Fintech Development Outsourcing: Pros & Cons Overview

Consumers have been using fintech solutions in their lives double each year over the past five years, and the COVID-19 pandemic was another major factor leading to consumers using mobile banking over visiting their local banks, and utilising contactless payments instead of cash.

With fintech’s increasing popularity, the industry has become highly competitive – to succeed in the industry it is important to beat competitors in every way possible.

The biggest advantage of a fintech company is its mobile app, which becomes the company’s face in the absence of an office and a bank branch.

Surf has been developing mobile apps for over a decade, and we are particularly focused on fintech; most recently, we developed apps for multiple banks and cryptocurrency exchanges.

You can either hire offshore development teams or build a mobile application for your customers if you’re starting a fintech business. We’ll discuss some of the pros and cons of outsourcing fintech development, as well as how to choose the right company for the job.

Advantages and Disadvantages of Outsourcing

Fintech development outsourcing involves hiring a company on a contract basis instead of hiring developers on a full-time basis and managing the whole project themselves.

Let us examine the advantages of outsourcing fintech software development over building it in-house and the things that need to be considered.

Advantages

• Reduce costs

Developers’ salaries are determined by where they live. In most cases, developers in Canada or the United States receive hourly rates of $90-110, but developers from other regions have much lower hourly rates ($18-40) while delivering code of the same, if not higher, quality.

Many development teams can work remotely, sharing their progress via team collaboration platforms and conducting meetings with other departments via Skype or Zoom.

You can easily cut development expenses in half by hiring fintech developers offshore if you’re setting up a fintech company in the US.

• Modern technologies

You can gain access to the latest solutions by working with a fintech software development company that specialises in the latest solutions, which you can hardly get if your in-house developers don’t have as many projects to work on.

Trending cross-platform frameworks are an example of such technology, as they enable developers to create apps for iOS and Android from one codebase with only minor modifications.

Although cross-platform development costs more per hour than native, you’ll pay just one development team at the end, not two.

• Prioritise your main business

If you’re a fintech company, you provide financial services to individuals and businesses, not apps. Why do you have to incur additional costs of setting up a development department, hiring additional managers, or spending on HR processes?

Furthermore, some developers won’t have any tasks after developing the initial version of the app, so if they are full-time employees, you will have to retain them until the next major project or let them go.

You won’t have such problems when outsourcing development: only pay for the work done and the development company will handle all hiring and management.

• Easily transfer projects

Professional development teams consider the possibility that the client’s project may be passed to another team in the future. They aim to create a framework, code, and other features that are easily understood by other developers when working on a client’s project.

When practices and documentation are used and widely recognized, the risk of in-house development is eliminated, such when an initial team develops an app without documenting it, then leaves the project, the new team members will have a hard time understanding and implementing the changes.

During the development process, Surf uses the standard architecture for the industry, each component is well-documented, and we use renowned solutions. Among testers, Gherkin is an easy-to-understand language for auto testing. At any stage of the development process, an in-house team can seamlessly take over a project.

Disadvantages

• Limited control 

While working with a remote team of fintech developers has many benefits, it also has its few drawbacks, and one of them is that in-house development offers more control over the process.

You may not have a clear understanding of the roles and responsibilities, working conditions, and benefits of developers employed by another company.

Due to this, the development process can be slowed down and quality can be adversely affected. Loss of control is usually the result of poor communication.

Establish a plan of meetings, create templates for reports, and designate team members who will oversee the development process and provide regular reports.

• Minimal involvement

The fact is that your internal employees are more familiar with your core values and better understand your business needs.

These employees chose your company specifically. A low level of engagement by fintech developers may result in poor quality when outsourcing your project.

The antidote is to work with an enterprise fintech company with a track record of success, good references from their previous clients, and the same mindset as yours.

Best Ways to Professionally Outsource Developers

It is important to pay attention to certain aspects of fintech app development if you decide to outsource it. We will examine briefly what you should consider when choosing fintech app developers in this section.

1. Experience

Fintech software requires particular expertise and knowledge, as does every type of application. It is essential that financial apps work smoothly, processing users’ input without delay – if a trader loses money because the investing app freezes and can’t complete a transaction in time, will they keep using the app? Probably not.

Banks and brokerage firms are increasingly using apps to interact with their customers, so a poor app experience makes customers turn to their competitors.

If you would like to outsource the development of your fintech app, we would recommend choosing a partner who has relevant project experience.

Surf has built several fintech applications over the last few years, such as the Twim cryptocurrency trading app. Throughout the development of the Twim app, we paid close attention to the quote charts and how quickly they updated. The quotes should be accurate and show real-time data to appeal to frequent investors and day traders.

2. Similar culture and values

A cultural difference and different approach to work will cause work processes speed and quality to drop when hiring an offshore development team from another region. As a result of time zone differences, cross-cultural communication is often done via email, since conference calls or instant messages are impractical. Your project manager may lose control of the team, not receive timely updates, and have other problems as a result.

You may want to consider finding a development team in Central or Eastern Europe, such as Poland, Russia, or Ukraine if you are a US company or startup.

Developers from these countries also have excellent coding skills, comfortable hourly rates, and a working culture similar to their US peers. They also have a high level of English proficiency, reducing the risk of misunderstandings and delays.

3. Security

Banking is the industry with the highest annual losses due to cybercrime, so your fintech app needs to be very secure. In mobile apps, there are several types of cyberattacks, with infrastructure breaches, pirate apps, man-in-the-middle attacks, and clickjacking being the most popular. Code quality and poor cryptography are two of the main reasons these attacks succeed, as are insecure authentication, data storage, and integration.

When choosing an external developer for your project, make sure to look at the security solutions they have used in their previous projects. Here are some security features that any fintech app should have:

• HTTPS and SSL encryption for all connections
• Single-use codes sent via SMS or email are used for two-factor authentication
• Making up money figures on app screens in front of onlookers
• In case a phone is stolen or lost, a feature should allow the user to wipe its data

As part of Surf, we understand that security is the cornerstone of fintech, and we always use the best security solutions to protect the sensitive data of app users.

4. Clearness

The workflow should be as transparent as possible when it comes to outsourcing app development to avoid hidden costs and unexpected delays. When choosing a developer, choose one with good references, but don’t forget to include a service level agreement (SLA) in the contract.

An SLA should include deadlines for each stage of development, acceptable downtime periods, data management and recovery processes, and action plans in case of emergencies or disasters. You can also use proven project management and testing tools, like Asana, Jira, Trello, etc.

Conclusion

Due to the rapid growth of the fintech industry and the adoption of a “mobile-first” strategy by more and more finance companies, there is a high demand for quality fintech app developers as well.

You can hire the best talent for your app development project at affordable prices when you outsource. A contractor can also save your management team and HR department a lot of headaches.

Among the most important aspects to consider when hiring contractors for Fintech development outsourcing are their expertise in fintech development, their values, and working culture, as well as their use of the latest technologies.