Are you planning to develop a fintech solution?

Fintech software development was already a trend 3 years ago and in 2024, it had a comeback. Startup funding is forecasted to cross all previous milestones and so is revenue generation.

This has convinced a lot of businesses and founder-to-be, to consider fintech software development. And this comes with a lot of questions, with the primary one being:

“How Will I Develop The Fintech Software?”

Well, that’s what brings us here today. We are going to discuss a very important concept of the tech industry that can give your fintech app idea wings, outsourcing fintech software development.

Outsourcing has become a trend of its own.

Everyone from Fortune 500 companies to ambitious startups has been opting for outsourcing fintech development work for a very long time.

So, is it a good option? Why do companies prefer it? Isn’t it risky? And the question goes on.

In this guide to outsourcing fintech software development, we shall be answering the majority of your questions. So, therefore, with this, being said, let’s get right into it:

Fintech Software Development Trends And Market Insight

Fintech is booming or so the statistics say. And in this tide worth billions of dollars, the top names, new and established are opting for

  • The global IT services outsourcing market, encompassing fintech development, is valued at $525 billion and is projected to grow at a CAGR of 8.2% until 2032.
  • Top fintech players are turning to outsourcing to leverage expertise in AI, blockchain, and IoT for cutting-edge solutions.
  • The global FinTech software market is expected to reach USD 556.8 billion by 2030, growing at a CAGR of 19.5%

With the oversight of the fintech market and the outsourcing trend out of the way, it’s time to understand the concept as while.

Understanding Fintech Software Development Outsourcing

So, let’s see what software development outsourcing is:

Whenever a company pays another specialist firm to do their work i.e. handing the work over to them, it is known as outsourcing.

So, when we are talking about Fintech software development outsourcing, this happens when a company wants to develop a fintech solution and they hire a fintech software development firm to do this.

All of the burden of development from infrastructure, designing, and testing, to deployment and management, is handed over to the development team.

As simple as that.

Now the fintech development project requirement of every company is different. That’s why, there are different types of fintech development outsourcing.

Let’s discuss the different types in the next section.

Types of Fintech Development Outsourcing

The software or app development outsourcing type mainly depends on the client’s requirements. And each of these types comes with its own benefits and drawbacks.

Types of Fintech Development Outsourcing

In any case, let’s look at the same below.

1. Project-Based Outsourcing

The first one is project-based outsourcing, where the client hires a vendor to work on one specific project.

Here, the scope of the project is already defined along with the budget and timeline. On the client’s side, this saves money and time as the vendor will handle all the development work. But there are some drawbacks as well.

  • Pros: Cost-effective, good for smaller projects, faster time to market.
  • Cons: Limited control, potential communication challenges, and less flexibility for changes.

2. Staff Augmentation

Staff augmentation is yet another popular method.

What happens here is, that clients hire individual experts from an outsourcing vendor to join an in-house team for specific tasks or skills.

This usually takes place when a development time requires super specific skills and it’s faster to hire an expert via outsourcing than full time.

  • Pros: Access to specialized expertise, and greater control compared to full project outsourcing.
  • Cons: Requires effective integration into your team, potential cultural differences, and management overhead.

3. Dedicated Development Teams

Clients often love to “Hire Dedicated Developers”.

What this means is that, as a client, you set up a dedicated team of developers at the vendor’s location who work exclusively on your project.

Hence, the term “dedicated”.

This is a great way of making sure your project gets the required attention while also saving a lot of cash, compared to what you have to pay for in-house.

  • Pros: High level of control, dedicated team focused on your project, cost-effective compared to in-house development.
  • Cons: More complex management, potential communication challenges due to time zone differences, and less flexibility compared to staff augmentation.

4. Managed Services

Here, we have the managed services.

The vendor takes complete responsibility for managing your software development, including infrastructure, development, and maintenance.

This is yet another popular choice.

  • Pros: All-inclusive solution, minimal involvement from your side, reduces internal resource burden.
  • Cons: Highest cost, less control over the development process, potential vendor lock-in.

5. Hybrid Model

Lastly, we have the hybrid model.

