Driven by digital transformation, the FinTech sector is experiencing rapid growth. The COVID-19 pandemic has just accelerated the adoption of FinTech software. According to the research conducted by deVere Group, the use of FinTech apps in Europe has increased by 72% due to COVID-19. The survey of more than 2,000 adults in the US found that 69% of participants say that FinTech is a “financial lifeline” during isolation and 73% of respondents name FinTech software the “new normal”.
Driven by digital transformation, the FinTech sector is experiencing rapid growth and the COVID-19 pandemic has also accelerated the adoption of FinTech software. In fact, according to research conducted by deVere Group, the use of FinTech apps in Europe has increased by 72% due to COVID-19. The survey of more than 2,000 adults in the US also found that 69% of participants believe FinTech has been a “financial lifeline” during isolation and 73% of respondents named FinTech software the “new normal”.
To meet changing market requirements, financial organisations and banks need to digitise operations, improve customer service, protect sensitive data, save costs, and increase efficiency. Fortunately, FinTech software solutions can address all of these issues.
However, hiring software engineers to develop FinTech software is often costly and time-consuming, so many organisations outsource their software development projects achieving excellent results.
This article describes the main benefits of outsourcing software development and showcases examples of how well-known organisations achieved their objectives by hiring third-party contractors.
Why leading companies outsource software development
World-famous banking institutions such as the World Bank, Barclays, Goldman Sachs, and J.P. Morgan understand the benefits of outsourcing and frequently use this approach when building new technology.
Although previously the primary reason for delegating IT functions was to reduce costs, now most market players want to access field-specific expertise, which may not be available within the company (46%), and allow their in-house teams to focus on their critical business projects (49%) according to Fortunly. Cutting down expenses is the third reason given for outsourcing their IT projects (about 45%).
It is noteworthy that despite, or perhaps due to, COVID-19 companies are increasingly delegating IT tasks to third-party contractors. As a result, their IT department budgets for software development outsourcing rose from 12.7% in 2019 to 13.6% in 2020.
The main benefits of IT outsourcing
1. Diverse expertise
By outsourcing FinTech software development, organisations get access to a pool of expert IT professionals—software and quality assurance engineers, designers, business analysts—with field-specific expertise in different sectors. For instance, some firms specialise in creating artificial intelligence solutions for banking and finance, while other IT outsourcing companies are focused on FinTech mobile apps.
Thanks to accumulative experience from previous similar projects, the team is able to apply their expertise to build FinTech software, delivering high-quality functionality much faster.
To address customer issues, FinTech software developers tailor the technology stack to business requirements.
For example, outsourced software engineers can employ advanced technologies such as Python and its frameworks to create AI-based systems that can give valuable data insights and forecasts, which is especially important in the banking and finance sector.
With cloud computing, it is possible to achieve platform scalability and high availability, so that it can process massive arrays of data and handle a continuously growing number of users.
Outsourcing offers companies a chance to work with key professionals in various areas, but it’s important to make sure that they have the experience you need. When searching for a third-party contractor, it is recommendable to ask to view their portfolio of case studies and read their client testimonials. This will allow you to get an idea of the company’s expertise and reliability.
2. Cost reduction
By outsourcing FinTech app development, financial and banking institutions can reduce costs by 20-30%. Choosing this practice, they are not limited to a region, which means the possibility to hire a contractor from the country with lower wages.
For instance, the annual average salary of software engineers in the UK is $65,760 while in Eastern Europe’s countries, for example, Belarus, they earn $56,733. Therefore, clients cut down expenses by around 13.72%. Considering a medium-sized project launch required joint efforts of 5 specialists while the development process can take 12 months, cost savings can reach over $45,100.
However, if the customer plans to set up a long-term partnership with an IT firm, the cost difference can become 2-3 times higher. In addition, it is very important to continuously maintain system infrastructure even after launch to prevent scalability, performance, and other issues.
What’s more, through the delegation of software projects abroad, customers are immune from paying additional expenses typical for traditional employment such as bonuses and social packages, software and hardware licenses. They also don’t have to take care of team training and motivation. As a result, businesses significantly cut down expenditures.
