Fintech, short for financial technology, has revolutionized the financial industry. Driven by the rapidly evolving technology landscape and increasing call for digital financial services, it has disrupted traditional banking and financial services.
Combining financial services and technology, this industry offers innovative solutions to both consumers and businesses. Fintech companies use software and digital platforms to provide services. These services are online payments, money transfers, lending, insurance, and investment management.
The importance of software development for fintech industry cannot be overstated. It is important to build the digital infrastructure for fintech companies to operate, innovate and scale their businesses. However, with this growth comes new challenges in fintech software development. These challenges range from technological and regulatory to operational and cultural. They can pose significant hurdles for fintech companies looking to stay competitive and relevant in the market.
Today, we will discuss some of the common challenges in fintech software development. As well as provide examples and case studies to illustrate these challenges. We will also offer practical advice and strategies to overcome them. So let’s waste no time and discuss how fintech companies can overcome these challenges and develop innovative software solutions that meet the needs of their customers.
Ivanna
Client Manager
Contact us, and we will share our case studies related to booking software development
Get a Free ConsultationRegulatory compliance
With the increasing complexity of financial services, fintech software developers face several challenges in creating and maintaining software. Some of the common include the need to balance speed and agility with security and compliance requirements.
Fintech software development is governed by strict regulations and compliance standards. Financial institutions must comply with rules set by government agencies and regulatory bodies. These regulations aim to protect consumers from fraud, money laundering, and other crimes. They include anti-money laundering (AML) laws and Know Your Customer (KYC) requirements.
Developers must ensure that the software they develop meets these standards. Failure to comply with regulations can lead to legal and financial consequences. Fintech software development companies need to adhere to strict regulations and security standards. These regulations safeguard their clients' data and finances.
However, there is a major difficulty with regulations. They are constantly changing, making it challenging for companies to stay up to date. However, reg tech solutions can assist banks in monitoring transactions and detecting fraud. It goes without saying that the fintech sector will always need regulatory technology. Since fraudsters are always coming up with new ways to get around the law.
How to overcome this challenge?
Custom software solutions can help fintech companies meet needed requirements by implementing advanced security protocols and robust data protection measures. For instance, developers should use secure coding standards such as OWASP. This is done to ensure that the software they create is secure and compliant.
It is a must for developers to test the system regularly. As well as using secure communication protocols. Make sure that your team performs regular security audits. It will help to identify any potential risks in their code.
Data privacy and security
Security is undoubtedly the top priority in Fintech software development. Financial institutions handle the sensitive financial information of their customers. Any data breach thus can have severe consequences. They can damage the reputation of even top fintech companies and lead to significant financial losses.
Therefore, developers must ensure that the software is secure and protected from cyber-attacks. They must use the latest security technologies and protocols to prevent unauthorized access to the system. They must also conduct regular audits and vulnerability assessments. This will help to identify and address any security vulnerabilities.
One of the most notorious cases is the Equifax case. In 2017, Equifax, a credit reporting agency, experienced a data breach. The sensitive information of over 143 million consumers was exposed. The company's negligence in protecting sensitive data led to a settlement of $700MM.
How to overcome this challenge?
No one fintech mobile app development company certainly wants to have such losses and gain a bad reputation. To prevent data breaches, robust security measures are needed. Devs must ensure that they comply with regulations and standards such as GDPR and PCI-DSS.
Implementing robust security measures can prevent data breaches. These measures are
- Encryption. Encrypting data protects it from unauthorized access. It ensures that even if your database is breached, the information will be useless to hackers. It can be done with the help of encryption algorithms such as AES, RSA, or EC.
- Multi-factor authentication. Users should be able to sign in to the app only after entering a password and a code from their phone. This can prevent phishing attacks where fraudsters try to steal personal information.
- Real-time notifications. If there is an attempt of hacking or breach an account, users should get an instant notification about it via email or text message.
- Continuous monitoring. It is also important to continuously monitor data flows through the mobile app development process.
Scalability and Flexibility
To be successful in the fintech industry, the software must be able to handle a large number of users and transactions. The solution must be scalable to meet the demand because more users nowadays adopt financial software development services.
Additionally, banking software development companies often need to integrate their software with third-party services. Among them are payment gateways, banks, and credit bureaus. These integrations can be complex and time-consuming, leading to delays in product development.
