB Insights Fintech Report Q2 2019
The FinTech industry is in for a bright future. In fact, a substantial rise in investments has been noticed in this fast-growing sector, more and more financial startups can emerge and disrupt traditional services with the use of breakthrough technologies. Every financial organisation wants to top the list and stay ahead of its rivals, which has led to a rising demand for custom FinTech solutions. Apart from technology sensu stricto, a lot of other aspects, like design, security and legal standards, need to be taken into consideration before jumping in the deep waters of FinTech. Let’s take a look at the essentials.
Agile for smooth FinTech development
We need to face it - in the financial industry, time is literally money. In a constantly connected world, everyday activities are becoming more and more automated. Our financial operations, like payments, lending or investing, are concerned by these changes as well. The ultimate goal of FinTech app is to meet the evolving needs of ordinary customers and improve financial processes by adding new functionalities. Therefore, being up to speed with the newest trends is the key to success. It may be challenging, though, and requires an extra dose of flexibility. That’s why it is important to stay open-minded and establish a workflow that would support adjustments during the development process.
Being under pressure, financial entrepreneurs often feel tempted to implement too many features at once. As a result, they end up buried in half-finished solutions. Frustrated and lost, they abandon their visions. In order to avoid unpleasant situations of this kind, you should think of introducing Agile practices into your daily work routine. This approach, based on daily cooperation, regular progress, and frequent deliveries, allows adjustments to the product whenever it’s needed. Along with effective project management and quality assurance, Agile methodology gives the possibility to adapt the product to current circumstances and scale it up in the future. These aspects are crucial for any FinTech company that wants to stay in the game.
Speedup with proper tech-stack
Obviously, a wisely-chosen system of work is not enough. Creating efficient and innovative FinTech solutions requires a suitable technology. Choosing the stack can impact the whole project and determine its success or failure. Hence the importance of research before making a final decision. Depending on the sector, different technologies may work better. According to HackerRank, Python is the best programming language for the FinTech industry.
What is the best programming language for FinTech? Source: HackerRank
The reason for it being so effective is its strong financial algorithm performance. Moreover, Python is flexible and easily-scalable - it leaves the door open for improvements. It also offers many open-source libraries for data science and machine learning that are widely available and ready to use, e.g. NumPy and SciPy.
If you plan on developing an advanced platform that can be used via smartphones, you should consider going for cross-platform mobile development using React Native or Flutter. These frameworks are known for high-performance and speed. They gain an advantage over other native solutions because they work both for Android and iOS with just one codebase.
The essential role of APIs in FinTech app development
Another issue you cannot pass by when creating a FinTech solution is API, i.e. Application Programming Interface. APIs are widely used to connect a software product with external services. They allow safe and convenient communication with other systems and enable better data management while still ensuring a high level of security. Above all, new products can be built much faster thanks to the possibility of integration with already existing software, e.g. an investment or payment system. Among FinTech companies, it is very common to use other APIs. It is getting even more popular thanks to open API initiatives (for example the Open Banking initiative). As a result, the network of products and services is growing bigger and bigger. Using ready APIs is handy. Some companies, however, decide to create new ones and benefit from it like GoCardless - an advanced online payment platform.
In fact, quite a lot of payment systems offer their own specific APIs. Integrating with them makes building FinTech app even quicker. Among those ready-to-use APIs, we can find MasterPass, a free digital wallet solution created by Mastercard or PayPal - a payment processing system, popular, especially within the eCommerce sector. Also, big tech sharks joined the game noticing the potential of FinTech solutions. For a lot of them that was a bull’s-eye just to mention Apple and its Apple Pay - a free system allowing online and offline payments for users of iPhones, iPads and Apple Watches. In 2018, there were 140 mln users of the service - 55 mln more than a year before.
Unfortunately, in the endless race of FinTech companies, choosing the right programming language and integrating the product with different APIs sometimes is just not enough to take the lead. Demanding environment and stiff competition require implementing innovation and more sophisticated technologies to deliver extraordinary solutions and user experience.