As the name suggests, this happens when you combine elements of different outsourcing models to suit your specific needs.

This is especially suitable for larger organizations whose requirements aren’t fulfilled via regular services.

  • Pros: Flexibility, access to specialized expertise, tailored solutions for your project.
  • Cons: Requires careful planning and coordination, potential complexity in managing multiple vendors.

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Why is fintech development outsourcing a good choice?

Should you outsource developing a fintech solution?

Well, whether you want to develop an eWallet app or a fintech software that solves super-specific problems, outsourcing is always preferred.

Why is fintech development outsourcing A Good choice

Here’s why:

1. Access to Global Talent

One of the big reasons to outsource fintech software development is, it opens doors to a global pool of skilled developers with specialized expertise in fintech.

This means you can find the best minds suited for your specific project requirements without geographical constraints.

Leveraging this talent can lead to the creation of more sophisticated and innovative fintech solutions.

2. Cost Efficiency

Worried about fintech solution development cost?

Well, fintech development can indeed be expensive, especially when trying to keep up with the latest technological advancements.

This is where one of the biggest benefits of fintech software outsourcing comes in:

It allows companies to reduce development costs significantly.

By tapping into regions with lower labor costs, businesses can allocate their resources more efficiently, investing in other critical areas such as market research and customer service.

3. Focus on Core Business Functions

Why handle all the headaches of developing a fintech software, when experts can do it for you?

That’s the philosophy fintech software outsourcing is based on.

You see, outsourcing the technical side of fintech development lets you concentrate on your core business activities.

This division of labor ensures that while the outsourced team handles the software development, your in-house team can focus on strategy, customer engagement, and expanding the business.

4. Speed to Market

No longer do you need to worry about “how long does it take to develop the app?

Outsourcing can accelerate the development process, thanks to the dedicated teams that work round the clock to deliver quality products within tight deadlines.

This agility ensures that your fintech solution can adapt and respond to market demands promptly.

5. Risk Mitigation

Developing fintech solutions in-house can be risky, especially for startups and smaller firms without extensive experience in the domain.

Outsourcing to a reputable fintech software development company can mitigate these risks.

These companies bring their expertise in compliance, security, and best practices to your project, ensuring that your product meets industry standards and regulations.

The world’s first fully digital bank, Nubank, was built using an outsourced development team: Proof that outsourcing can be the foundation for groundbreaking innovation.

In-House Development vs Outsourcing

In-house vs outsourcing

This has been an endless and timeless debate. And one of the biggest dilemmas for companies across the world.

For a fun fact, “Outsourcing can offer cost reductions of 20-50% compared to in-house development”

But that’s not all. There’s much more that goes into it. So, let’s look at a breakdown below:

FeaturesIn-House DevelopmentOutsourcing
1. CostHigher upfront costs for salaries, benefits, equipment, and workspaceLower upfront costs, but potential hidden fees in contracts
2. ControlFull control over development process, team, and intellectual propertyLess direct control, reliance on communication and collaboration with vendor
3. Talent AccessLimited to local talent pool or relocation costsAccess to wider pool of specialized talent, potentially at lower cost
4. Speed & AgilityCan be slower to set up and find talent, but potentially faster development once establishedFaster project start-up due to existing team, but slower response to changing needs
5. Security & ComplianceEasier to maintain full control over data security and complianceNeed robust agreements and due diligence to ensure vendor compliance
6. Communication & CollaborationDirect communication and collaboration with team, but potential internal communication challengesIndirect communication with vendor, need for clear communication protocols and collaboration tools
7. ScalabilityLess scalable, requires hiring and training new employees for growthMore scalable, easier to adjust team size based on project needs
8. Expertise & SpecializationLimited to existing team’s expertise, may need to hire specialistsAccess to specialized expertise in specific technologies or domains
9. InnovationCan foster in-house innovation and knowledge sharingMay rely on vendor’s existing solutions and technology stack
10. Culture & FitAligns with company culture and valuesMay require cultural adaptation and relationship building
11. Long-Term CommitmentRequires long-term investment in building and maintaining teamLower long-term commitment, easier to switch vendors

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How To Outsource Fintech Software Development? (With Example)

In this part of the fintech software development outsourcing guide, we shall learn how you can find and outsource a software development company.

