If you’re thinking about building FinTech products, you probably know that it’s going to be an uphill battle. The financial services industry is one of the most highly regulated—and competitive— in the world. There are countless legal obligations to handle, licenses to acquire, and data protection rules to follow. Getting things wrong could cost you your entire business.
Customers only see a fraction of what’s needed to make a FinTech product work smoothly. If you’re new to the game, competition is fierce, investor pressure is high, and a banking license is expensive. If you’re already established, it can be daunting to keep up with the market’s fast pace and integrate agile development processes into your company’s legacy systems.
While there’s no magical solution to building FinTech products, no surefire recipe for ‘getting it right’, there are a few tried and true principles that’ll help you consistently build value and stay ahead of the game. We should know—we’ve helped some of the industry’s leading companies get their start building FinTech products or expand their core offerings. Let’s jump right in and see how our three best practices can help make your next FinTech project a success.
Best Practices for Building Fintech Products: #1: Know Your Partner.
When building FinTech products, it’s common to outsource development to a partner with technical competencies while you focus on the legal and compliance hurdles that come with the territory. While this has the advantage of freeing up your time and resources to focus on other things, it’s important not to rush through the selection process—especially if this involves building your new venture’s tech stack from the ground up.
From our experience, FinTech partnerships are most successful when the client spends time getting to know who they’ll be building FinTech products alongside before jumping into commitments. Not only will this help you validate your partner’s technical competencies, it’ll also ensure they’re a good match for your team’s approach to communication and workflow.
You want to know that your partner has everything you need before agreeing to work with them. This can include checking that their security procedures are in place, asking them to use your own hardware for testing and development, or even spending some time together to build up the team vibe. Treat this process like recruiting for your own team: the more transparent things are early on, the fewer nasty surprises you’ll face going down the line.
Best Practices for Building Fintech Products: #2: Balance functionality with compliance.
Building FinTech products that are functional, secure, and usable is essential. The reality is that the stakes are higher in financial services – so you need to make the numbers game run smoothly for your users in the frontend, all while maintaining high standards for your backend, and keeping a close eye on questions like privacy and security. This means it’s important to communicate with your partner often when building FinTech products, validate their work regularly, and stay agile throughout the development process.
There are many types of FinTech service providers out there, building FinTech products of all shapes and sizes, and each to their own brief. This includes lenders, insurance companies, payment providers, money transfer services, and traditional banks, to name but a few. Despite their differences, these players all have something in common: they need to balance functionality with compliance, and innovation with regulation. How they do so will always depend on the particular use case of whatever product they’re developing.
Challenger banks like N26 or Revolut, for example, have all built great UX/UI that makes it easy to use their services in just a few clicks. While the end result might feel effortless, making a FinTech product run smoothly requires hard work behind the scenes. If you’re looking to shake up the market, make sure your backend meets security standards, but don’t forget to focus on your frontend, either. This is often the trickiest part, as onboarding for digital banks takes place entirely online. When building FinTech products you’ll need to strike a delicate balance between compliance, security, and usability in order to stand out from the competition.
If you’re a traditional bank looking to innovate, remember that there’s no one-size-fits-all approach to building FinTech products. Different banks with different user bases will often have to build very different solutions from one another. So it’s important to be mindful of your customers’ expectations as you think about taking your financial services product in a new direction. Having worked with both new players and industry mainstays, we know how varied this process can be, and we can give you valuable advice on building fintech products that feel tailor-made to meet the needs of your particular business.
The same applies to your tech stack. No programming language is better or more secure than any other. Choosing a language for your FinTech product should come down to what works best for you, and how it enables you to meet your business goals while keeping security airtight. For example, we used Golang in our work with Solarisbank, which provides a banking API to businesses, but this language is also used by companies like Monzo, a customer-facing challenger bank with very different backend needs. The secret to unlocking a programming language’s power is simply a development team that knows what they’re doing.
Another thing to keep in mind is quality assurance. Fines are so high for issues like money laundering that any missteps can lead to bankruptcy, especially for newcomers. So it’s important to have the partner developing your product test for security holes throughout the development process, to ensure that no significant risks have escaped anyone’s attention.
Best Practices for Building Fintech Products: #3: Think long term.
As a general rule, when building FinTech products it’s just as important to know your own goals as a company as it is to know who you’ll be partnering with to make them happen. This may sound obvious, but it’s not always clear where to start or what to look for.
FinTech companies entering the market for the first time usually have to partner with white label solutions when starting out, as it’s both more efficient and more affordable than building every aspect of their product on their own. This can range from working with licensed payment processors like Stripe or using an existing KYC solution like Veriff to avoid fraud. While this provides a great boost early on, remember that at some point, these third-party solutions will likely either no longer meet your needs or become too expensive to use as you grow. So think about how you’ll plan on replacing them down the line, and remember to work on building an in-house team as you do.
If you’re a financial service provider with an established position in the market, the main challenge you’ll have to meet when building FinTech products is how to stay relevant and fend off increased pressure from competitors while creating new opportunities for growth. Often, banks face the difficult choice of having to either overhaul their existing platform or build a new one from scratch. There’s no quick fix here, but partnering with a company who has experience in this field will certainly help you think things through and build secure, innovative, and scalable solutions within your existing systems.
The secret to Building FinTech Products Successfully? Planning and partnership.
In FinTech, one thing is certain: the stakes are high and you’ll want the best help you can get. Whether you’re just getting started or looking to expand an existing product offering, look for partners who know what it takes to balance compliance and innovation, maintain high technical and legal standards, and make it easy for you to take things over once your project has reached maturity.
Find the competencies needed to realize your vision while making sure you lay the groundwork for a business that lasts. If you’re a new player, make sure you focus on legal issues and think about how you’ll transition to an in-house team once the hiring gap has been bridged. If you’re established, look for a development partner who can help you innovate in a sustainable, cost-effective, and result-oriented way.
No matter your use case, you’ll want to join forces with someone who does more than just get your product up and running. A quality FinTech partner will give you the tools and knowledge to keep building value long after they’ve gone. Here at Mooncascade, that’s exactly what we strive to do with our clients, whether they’re a startup or an established player. So why not drop us a line to see how we can help?