FinTech is one of the most technologically advanced branches of the economy, there’s no doubt about it. Though, what tech is there and what is backstage can blow one’s mind.
The sheer number of innovations and the pace of how the FinTech sector is adapting new tools and technologies are not things an average person knows about. But anybody who deals with financial applications from the other side, namely people who create and maintain them, understands what amount of work, what tools and technologies are needed to succeed in this market. And most importantly – to make an app that will perform well.
Performing well, though, can mean a number of things. First of all – seamlessly doing all tasks it was designed for. Second of all, being able to operate on any device a target user may have. Then, being secure and stable. But to make sure all of these requirements are met, developers must always be up-to-date with the latest innovations and be ready to implement them the correct way, which is not so simple anymore, especially in such a competitive market. We talked to some of the top app developers at Code & Pepper, a FinTech development company, about it and here’s what they have to say about the best tools and technologies used for financial app development.
Tech for all types of FinTech
We can distinguish between pillars of technology in this industry: solutions that help with analytics and those that allow for implementing the results in the systems. Combined, they are what is needed to create new apps and functionalities the customers need. Or improving existing ones, so they can always meet the ever changing requirements.
Let’s start with basic concepts that allow for making the work of FinTech companies easier:
Fun fact: according to McKinsey, 9 out of 10 insurance companies are still using legacy software and an IT infrastructure almost that remembers the Dotcom boom. They need to update their systems if they want to compete with modern FinTechs.
Documents on paper pose a serious problem in financial companies. Signing them, so they are legally binding, is time-consuming and requires additional resources (printers, ink, paper, scanners).
Saving time on mundane activities, such as checking information in documents, comparing them with databases for fraud prevention and to detect money laundering and so on can be tempting. The same goes for pricing optimisation and analysing customer behaviour. AI helps with it all.
- Machine learning
Related to AI, this technology saves millions for companies and solves actual problems users face. By feeding algorithms with data, an app can automatically process claims, analyse historical loans and recommend future actions.
- Smart contracts
Signing agreements without meeting in person or sending them physically with a post is tedious, but not necessary anymore. There are numerous ready-to-use third party solutions for signing documents online, in blockchain. Even banks (for example UBS, Barclays Credit Suisse, HBC, SIX and Thomson Reuters) are working on this technology.
Blockchain has so many uses in modern FinTech – from simple money transfers and payments, through investments, to verifying data and handling important documents.
Digital assistants that are fed with answers to the most common questions and, sometimes, some AI of their own, can provide answers faster and more conveniently than their live counterparts working in customer service departments, saving their precious time for more complicated cases. It’s a very common way of saving operational costs.
Generally, if you drive safely and don’t cause accidents, you pay less for insurance than somebody with a bad history. Also, owners of slow cars are less likely to drive too fast. However, what if insurers had more information and used them to calculate their prices individually for each client? This is what telematics is for: gathering data, such as age, history of illnesses, style of driving, how much and where a client drives etc. Knowing this and more, an insurer can offer a service in new models: user-based insurance (UBI), pay-as-you-drive (PAYD), pay-how-you-drive (PHYD).
Faster data transfer will definitely open new possibilities for FinTech applications and allow companies to handle much more data in a much more effective way. 5G means hassle-free application updates, faster and more accurate biometrics, a higher level of security.
Whether you like it or not – Metaverse is going to be real and will probably revolutionise the way we consume content and access the Internet. Also – how we use apps. In fact, Swissquote introduced a VR trading application in 2017, 5 years ago.
- Algorithmic trading
It may come as a surprise, but 73% of trading was done by algorithms in 2018 – now, it’s even more, probably closer to 80%. There even is a special category of trading apps which excel at automatic trading. MetaTrader4 or eOption provide a selection of pre-defined rules, are easy to use and let you control what is happening with your money without constant attention.
Cloud solutions for FinTech
Financial application development usually starts with a simple question: cloud or on premise servers? In the case of this particular industry, many new apps are launched in the cloud, for example Amazon Web Services. But what’s the difference between computing in the cloud and locally? The latter doesn’t allow for:
- Almost unlimited computing power
- Total flexibility and ability to simply change a payment plan to get more resources
- No need for hardware upgrades and maintenance
- High security guaranteed by experts from specialised hosting companies
- Easy access to data from all over the world
- Employees don’t need high-spec computers, because computing is performed by the servers
Top 3 FinTech cloud providers are:
- Google Cloud
Each of them has some pros and cons. AWS is the most mature service provider, but may be a bit costly (even though Amazon keeps announcing new, better plans, AWS has not become any cheaper since 2014). Microsoft’s Azure is the most flexible and compatible, it’s also affordable – but it has the fewest availability zones and cannot guarantee the capacity the clients pay for. Google Cloud has great infrastructure, it excels at big data, machine learning and data science. But as a mostly consumer business, Google is still struggling to establish its image as a top enterprise provider.
Quality assurance tools
No quality software can be made without quality assurance tools, righ? QA must be present on every stage of the software development process. In fact QA goes beyond just manual and automated testing, it’s something every developer should be familiar with and the whole development company should have a concrete set of processes supporting the quality control. Of course, there are many tools that can help:
A code quality analysis tool, perfect for code audits and frequently used by FinTech developers.
A code formatting assistant. Code clarity is extremely important in larger projects, where many developers work together and need to understand what everybody is doing.
This tool is vital for static analysis of code. It lets developers scan for quality, implementation of best practices and even more.
A simple, yet powerful tool from Google. It can automatically assess web applications for SEO, accessibility, performance, best practices and PWA – and is available for free, so it’s hard to not recommend it.
A versatile end-to-end testing tool that runs in a browser.
Compliance is key
One of the most complicated aspects of creating a FinTech app is compliance. It’s no joke, when we’re dealing with other people’s money and regulators often treat FinTechs just as other financial institutions, for example banks. FinTech businesses use these cloud computing tools to make sure they don’t break any rules and agreements they sign are well-prepared.
- AWS Artifact
It’s a tool that lets you access huge and accurate AWS compliance reports, for example Service Organization Control and Payment Card Industry. Thanks to that, users can review and manage agreements, always being sure they know facts about their industry.
- AWS CloudTrail
FinTechs that use AWS infrastructure can use CloudTrail to monitor all changes they make. This tool makes operational analysis a breeze and supports troubleshooting.
- Amazon Fraud Detector
In order to obey the law and block possible bad actors, FinTech products need a way to make sure their users are not criminals and that none of them uses apps to steal or launder money. One of such tools is Amazon Fraud Detector. It monitors all activities within an app to identify potentially fraudulent transactions and users.
It’s just a tip of the iceberg
The ways of making a FinTech app work better are endless and perfection cannot be achieved – but we still need to strive for it. Only by using the most advanced tools and technologies, developers can compete with ambitious competition. It’s especially important in the field of financial services – here, customers’ trust is everything and once lost, can rarely be rebuilt. One mistake can destroy a promising startup and severely hurt a leader. Fortunately, the IT industry is constantly creating new, often surprising and very clever solutions you can use to make your product as attractive and useful as possible. Don’t we agree that missing out on them would be silly?
Author bio: Jakub Skowron
Content Writer at Code & Pepper. Technology enthusiast, literature devourer, and creator of insightful FinTech-related content. In his spare time, he also works with international public art projects.