Here, we shall go through every step of the process and discuss in great detail “How To Outsource Fintech Software Development?”

Fintech Software Development Outsourcing Process

Plus, to make it that much more understandable, we shall provide various examples along the way.

Step 1: Define the Project Needs

The process of fintech development outsourcing starts with a little self-reflection. I.e. the first thing we need to do is gather project requirements.

It can be divided into a few sections. These are:

1.1 Outline Project Goal, Target Audience, Features

The first thing you need to do is set an outline. For instance, if you are developing an app, choose a fintech app ideas, and so on.

Once the basic ideation is done, it’s time to go for market research.

The main goal here is to find the target audience. From here onwards, we shall be focusing all of the effort and brainstorming.

Based on the same, you’ll need to point out the basic features of the software.

Once all of this is done, we move to 1.2 that is…

1.2 Specify Tech Stack

Tech stack refers to all the technologies and tools that are involved in fintech software development. Now, this highly depends on the end product you want.

Let’s take an example here you want to build an App like Cash.

So, the eWallet app tech stack to go for this project would be something like this:

ComponentsTechnologyDescriptionPrice Estimate (Monthly)
FrontendReact NativeCross-platform mobile app development framework for iOS and Android.Free
FlutterGoogle’s UI toolkit for building natively compiled applications for mobile, web, and desktop.Free
XamarinMicrosoft’s framework for building cross-platform mobile applications.Free
BackendNode.jsJavaScript runtime for building the server-side logic.Free
DjangoHigh-level Python web framework that encourages rapid development and clean, pragmatic design.Free
Ruby on RailsThe web application framework is written in Ruby and follows the Model-View-Controller (MVC) pattern.Free
DatabasePostgreSQLAn open-source relational database is known for its reliability and robustness.Free
MySQLOpen-source relational database management system.Free
MongoDBNoSQL document-oriented database program.Free
Cloud StorageAmazon S3Scalable object storage service for storing and retrieving data.Usage-based pricing
Google Cloud StorageObject storage service for storing large, unstructured data.Usage-based pricing
Microsoft Azure Blob StorageStorage service for storing large amounts of unstructured data.Usage-based pricing

Make sure to select the tech stack carefully since this can highly affect the final product. Thus, making it an essential part of the fintech software outsourcing process.

1.3 Determine A Budget & Timeline

Now, it’s time to set budget and timeline.

There’s a lot that goes into software development, especially in terms of cost and timeline. Here’s an example of different fintech software types with cost & development time related to the same.

Types of Fintech SoftwareDescriptionCost EstimateTimeline Estimate
1. Mobile Payment ApplicationsMobile apps facilitate peer-to-peer payments, bill splitting, and contactless payments using smartphones.$50,000 – $200,0003 – 9 months
2. Digital WalletsSecure digital wallets allow users to store, manage, and use various payment methods and loyalty cards.$30,000 – $150,0002 – 6 months
3. Personal Finance ManagementPlatforms offering budgeting, expense tracking, investment management, and financial goal-setting features.$50,000 – $200,0004 – 10 months4.
4. Robo-AdvisorsAutomated investment platforms providing algorithm-driven financial planning and portfolio management.$100,000 – $200,0006 – 12 months
5. Peer-to-Peer LendingOnline platforms connect borrowers with investors, bypassing traditional financial institutions.$100,000 – $200,0006 – 12 months
6. Crowdfunding PlatformsOnline platforms allow individuals or businesses to raise funds from a large number of investors or donors.$150,000 – $200,0006 – 12 months
7. Blockchain-Based SolutionsDecentralized platforms offering secure transactions, smart contracts, and digital asset management.$100,000 – $200,0006 – 18 months
8. Regtech SolutionsRegulatory technology solutions automating compliance processes, KYC (Know Your Customer), and reporting.$100,000 – $200,0006 – 12 months
9. Insurtech PlatformsTechnological solutions optimizing insurance processes, including policy management, claims, and underwriting.$100,000 – $200,0006 – 12 months
10. Payment GatewaysPayment processing solutions facilitate online transactions, supporting various payment methods.$50,000 – $200,0003 – 9 months

Based on this example, you can set the budget for your software development outsourcing project.

