Developing or upgrading a fintech company’s core software may take months or even years to complete. Meanwhile, the company must carry on its existing business with customers who cannot afford even a day of downtime.
To continue growing, fintech companies need to bridge this gap. They must find a way to make their offerings accessible while also upgrading and expanding those offerings.
By exploring their options and planning ahead, fintech companies can strike a balance between the often-competing demands of customer needs and software development.
Understand the Challenges and Opportunities of Growth
Fintech companies face rapid acceleration from increasing customer interest in using their apps, thanks in part to the COVID-19 pandemic. As the financial industry addresses customers’ demand for digital services, a number of challenges and opportunities open up for fintech companies.
Cybersecurity and data protection remain top concerns for any business that operates digitally. For fintech companies, the need to protect sensitive customer information like credit card numbers, Social Security numbers and data about net worth further intensifies the need for security, Richard D. Harroch and Melissa Guzy write at Forbes.
Open banking also creates both opportunities and challenges in terms of data use and data security, Alicia Phaneuf writes at Business Insider. Open banking allows fintech companies to connect to established financial institutions through the use of APIs, which can boost transparency and speed transactions for customers, but which comes with its own security concerns.
Managing digital security issues can also be complicated by efforts to change, upgrade, or expand fintech tools and services.
Access in the Time of COVID-19
The COVID-19 pandemic has created a new demand among banking customers, who want to be able to carry out transactions without physical contact with a cashier, bank teller or other party.
Likewise, demand for mobile payment options is likely to explode as the pandemic continues to generate a need for distanced, touchless payment methods, says David Haas, chief operations officer at Elite Insurance Partners, LLC. Embedded finance, or the integration of payment apps into other apps and platforms, represents a fertile area of growth in fintech, as well, writes Yehia El Amine at Inside Telecom.
Rapid introduction of new features and services has helped fintech companies grow, gaining traction among customers who increasingly expect on-demand, personalized and seamless digital experiences, writes Sanoj Balakrishnan, who heads the digital business unit for North American healthcare at Cognizant. Meeting customer demands in these areas, however, poses its own challenge: Continuing to meet growing demands.
As customers grow accustomed to financial apps that make their money accessible at any moment, they increasingly expect that access will be reliable and constant. The realities of living in a pandemic add to that demand. To support transactions while protecting parties during a pandemic, these apps must be as readily accessible as contact-based forms of payment, like handing over cash or a card. Downtime is not an option.
Componentize to Protect Customer Access
As customer demand outpaces an app’s or platform’s existing capabilities, fintech companies need to develop new software or overhaul existing programs. As a part of this process, many fintech companies rethink how they offer, deploy and protect their apps.
Componentization: The Best People for the Best Parts
Componentizing IT, or building a suite of digital offerings by conglomerating third-party components, has become the norm for 80 to 90 percent of modern applications, writes Lori MacVittie, principal technical evangelist at F5 Networks.
“We build systems out of a software stack rather than developing each component ourselves,” MacVittie writes. The result is a gradual shift from manual processes to pipelines — a shift that can benefit fintech companies seeking to protect customer access while upgrades are developed.
When fintech companies are willing to componentize, they can offer customers a stable experience that runs as it should, without forcing their own teams to constantly monitor every aspect of that digital experience. Monitoring becomes the responsibility of the third party in charge of each component, freeing a fintech company’s team to focus on improving the core of its offerings.
One Change at a Time
A componentizing approach also allows fintechs to focus on making one change at a time. This kind of focus can improve the results of overhauling an app or moving it from in-house to cloud hosting, recommends Ariff Kassam, chief technology officer at NuoDB.
Focusing on a single application “limits the scope of your immediate changes and allows your development organisation to adapt to new development and operational models,” as well as buying the team time to determine which apps will do best in the cloud, Kassam writes.
When apps need to be both moved to the cloud and upgraded to make the move possible, componentizing supports the focus and attention required to make that happen.
Rebuild and Transition
Rebuilding code from scratch is a tough endeavor, and it’s one that is often frowned upon. The sheer amount of time it takes, the extensive need to test all-new code, and the deleterious effects on a company’s existing apps or market share in the meantime all weigh against the decision to build from scratch, Joel Spolsky wrote 20 years ago, and that’s advice that still holds true today.
Yet there are times when a rebuild and transition are necessary. An original product with no automated testing, none of its original creators present, made in a low-quality manner and running on obsolete technology deserves to be laid to rest and a new rebuild enacted in its place, programmer Péter Tӧrӧk writes at Stack Exchange.
Tӧrӧk recommends, however, that teams look closely at the costs and time involved in a rebuild, and that they ensure everyone is on board, from leadership downward. He also recommends breaking the job into smaller parts, taking a modular approach to recreating old code in order to allow for better testing.
Meeting Customer Demands During a Software Transition
“Increasingly tech-savvy customers now demand greater flexibility and easy-to-use services coupled with more transparency around things like fees and corporate social responsibility,” writes Adam Preedy, manager of EMEA sales engineering at SS&C Intralinks. Customers know what they want, and they’re willing to hop between fintech companies or financial institutions until they get it.
Fintech companies gained a foothold in the financial industry by offering the flexibility, ease of use and transparency that established banks want. When it comes to keeping up with customer demands, however, pressures to continue offering flexibility and ease of use can work against a growing fintech — or they can work to its advantage.
Whether a fintech company chooses to work on single components or to execute a rebuild from scratch, tracking customer expectations and communicating effectively about transitions and rollouts can help ensure that the process goes smoothly. By including customers’ perspectives, fintech companies can improve their chances of maintaining customer loyalty or even gaining new customers.
Having more customers than your current software can support is a good problem to have. Yet it also poses a challenge. Through care and planning, fintech companies can rise to the challenge, providing innovative, up to date services while ensuring they’re always available when customers need them.