Why do fintech companies need to scale up so quickly?
It’s really hard to name the other industry performing under such a big pressure of delivering top-notch solutions as fintech. But the possible reward seems to be worth the effort considering there are already 48 fintech unicorns (with a private market valuation of $1B+) worth $187 B.
Fintech Unicorns; source: Global Fintech Report Q2 2019
Competing with powerful giants like banks, insurance companies, and brokerage houses armed to the teeth with all kinds of resources resulted in constant searching for new ideas and bringing the Agile approach to the very limits. This kind of business FOMO (fear of missing out) within fintech companies drives a wild innovation race of delivering more and more sophisticated technologies. To keep pace it takes extraordinary flexibility and the capacity of the prompt introduction of new solutions. These two things gain the advantage for fintech startups over fin-sharks but at the same time - they are highly dependent on not-so-easily-available IT manpower.
How can an external software partner support fintech development?
Every fintech company is probably aware of the real cost of hiring a software engineer which doesn’t end on a simple amount of salary but also includes recruitment and onboarding costs, and also these hidden behind full-time employment - taxes, annual leaves, paid vacation, insurance rates, etc. Furthermore, it takes a lot of time to find an expert fitting the particular needs which of course slows down the development and weakens the fintech company’s invaluable responsiveness. In a non-financial aspect scaling up an in-house team can’t go on forever because it handicaps the innovation performance.
To remain agile and innovation-driven, fintechs are looking for external software development partners that will provide skilled engineers and also fill the tech expertise gaps that often block the progress of work. They expect something more than just code even within the staff augmentation - a knowledge transfer. This educational dimension is necessary for fintechs to briskly adopt trends and new solutions like AI, Python Pandas or data visualization.
In some cases, building a feature or a part of the core product internally just might not pay off. Especially if you have to do it from scratch when your devs need to work with a technology they are not familiar with. Then finding a responsible partner to take over the ownership of the project is a perfect solution to speed up the development. And as in all collaborations, the company gains an external, expert point of view that can change the way it thinks about the product and solutions assumed to be implemented.
What a fintech company should consider while looking for a reliable software partner?
1. Experience in cooperation with fintech
For the very first research, an overview of the website portfolios might be enough but in more advanced levels it should be expanded with diving into other resources. Pay special attention to the finance-related projects the vendor run and check if it has experience in cooperating with companies from your area. This way you can verify not only the knowledge about your business field but also the awareness of specific regional legal limitations. With experience gained in a particular industry comes battle-tested processes speeding up the development and boosting the effectiveness of work. If you want to make sure that their previous fintech projects were successfully delivered - check the testimonials - the ones on their website and also published within trustworthy B2B Ratings & Reviews pages like Clutch or The Manifest.
Clutch Top Custom Software Developers for Financial Services 29.7.2019
They aggregate the opinions of clients gathered during in-depth interviews and show the aspects essential to choose a proper partner in software development. You’ll find there the leaders in offered services as well as in more specific industries.
2. Business maturity
There are several factors worth considering when evaluating the maturity of the software company. Two most obvious - size and performance duration on the market, play a significant role but only when they transfer to:
- Well-structured delivery process.
Although in the IT industry the ability to change and react briskly extremely matters, the performance of solid vendors should be based on meticulously developed processes sprung from Agile. The proficiency in implementing the approach and its frameworks is a must and needs to be evidenced with official certificates and courses. Examine the specific design and development processes and the ones that stand behind a successful project running like risk management, change control, quality assurance, budget, scope and backlog management, and task prioritization. Ask also about the estimation process, especially when you will operate with a tight budget.
- Ensuring easy team scale-up.
Stable but, at the same time, flexible team is the essence when you’re looking for external software development support for your fintech company. The number of employees can tell you a lot of the vendors’ ability to dynamically scale up the crew. Nevertheless, put a spotlight on the model of cooperation with employees they use - wide collaboration with 3rd party contractors and freelancers might result in communication and teamwork problems.
Teamwork at open-space
- Working together supports efficient communication and boosts team spirit.
Ask about the attrition rate to evaluate the potential partner’s ability to retain employees and secure the resources. Investigate team motivation tools and processes, browse social media profiles to discover the corporate values, see if the team is well integrated and just like working together.
- Providing experts from a wide range of software disciplines.
A suitably developed software company extends its offer to provide complementary services and gain a more holistic view of the IT projects. That’s why a full-stack software house has always an advantage over companies focused only on programming. The ability to look at the digital product as a whole is useful in all kinds of projects, and even if the cooperation starts with a simple staff augmentation it often smoothly turns into more advanced assignments when UX or QA specialists are needed. And how to check if the company hires top skilled experts? You can find some of their profiles on Linkedin, works on github, Behance or Dribbble their articles on blogs and websites, and also some information about their lectures on IT events.
- Maintaining high communication standards.
Remote cooperation needs to be rooted in transparency and constant communication. Only this way outsourcing IT projects can bring satisfying effects and the collaboration won’t change into a blaming concert full of shifting the responsibility onto one another. To ensure this will not happen, first of all, verify the English fluency of the team members you will contact.
English Proficiency Ranking, source: The EF Index 2018
Also, make sure you will work with experienced, trustworthy Project Managers who can marry technological and business goals, build a successful Agile team and take responsibility for delivering topics on time.
What communication tools and devices your vendor uses?
Finally, check the tools and devices companies use to communicate, meetings and other ways envisaged to maintain information flow and project performance monitoring. You need to be up to date with the work progress and aware of any changes needed to be done in the project.
3. Technology expertise
Fintech industry has its own favorites and specific requirements if it comes to technology selection and software companies willing to cooperate with them need to achieve proficiency in using these technologies. Most fintech apps are built upon solutions ensuring fast delivery of MVP at the beginning and afterward - efficient development, simply adding new features and modifying the code. That’s why Python is so popular among fintech companies even though the traditional finance sector has a different front-runner.
Most requested languages in coding interviews in Finance and Fintech industries; source: HackerRank
Among solutions enabling brisk app development and dynamic scaling up is React Native which saves time and money mostly by sharing the same codebase across different platforms. On the other hand - a partner supporting fintech development has to be up-to-date with cutting-edge technologies and ready to seek tailored solutions. AI-powered voice banking platforms, machine learning engines fueled with Big Data collections, security mechanisms using biometric - programming really reaches the peak of creativity in here. So if your app harnesses the power of emerging technologies you need to look for more than just code supplier. Last but not least something that sounds less spectacular but extremely valuable in the fintech industry - API utilization. APIs not only boost coding and help with the implementation of highly advanced technologies like microservices. They might also be a separate product shared on different conditions to develop the app and even earn money on it. Your software partner should be both proficient in API development and fully aware of the influence it has on a business strategy.
Even the most meticulously conducted research should be finished with a talk or even a few of them with selected companies. Meet the people you consider working with, organize a tech-call with team leaders and developers to check their skills and language, ask Project Managers about details of their Agile methods and processes. This way you can verify their knowledge live. If you still hesitate between 2-3 potential partners nothing will substitute coming to the office personally and watch the people on their everyday work. After all, for some time these will be your people as well!