Step 2: Look for a fintech development partner

It’s time to find a development partner or shall be way outsourcing development company for the fintech project.

Now, there are various ways to do so and some points to keep in mind, let’s have a look:

2.1 How To Find Developers

Here’s how you can find app developers for your fintech software outsourcing, potential places to look at are, as mentioned below:

  • Referrals and Recommendations: Seek advice from trusted sources.
  • Online Research: Investigate companies online.
  • Industry Events and Conferences: Network at industry gatherings.
  • Outsourcing Directories and Platforms: Use online directories.
  • Professional Associations: Explore industry organizations.
  • Social Media and Online Communities: Engage with online groups.
  • Industry Publications and Blogs: Read industry content.
  • Consultants and Advisors: Hire experts for guidance.
  • Request for Proposals (RFPs): Solicit proposals from vendors.
  • Attend Webinars and Workshops: Participate in educational events.

Now, let’s look at the things to keep in mind when hiring fintech outsourcing partners.

2.2 Things To keep in mind

If you want to find the right development partner, it’s important to consider a few important factors. These are, as mentioned below:

  • Expertise: Ensure they have relevant fintech software development experience.
  • Reputation: Check their track record and client feedback for reliability.
  • Compliance: Verify adherence to industry regulations and security standards.
  • Communication: Assess channels and responsiveness for effective collaboration.
  • Cultural Fit: Consider compatibility for smooth teamwork.
  • Scalability: Ensure they can adapt to project changes and growth.
  • Location: Evaluate geographical proximity for coordination.
  • Cost: Assess pricing and value alignment with your budget.
  • Technology: Check compatibility with your preferred tech stack.
  • Contracts: Review agreements for clear expectations and responsibilities.

Not to mention, these factors can directly and indirectly affect the total cost to hire developers, something to keep in mind.

In any case, once you have selected someone you want to hire, here’s what you need to do”

2.3 Finalize & Hire

Once you and fintech developers have agreed on everything, it’s time to shake the hand, sign a few documents, and hire the partner.

This is a quick and simple process. Yet, once this is done, we start the word.

Step 3: Onboarding & Planning

After selecting a fintech development partner, the next crucial step is onboarding and planning. This phase sets the foundation for successful collaboration and project execution.

3.1 Kickoff Meetings

Initiate a series of kickoff meetings to align all stakeholders on project goals, expectations, timelines, and communication protocols. Ensure that both parties understand the project’s scope, objectives, and critical success factors.

3.2 Team Introduction

Introduce the core team members from both sides, including project managers, developers, designers, and any other key personnel involved in the project. Building rapport among team members is essential for smooth communication and teamwork.

And once this is done, we start with the development process…

Step 4: Fintech Software Development Process

The development process is the heart of the project, where ideas are transformed into a tangible fintech solution.

It typically involves:

4.1 Agile Methodology

Implement an agile development approach, which allows for flexibility, regular feedback, and iterative improvements. This methodology is particularly beneficial in fintech projects due to the rapidly changing financial landscape and regulatory environment.

4.2 Prototyping and Design

Start with creating wireframes and prototypes to visualize the user interface and experience. This step is crucial for understanding the end-user requirements and ensuring the software is intuitive and user-friendly.

4.3 Development Sprints

Break down the development process into sprints, focusing on delivering specific features or modules in each cycle. Regular sprint reviews and retrospectives help in maintaining the quality and aligning the development efforts with project objectives.

 4.4 Quality Assurance and Testing

Implement rigorous QA and testing phases to ensure the software meets all functional, performance, security, and compliance standards. This includes unit testing, integration testing, performance testing, and security audits.