One of the biggest concerns surrounding outsourcing software development is the seemingly unknown cost of a project, but outsourcing can actually offer many financial benefits to companies.
Without being able to outsource, all software development has to be added to your current team’s workload, perhaps drawing them away from current projects that are also important.
You might then delay developing software which, most likely, leads to loss of potential earnings or impatient customers who are waiting for you to deliver a better software with better technology.
Then you might decide to grow your team in order to start a project, but the project will end and you’ll be left with additional staff and additional staffing costs.
Thanks to outsourcing, you get to manage your budget efficiently as an outsourcing company will be able to create a plan, tell you the costs and provide you with a team to build what you need.
3. Improved time-to-market
If a company doesn’t employ engineers, designers, and testers, it has to assemble a team for building custom financial software on its own. However, processes such as recruitment and onboarding generally consume a lot of time, resulting in extra costs and efforts.
Additionally, if a specialist is not able to continue working, for instance, due to illness, a new expert has to be quickly hired. Otherwise, product development might be suspended for months, which is unacceptable when delivering FinTech software solutions in a highly competitive market environment or when aiming to showcase a system to investors.
Thanks to IT outsourcing, organisations don’t have to spend time searching, interviewing, onboarding, and replacing software designers and engineers.
A third-party contractor can also adjust the team’s size. If someone has to leave the project, an IT outsourcing company will rapidly provide another specialist with the necessary skill set. If the client needs to increase the speed of project development, an IT outsourcing company will be able to react quickly and grow the team. As a consequence, it is possible to create and deploy FinTech applications much faster.
Now that we have seen the top 3 benefits of outsourcing software development, let’s consider how financial companies have made the most of delegating FinTech software development to a third-party partner.
FinTech companies that outsourced software development
1. Currencycloud is a B2B firm delivering cross-border payment as a service. Its flagship product employed cloud technology to enable access to numerous exchange rate providers and payment networks. However, the company’s platform for B2B transactions was built on top of an outdated technology stack, which caused performance and scalability issues.
To address these issues, the organization hired a trustworthy IT outsourcing firm that helped Currencycloud build a microservices architecture to achieve high availability, scalability, and resilience to heavy loads. By leveraging a continuous delivery/integration pipeline, the team reduced the app development cycle while enhancing software quality. As a result of working with an outsourcing company, Currencycloud can now process more than $400 million payments per month.
2. With the view of digitising services and automating customer service, a large European bank outsourced to Eureka to create a FinTech mobile app for online transactions, currency exchange, payment card ordering, ATM and banking centre search.
Satisfied with the delivered solution, the institution decided to launch a web application on its base. In addition, Eureka’s FinTech software developers built a CRM module for credit card reissuing.
Thanks to the customised product built, the European bank managed to attract new users and boost client engagement.
3. RateSetter—the UK’s leading provider of lending services—cooperated with an IT firm from Eastern Europe to scale and secure a FinTech platform. At that time, the system had over 250,000 users, and the number was continuously growing, leading to a risk of downtime.
Collaborating with outsourced software developers, RateSetter achieved high scalability through their migration to microservices, as well as through safeguarding sensitive data. Employing the cloud, Ratesetter also enabled fault tolerance. Today, the company is featured as one of the most popular peer-to-peer lending platforms in the UK.
Why Eureka?
At Eureka, we have been providing FinTech software development services for more than 10 years. During this time, our company has developed numerous banking and finance apps that have allowed our clients to streamline their business processes, improve end-user loyalty, boost employee productivity, and increase revenue.
More specifically, we have built a FinTech mobile app that supports over 50 types of payments and e-wallet transactions and our team also created an online payment system for a medical institution. This allowed patients to instantly pay for medical procedures and online consultations by using URLs in messages sent by doctors.
If you would like to learn more about our expertise or if you would like to discuss a project idea then you can contact our team here.
We would be happy to help you address any business-specific challenges or send you some case studies of FinTech software solutions that our team has delivered.
You might also find our article about top FinTech software solutions for dominating the market useful.