User demands and market trends can change rapidly. And fintech software must be able to adapt to these changes quickly. Flexibility refers to the ease with which a system can adapt to these changes.
How to overcome this challenge?
It is important for software developers to consider scalability when designing the application. The use of technologies that can handle large amounts of data and users is necessary. Some cloud-based solutions can help developers build applications that can scale up as the user base and data grow. And this is without having to invest in additional hardware.
Additionally, using APIs and microservices architecture can simplify the integration of third-party services. Agile development methodologies can help teams quickly iterate and adapt to changing requirements. It will also help in reducing time to market.
Developers should also regularly monitor the performance of the system. As well as make necessary adjustments to ensure that it can handle the increasing load.
Technical Debt
Many financial institutions still use outdated legacy systems. They are difficult to integrate with modern fintech software. These systems can be a significant barrier to innovation and digital transformation. That is why technical debt is a common challenge in fintech software development.
Technical debt refers to the accumulated cost of maintaining and updating software that was not designed to accommodate future changes or enhancements. As software requirements change, devs may find themselves having to work around poorly written code. The result of this is inefficiencies, bugs, and even system failures.
How to overcome this challenge?
To avoid technical debt, developers must ensure that the software is designed to be scalable, modular, and easy to maintain. This involves using best practices such as
- agile development;
- continuous integration;
- automated testing.
Talent Shortage
Fintech software development is a complex process. It involves a wide range of technologies and skills. As the industry is proliferating, the demand for skilled software developers is rising. However, there is a noticeable shortage of qualified candidates now. This can be attributed to the lack of specialized education and training programs.
This shortage poses a significant challenge for fintech companies. They are struggling to find the right talent to fill their vacancies. As a result, delays in software development can occur. And this leads to potential losses and setbacks for the company.
How to overcome this challenge?
In order to address this issue, it is crucial to invest in training and development programs. These programs can help upskill the existing workforce and improve their expertise. Another benefit is that it enables them to take on more complex projects.
Additionally, these programs can also attract new talent. Since potential candidates are more likely to apply to companies that offer professional development opportunities.
By prioritizing training and development, fintech companies can overcome the shortage of qualified candidates and ensure that they have the right talent to drive growth and innovation in the industry.
User Experience
One of the biggest difficulties might be coming up with a solution that is reliable, secure, and easy to use. The challenge is to create an app that has all the needed features, replies to all standards, and is adapted to the user's needs at the same time. Fintech companies should focus on delivering a seamless and user-friendly experience. This could be done by incorporating user feedback and conducting usability testing. Designing intuitive user interfaces and providing personalized services can also enhance user experience.
How to overcome this challenge?
Users should get what they expect from their software. With that in mind, there are several things we can do to make our clients happy. First, research your client’s needs and expectations. This is an important part of any project. Understanding the problems of your clients will help you come up with a solution that meets their needs and expectations.
It is also crucial to test the software before going live. Make sure that the software works on all browsers, mobile, and desktop devices.
Stfalcon’s Development Case in Fintech
Interface design for Credit Agricole payment kiosks
Stfalcon developed an interface design for Credit Agricole payment kiosks. Credit Agricole is well-known as the biggest French bank and one of the largest companies worldwide.
The main task of such kiosks was to release the bank offices of queues and relieve cashiers of some work. That’s why they had to be as simple as possible in operation even for the most unsophisticated users.
We had to strike a balance between the element’s size and the content scope displayed on a single page of the screen, which also had a relatively low-resolution capability.
For the bank customers, we implemented the possibility of user authorization through the telephone and the extended list of services. Noncustomers have quick and hassle-free access without authorization to the most popular services like topping up, cash deposits, and some others. The services for independent entrepreneurs are listed separately.
Read the full case study
Conclusion
In closing, fintech software development is a challenging task. It requires expertise in multiple areas. Developers must ensure that the software is compliant with regulatory standards. We always check if our software is secure and scalable. Stfalcon uses the latest technologies and best practices to develop software that meets the needs of financial institutions and their customers, so we offer our clients only top-quality products.
Cloud computing, distributed architecture, monitoring tools, agile development, modular architecture, and an API-first approach are all solutions that can help overcome these challenges. With them, we create reliable, secure, and accessible to all Fintech software.
If you are interested in developing an effective and secure financial solution you can contact our experienced team and we will help you develop software that provides smooth user experiences with the required features and functionalities.
