Why Fintech Software Development is Imperative in a Successful Post COVID-19 Financial Industry
21 December 202111 February 2021 | Software
Over the past years, the most significant role in the evolution of business has been played by the adoption of new technologies. The COVID-19 pandemic has created considerable disruption for several enterprises, particularly those lagging in adopting new technologies. No matter the industry, companies that lacked digital agility, have found themselves in dire straits.
However, buoyed by the required digital transformation- the use of technology to transform current services – across several sectors, Fintech experienced rapid growth in 2020, as reported by the World Bank.
According to a study by The World Bank and the Cambridge Centre for Alternative Finance, the impact of COVID-19 resulted in a 60% increase in digital payments and a 19% increase in digital savings and other Fintech products and services. This growth highlights the importance of Fintech for a successful COVID-19 pandemic recovery.
That said, not every company has seen the same level of digital growth and adoption. . According to Gartner, 76% of CFOs believe their digital transformation efforts are lagging, either because those efforts were limited in scope or focused on the wrong areas.
To respond to the new customer expectations and provide a sustainable service, financial players must adopt a more holistic approach to digital transformation while accelerating their time to market for innovative solutions.
Companies worldwide are finding it necessary to shift towards agile and interoperable technologies that help them to do things like operate from the Cloud, optimize DevOps workflows, and integrate with third-party tools at will. When it comes to handling finances for businesses and individuals, Fintech services are well-positioned to provide positive relief in a post COVID-19 world.
Table of Contents
- Benefits of Fintech Software Development in a Post COVID-19 World
- Overcoming Challenges with a Better Customer Experience
- Differentiation Through Fintech Software Development
- In an Uncertain Future, Tech Will Help Financial Companies Thrive
Navigating what many are dubbing the “new normal” requires a new approach and innovative ideas that can only be brought to life with the help of technology or by leveraging technology. For many companies, revenues were severely slashed as customers became confined to their homes. This resulted in changes to their operational capacity and how they interacted with their customers, managed employees, and handled their finances.
Fintech has always been seen as the next stage in financial services, and that has only been accelerated. During times of uncertainty, innovation is also highest, and Fintech has undoubtedly risen to the occasion and provided a few benefits to come to many businesses’ aid.
To mitigate the social and economic impact caused by the COVID-19 pandemic, many have turned to digital finances. With the need to socially distance, Fintech provides contactless payment methods and account-to-account payment options that enable customers to conduct their business without issues.
Currently, these payment methods offer safety against viruses such as COVID-19, but they also protect against digital fraud and create a great customer experience. With PSD2 and AML and KYC regulations, financial companies must intertwine their compliance efforts with the digital transformation and innovation ones. Using custom fintech software development services in this process helps financial companies quickly respond to market changes and add value for their customers by providing seamless payment solutions.
Fintech can provide several benefits to banking institutions that previously relied on in-person visits, such as keeping them in contact with their customers and enabling their customers to conduct business using multiple devices.
Most banks already have at least a fintech solution implemented, but with the focus on operational efficiency and resilience during the COVID-19 pandemic, it is understandable that keeping up with market trends is a challenge. While some banks still need to migrate their legacy systems to new technologies, others are gaining market share by rapidly expanding their digital portfolio and innovating (for example, exploring AI & ML to predict customer behavior).
Financial services companies must integrate new technologies and constantly adapt to survive and thrive. For example, banks can leverage new technologies to move their paper processes to digital. By relying on a microservice architecture and using Angular, Spring Boot, and Java, we empowered one of our clients in creating a Paper-Free Banking Application. The app has digitized the loan application, automating the entire process to reduce the time customers spend at local branches.
While there are many benefits of using Fintech today, some challenges must still be overcome. Let’s take a closer look at those.
Even though Fintech is poised to facilitate easier financial transactions, financial services companies still need to be aware of their duty in dealing with the impact caused by the current social and economic conditions.
In addition, digital transformation is becoming a necessity, but nearly half of existing financial institutions haven’t been upgrading their legacy systems as they should. What was initially a 2-3 year outlook plan, was suddenly condensed into months, which placed added pressure on existing systems.
Many financial services companies had been accustomed to complex legacy systems, but are now required to build cloud-native applications to meet the demands of today’s environment.
To facilitate these new demands, organizations need to create an engaging and encumbered end-to-end digital customer experience for all financial activities. Given the fast-paced disruption and innovation brought by Fintech products and services, companies must find ways to differentiate themselves through accelerated financial software development and excellent customer service.
To enhance the customer experience, financial services companies need to focus on a few key trends and technologies. Customer expectations have risen with 64% of digitally active customers worldwide now using some form of Fintech, and they now demand fast and more personalized solutions and the convenience to bank from anywhere.
Technologies such as the Internet of Things (IoT), Artificial Intelligence (AI), Blockchain, Cloud Computing, and RPA are just a few of the major drivers for Fintech companies that are changing the customer lifestyle, and these changes require a new approach from financial services companies.
While adapting to these changes represents a challenge, they also provide an opportunity, including access to more data that can enable companies to better tailor their experiences with the help of software development. In this context, data engineering is one of the key skills required in fintech software development in 2021, as it enables financial companies to enhance customer experience while increasing revenue streams.
To meet the demands of creating an improved digital customer experience, financial services organizations need to focus on software development.
Fintech software development can support the digitization of financial services for all companies, accelerating time to value, improving operational efficiency, and increasing customer engagement.
For established firms, Fintech software development means upgrading legacy systems and creating custom-tailored software for financial applications, including digital lending and client onboarding.
The speed of digital transformation has opened an extraordinary avenue for financial services to shift previously manual and paper processes to a digital system. Financial companies can quickly realize this opportunity by utilizing application programming interfaces (APIs) and software development kits (SDKs).
APIs, especially, enable organizations to access and integrate data and other services into their digital platforms more efficiently, improving development time and costs. Following the PSD2 directive, the Financial Services industry has experienced rapid growth in APIs. They provide companies with access to the API economy, enabling them to create new revenue streams through data monetization.
However, to succeed in these ventures, it’s essential to partner with the right tech firm to make sure you come out of your digital transformation on the right foot.
Fortech’s expertise can help companies meet the challenges of innovation and allow them to thrive in the growing Fintech landscape. The current landscape is being reimagined from a traditional to a completely digital ecosystem. That requires a keen understanding of the financial services industry and software development.
Backed-up by an 800 people organization, we help our clients by relying on our agile mindset, industry know-how, and technical prowess to support our clients and foster innovation. This agile approach enables Fortech to navigate an ever-changing ecosystem and provide services that enable clients to create reliable and innovative financial software solutions.
Financial services companies and those seeking to integrate Fintech into their current offerings need to be aware of the current trends shaping the industry. More personalized services and data monetization are some of the trends that will impact the financial sector in the coming year. For more information on these trends, read our whitepaper Tech Trends That Will Shape the Finance Sector in 2021.
About the Author
After completing his Bachelor’s Degree in Computer Science and working for 4 years as an analyst programmer, Andrei joined Fortech in April 2006. Given his passion for technology and deep understanding of client requirements and expectations, he made rapid progress to become Project Lead by 2013 and was recently promoted as Growth Manager. He believes software solutions should be elegant and efficient.In his spare time, Andrei tinkers with old cars, electronics, and some woodworking.