Technology: level up!
More often than not, in order to guarantee a high-level of personalisation and stand a chance against big financial corporations, banks or brokerage firms, FinTech companies support their products with emerging technologies such as AI, Machine Learning or AR/VR. An app is then based on the behaviour and preferences of its users, which makes the experience more satisfying and intuitive.
Money management is easier mainly thanks to Big Data. It plays an essential role in the FinTech sector. Based on the data stored in our devices, an app can anticipate customer behaviour and create numerous protective strategies. It is a very effective tool in risk management and fraud detection. Along the same lines, FinTech companies benefit from data analysis solutions. They allow us to make predictions about future trends and assess potential risks (for example, when investing a considerable amount of money).
Among emerging technologies used in the financial industry, we can definitely mention Artificial Intelligence and Machine Learning. Thanks to voice-processing systems or digital assistants (bots), an app is capable of detecting any vulnerabilities and anomalies that would be untraceable for a human. AI offers numerous scanning solutions that take security to the next level.
41 startups bringing AI to FinTech , source: CBInsights
Last, but not least, come microservices. Breaking down a large app into smaller, autonomous pieces can be beneficial in many ways. This versatile solution demands a holistic approach - although particular components constitute separate units, they are still strictly related and communicate with one another. In dynamic industries, like FinTech, microservices have a significant advantage over a monolith application, simply because a microservices-based app facilitates adjustments that are necessary in order to meet the users’ needs. Moreover, each service can be tested and monitored individually, which guarantees a higher level of security. Finally, this solution enables faster deployment and makes the app easily-scalable. It is possible to scale only one unit or a few of them without impacting the entire system. It’s worth-noticing that multiple digital banking applications, like Ferratum, heavily rely on a microservices architecture.
As can be seen, there is a lot going on in the core of FinTech app. But what about their visual part?
How to ensure great User Experience in a FinTech app?
FinTech is a very demanding industry, not only with regards to innovations in the product and its features. The interface needs to keep up with it and go in line with current trends. Distinguishing yourself from other FinTech companies may be the only way to succeed in this ever-changing environment. However, the old “less is more” rule resonates a lot with FinTech philosophy. Why is that?
Well, after all, it is all about translating complex and overwhelming financial data into something simple and understandable so that everyone can manage their money effortlessly. If the user panel isn’t transparent enough, customers will not find the app useful. In short, the interface needs to be intuitive and clear. A user-friendly design enhances the overall experience and makes financial operations more convenient.
We all seek control and stability. Therefore, a financial platform or system should keep us informed about the status of our bank account, show the transaction history or suggest different investment opportunities. What’s crucial is that these processes are quick and uncomplicated. A designer should implement graphic elements and call-to-action buttons that are straightforward and easy to navigate. This way, a user doesn’t get too much information at once. Instead, they get clear instructions and notifications after each step, which makes the whole experience engaging and safe.
The colour of money - what about UI design?
When creating an interface for a FinTech app, a designer should decide on a color scheme that not only would be aesthetic but also logical for a user. It is advisable to choose intense and vibrant tones as well as play with contrast - it allows highlighting the most important information. Colours, fonts, and shapes help guide the users and make them expect a certain outcome from their actions (for example, green arrows or bars often suggest a money raise whilst red ones are associated with a financial loss).
The most powerful tool in presenting a huge amount of information is data visualisation, i.e. a visual representation of data and information. It can take the form of dashboards with diagrams, charts, simple animations, icons, tables or photos. Thanks to this solution, complex financial data becomes clear and easy to interpret. Many successful FinTech companies use data visualisation to their advantage. Among them, we can find Moneyfarm - one of the largest online investment and digital wealth management companies in Europe. Other notable examples are Payroller or Acorns.