4.5 User Acceptance Testing (UAT)

Involve end-users or stakeholders in testing the final product to ensure it meets their expectations and requirements. Gather feedback and make necessary adjustments before the final deployment.

With this done, it’s the final time to deployment and maintenance.

Step 5: Software Deployment & Maintenance

The final stages of outsourcing fintech software development involve deploying the software and ensuring its continuous maintenance and support:

5.1 Deployment Strategy

Develop a detailed deployment plan, considering factors like data migration, system integrations, and user training. Choose the right deployment model (cloud-based, on-premises, or hybrid) based on the software’s needs and regulatory requirements.

5.2 Go-live Support

Provide comprehensive support during the go-live phase to address any immediate issues or concerns. Ensure smooth transition and minimal disruption to existing operations.

5.3 Post-Deployment Maintenance

Establish a maintenance plan for regular updates, patches, and enhancements to the software. This includes monitoring system performance, resolving any emerging issues, and adapting to new regulatory changes.

5.4 Continuous Improvement

Encourage a culture of continuous improvement by regularly gathering user feedback, monitoring industry trends, and updating the software to meet evolving market needs and technological advancements.

By meticulously planning and executing these phases, businesses can successfully outsource fintech software development, ensuring the final product is robust, compliant, and tailored to meet the unique needs of the financial industry.

And that’s how you outsource the project and develops fintech software, just like that. Now, here are some tips to help you do it successfully.

Some Tips For Successful Fintech Development Project Outsourcing

Now that we are done with all things fintech development outsourcing, it’s time to look at some important tips for outsource fintech software development.

Some Tips For Successful Fintech Development Project Outsourcing

 These are, as mentioned below:

1. Define Your Project Clearly

  • Outline goals, functionalities, target audience. Don’t rush into outsourcing without a concrete vision.
  • Set clear requirements and timelines. Ensure the contract clearly defines deliverables and milestones.
  • Choose the right technology stack. Align it with your project needs and expertise availability among potential vendors.

2. Partner Selection with Due Diligence

  • Research vendors’ experience in fintech and relevant technologies.
  • Evaluate their track record, client satisfaction, security measures, and compliance certifications.
  • Go beyond case studies. Request references and conduct in-depth calls to assess cultural fit and communication practices.

3. Communication & Collaboration

  • Establish clear communication channels and protocols early on.
  • Utilize collaboration tools like project management platforms and video conferencing.
  • Maintain frequent communication and promptly address concerns.
  • Consider cultural differences and time zone challenges.

4. Quality Control & Security

  • Implement a robust quality assurance process with regular testing and feedback loops.
  • Stay actively involved in key decisions and provide timely feedback.
  • Never compromise on data security and compliance. Choose a partner with proven security practices and relevant certifications.
  • Clearly define data ownership, access control, and security protocols in the contract. Conduct regular audits to ensure compliance.

5. Manage Expectations & Build Relationships

  • Set realistic expectations and timelines. Be flexible and adaptable to unforeseen challenges.
  • Invest in building a strong relationship with your partner based on trust and mutual respect.
  • Clearly define roles and responsibilities to avoid confusion and delays.

6. Exit Strategy & Plan

  • Don’t forget the future. Define a clear exit strategy in the contract, outlining intellectual property handover and knowledge transfer procedures.
  • Consider pilot projects before committing to larger engagements. Assess the partnership’s effectiveness and minimize exit costs if needed.

7. Avoid Micromanagement

  • Trust your partner’s expertise and allow them autonomy within the agreed-upon scope.
  • Focus on clear communication and goal setting, providing flexibility for execution.

The average fintech startup raises a staggering $18 million: Outsourcing allows them to stretch those funds further, accessing top talent and technology without breaking the bank.

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We have done it before:

  • Pay By Check– Pay by Check is a popular ewallet mobile app in the United States of America. It allows users to transfer, pay, or even exchange currency.
  • DafriBank– Digital Bank of Africa is a leading banking portal that also allows users to trade cryptocurrencies and provides e-wallet advantages.
  • SatPay– An eWallet platform is a Versatile eWallet Solution that allows users to request, receive, and send payments without hassle.
  • CUT– an E-wallet Mobile App, CUT is available in China and Myanmar. It works well with both RMB and MMK currencies.
  • SatBorsa– a Currency Exchange Fintech app, SatBorsa is one of the platforms that is available on both platforms, iOS, and Android.

