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Top 3 Advantages of Using Financial Software Outsourcing

Given that the financial sector is one of the most rapidly digitalising business areas, many companies now recognise that change is both beneficial and inevitable. Above all, the possibilities of digitisation can open up new business areas in the future. For instance, in the course of Industry 4.0, financial supply chains and financial processes are becoming increasingly transparent. This gives banks new insights into what their customers are doing with their money and leverages technology to create new user habits, personalised services, and individual interest rates. On top of that, for banks and financial institutions, it can be too expensive to handle their entire IT infrastructure on their own (e.g. cloud migrations, legacy system innovations, or third-party integrations). This is why financial software outsourcing is a preferred choice for many financial providers.

Financial Software Outsourcing

Working in a bespoke software development company with a focus on financial software outsourcing, I can say that FinTech (technology + finance) is now used throughout the financial sector. Plus, many emerging technologies such as blockchain, augmented reality, RPA (Robotic Process Automation), Artificial Intelligence (AI), and Machine Learning (ML) currently disrupt the financial industry, opening up vast business opportunities for those ready to innovate. Certainly, with young demographic cohorts such as digitally-native Millennials and Gen Zs entering the workforce, automation in finance is here to stay. Financial companies that want to stay relevant and secure their market position thus need to ensure they invest in digital payments solutions, innovative software technology, and advanced data analytics.

Now, let’s explore the three main advantages of choosing financial software outsourcing.

1- Financial Software Development and Open Banking

One of the most recent regulatory initiatives within the financial sector is called Open Banking in the UK and PSD2 (Payment Service Directive). The core idea is to stimulate banks to securely adopt new technologies more easily. As a trend, Open Banking is here to improve customer-centricity, encourage market competition and provide brand new financial services. Nowadays, in order to make their digital services more user-oriented and innovative, more and more banks collaborate with FinTechs and outsourcing vendors. Technologically, they mostly use open application programming interfaces (APIs). In this way, banks can integrate new apps into their existing IT environment despite complex and grown IT structures. The aim of working closely with FinTechs is to develop products based on customer needs, to constantly improve them, and thus generate a demonstrably high level of customer satisfaction.

On the other hand, financial software outsourcing and automation in finance also play a significant role in delivering top-notch financial products to the market. In case they work with an Agile tech provider that follows short delivery iterations with frequent reflection phases, banks, and FinTech companies can quickly bring their new financial solutions to market. According to a study by Deloitte, financial institutions can benefit from Open Banking as an opportunity to rethink their corporate structure and internal processes towards an integrated digital delivery model and gradually adopt a more efficient and flexible Agile workflow.

2- Financial Software Outsourcing for Mobile Development

In 2022, the smartphone is now one of our everyday companions and financial operations are also often managed on the go. One of the biggest advantages of financial software outsourcing is when you decide to delegate your new software product development to an experienced financial software development company. Mobile applications are a common way of automation in finance, offering consumers the opportunity to use services quickly and in a customer-friendly manner, boosting customer satisfaction significantly. Take online banking as a simple example. Today’s users are used to relying on fast, convenient, and easy-to-navigate finance apps to make instant payments in a few clicks.

Nowadays, it is no longer necessary to go to the nearest bank branch. Clients are no longer dependent on the opening hours of the bank. And last but not least, financial products can be bought or sold at any time and from any place via a mobile device. Mobile financial services allow end customers to enjoy a wider range of financial products and offerings, giving them the opportunity to purchase cheaper or more suitable products. Using financial software outsourcing, you can define your core product objectives and software functionalities so that your IT partner can successfully execute all your business requirements. Moreover, you can also help create an intuitive UI and UX design that matches your brand identity together with your vendor.

3- Financial Software Development and Business Security

Each financial software needs to comply with certain security requirements to guarantee business continuity and service excellence to the customers. Conducting penetration testing during the software development process is important to verify the effectiveness of security controls implemented in the architecture of a payment service. There are some other commonly accepted security measures across the financial industry that help prevent fraud, identity theft or misuse of financial data. For example, when it comes to online payments the use of SSL certificates (Secure Sockets Layer) is a must for any digital financial transaction. It is used as a mechanism to authenticate that a certain web application is what and who it claims to be and to encrypt the host-client connection.

Another technology that is used to ensure financial security with digital payments is tokenization. Put simply, this is a data security process that replaces critical data with an equivalent element (a token) without any intrinsic value or usable meaning once it leaves the system. Then, the generated tokens are sent back to the merchant to be processed instead of the real card numbers. Tokenization minimizes the risk of a data breach as the merchant's servers store tokens instead of the user's actual payment details and any experienced financial software development company can help you integrate it. Larger payment providers such as Google and Apple use the process of tokenization in their NFC-enabled mobile wallets.

Author Biography Aleksandrina Vasileva

Aleksandrina is a Content Creator at Dreamix, a custom software development company, and is keen on innovative technological solutions with a positive impact on our world. Her teaching background mixed with interest in psychology drives her to share knowledge. She is an avid reader and enthusiastic blogger, always looking for the next inspiration.

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