No matter the exact financial sector, data visualisation makes an app simpler, more intuitive and, as a result, more appealing to the users. After all, user satisfaction is what determines the success of a product. Designers and developers have to prepare a well-thought UX/UI strategy and define the target audience. Only by cooperating, organising workshops or scoping sessions and getting feedback from the users, they’re able to build an extraordinary app and adapt it to ever-changing circumstances in the financial industry.
All in all, the key here is to keep the balance between simplicity and security, the latter being the crucial aspect in FinTech.
When it comes to money and sensitive data, there’s no room for errors. While a FinTech app needs to be intuitive and easy to use, first and foremost, it needs to be secure. It often deals with a huge amount of personal or business-critical information that shouldn’t be exposed. Underestimating the importance of security may lead to damage that cannot be undone. Users simply won’t take the risk to download the app that is not foolproof nor transparent. This is the reason why FinTech solutions need to clarify what kind of data is processed and for what purpose. The apps should only collect and store indispensable information, minimising the risk of unwanted leaks and more serious problems (e.g. identity theft).
In order to secure the users' data, FinTech companies apply different protection controls, like encryption, firewalls, and authentication. Many of them decide to step on the next level and implement multi-factor authentication (MFA). This solution provides a user with an additional layer of protection. It is based on a pretty straightforward mechanism - the identification of a person is possible only when more than one piece of contextual information is given. Credentials used for this kind of authentication include something you know, something you have or something you are. In this case, a PIN number isn’t enough to access the account. Apart from that, you need to, for example, share your location (checked via GPS signal), enter an additional, single-use code or use a biometric verification (e.g. fingerprints screens or voice-recognition system). As big fans of Python and practical solutions, we created django-trench - our open-source library providing multi-factor authentication for Django, rocketing its security even further.
Respect for the law and regulations
When developing a FinTech platform, a company will inevitably face the problem of financial laws and regulations. The main issue with them is that they differ depending on the country or the region. As the product needs to be compliant with those standards and restrictions, it is essential to get familiar with them beforehand.
From 2018, EU and EEA countries need to follow the GDPR guidelines. As a result, appropriate measures and methods are put in place in order to stay in line with restrictive data protection principles. FinTech companies are particularly affected by this regulation because they deal with significant amounts of sensitive information. Not complying with the GDPR rules involves huge fines and serious legal consequences. It takes a lot of care and caution to process personal data in a safe and lawful manner. Therefore, it’s essential to be transparent with data processing as well as strictly limit the access of third parties to personal information.
Another set of requirements applies to companies that deal with credit cards. Payment Card Industry Data Security Standards (PCI DSS) are information security standards for organisations. Their goals are to maintain a secure network and protect users' data by regularly monitoring and testing the system. They were created to reduce credit card fraud. The evaluation of the security level takes place during the validation of compliance (which happens once a year or once a quarter).
Finally, it’s crucial to become acquainted with PSD2 that entered into force on 14 September 2019. This proposal, made by the European Commission, was adopted in order to create a safer, more innovative payment ecosystem across the whole continent, make cross-border financial operations easier and support online payment initiatives, like open banking. The new regulations have become real game changers for FinTech companies as they create a suitable environment for speeding up the digitalisation of financial services.
FinTech solutions demand the highest security standards implemented at many levels, also for APIs. Connecting multiple services makes the security even harder to achieve and many advanced financial platforms are affected by this problem. Ensuring safe and efficient communication among APIs is possible with good management. It allows building a trusted environment, based on authorisation and authentication. There are a few good practices to follow. They include the use of tokens, encryptions, and signatures as well as using an API gateway that facilitates the creation and maintenance of APIs. Security testing and monitoring every newly-added software is also an obligatory step to keep the risk under control.
New technologies, a fancy interface, laws and regulations, numerous security issues… It all sounds pretty challenging, right? Check how a remote, self-managed team can help you to develop your FinTech product and scale it up. If you're already looking for a reliable software partner find out Why Merixstudio is the right match.