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Conclusion

Fintech software development is booming, and many businesses are considering outsourcing this process to leverage its benefits.

This complete guide to Fintech Software Development Outsourcing explored the concept of fintech software development outsourcing, its advantages like access to global talent and cost efficiency, and the different models available such as project-based and dedicated development teams.

It also provided a step-by-step Guide to Outsourcing Fintech Software Development on how to outsource your project, from defining your needs to finding a development partner and ensuring successful collaboration.

FAQs

Why should I consider outsourcing fintech software development?

Outsourcing fintech software development offers several advantages such as access to global talent, cost efficiency, focus on core business functions, speed to market, and risk mitigation. It allows companies to leverage specialized expertise, reduce development costs, and accelerate the development process while ensuring compliance and security standards are met.

What are the different types of fintech development outsourcing?

There are several types of fintech development outsourcing, including:

  • Project-Based Outsourcing
  • Staff Augmentation
  • Dedicated Development Teams
  • Managed Services
  • Hybrid Model

Each type has its own benefits and drawbacks, catering to different project requirements and client preferences.

How do I define my fintech software development project needs?

Defining your fintech software development project needs involves outlining project goals, target audience, features, specifying the tech stack, and determining a budget and timeline. It’s essential to conduct thorough market research, identify the required technologies, estimate costs and timeframes, and set clear project requirements and objectives.

How can I find a suitable fintech development partner?

To find a suitable fintech development partner, you can:

  • Research vendors’ experience and expertise in fintech and relevant technologies.
  • Evaluate their track record, client satisfaction, security measures, and compliance certifications.
  • Request references and conduct in-depth calls to assess cultural fit and communication practices.
  • Consider factors such as expertise, quality of work, communication, and compatibility with your project requirements and business objectives.

What are some tips for successful fintech development project outsourcing?

Some tips for successful fintech development project outsourcing include:

  1. Define your project clearly, outlining goals, functionalities, target audience, requirements, and timelines.
  2. Conduct thorough research and due diligence when selecting a development partner.
  3. Establish clear communication channels and protocols, utilizing collaboration tools and addressing cultural differences and time zone challenges.
  4. Implement robust quality control and security measures, ensuring compliance with industry standards and regulations.
  5. Manage expectations, build strong relationships with your partner, and plan for future scalability and exit strategies.
  6. Avoid micromanagement and trust your partner’s expertise, allowing them autonomy within the agreed-upon scope.

What are the potential risks of outsourcing fintech software development?

While outsourcing fintech software development offers numerous benefits, there are also potential risks to consider. These may include communication challenges, cultural differences, security concerns, quality control issues, and vendor lock-in. It’s essential to conduct thorough due diligence, establish clear expectations, and implement robust contractual agreements to mitigate these risks effectively.

How do I ensure data security and regulatory compliance when outsourcing fintech software development?

Ensuring data security and regulatory compliance is critical when outsourcing fintech software development. Plus, it’s essential to define clear data protection protocols, conduct regular audits, and adhere to relevant industry regulations such as GDPR, PCI DSS, and HIPAA.

What factors should I consider when selecting a technology stack for my fintech software development project?

When selecting a technology stack for your fintech software development project, consider factors such as scalability, performance, security, interoperability, expertise, and community support. Evaluate different technologies based on your project requirements, budget, and long-term strategic goals to ensure the chosen stack aligns with your business objectives and technical needs.

How can I ensure effective collaboration and communication with my outsourcing partner?

Effective collaboration and communication are essential for successful fintech software development outsourcing. Establish clear communication channels, protocols, and expectations from the outset of the project. Utilize collaboration tools such as project management platforms, video conferencing, and instant messaging to facilitate real-time communication and collaboration. Maintain regular check-ins, provide timely feedback, and address any issues or concerns promptly to ensure alignment and progress towards project goals.