Tech Expertise to Consider for a Fintech Startup

In 1866, Giovanni Caselli invented the pantelegraph, the machine that would transmit images, not just words, by telegraph. It was used for a financial transaction from Paris to Lyon, France. Thus, an early fintech was born.

Arguably, fintech is one of the most exciting (and disruptive) areas of technology today. But it was the financial crash of 2008 that spawned the revolution in IT financial solutions – startups that provided simple and fast services to consumers, independent of the “shameful” institutions that had wreaked havoc on the global economy and in whom trust was gone.

While not yet in everyone’s vocabulary, the fintech industry is exploding, and startups in this sector are attracting an amazing amount of venture capital, captured about $17.4 billion in 2016.

Fintech is already re-inventing the way money is managed - by businesses and by people. Both can avoid local banks and investors and opt for such things as crowdfunding, mobile payments, and apps that will provide the same investment information that the “big boys” have.

Today, for example, someone can transfer money quicker and cheaper with Transferwise, can get a loan at lower cost from Prosper, and raise funds on Kickstarter.

The Technology Behind FinTech – Getting It Right

If you are contemplating a fintech startup, app, or an IT addition project to your current financial services enterprise, then you want your idea to be developed with the right technology. This means that state-of-the-art functions, security, fraud protection, high-traffic capacity, server scalability, and analytics must all be incorporated, based upon what you want your end product to do.

If you are not a techie usually you only know what you want the technology to do. And you know that the technologies for a fintech startup will require expert developers.

In order to have a reasonably intelligent discussion with potential developers, however, you must have at least a basic understanding of the key technology behind fintech web development and applications.

Here is your “crash” course.

Understanding The Technologies for a Fintech Startup

Any fintech site or app has “back-end” and “front-end” technology, and while they perform very different functions, they are fully interdependent.

Back-End Architecture

This is the technology (and the programming) that makes a site or an app run. It is never seen by a user – sort of the “brain” behind all of the functions that a user performs. It consists of a server, database, and server-side applications. All of these together are called a tech stack.

The developer programs servers (web, cloud-based, or hybrid combinations) with frameworks of programming languages, the point of which is to “pull” and push” information to and from the database, based on requests that come in. This pulling and pushing is facilitated by application programming interfaces (API’s).

While this is a very simple and incomplete explanation, you can understand how important the right technology stack for a fintech startup really is. It controls everything a user does on the front-end, from signing in securely and accessing information/accounts to transferring money. It also determines such things as traffic capacity and makes adjustments during high traffic events.

That startup stack must also be easily scalable so that as demand grows and as functions are added, little new development is needed.

Back-End Tools

There is a myriad of programming languages and frameworks that developers may choose to use, but probably the most popular right now is Java, primarily because it is so versatile and, once built, can be used on any platform. There is also an almost never-ending supply of add-on components for scalability, and it’s great for high-traffic sites, apps, and events. And Spring Framework, an application framework for Java is now preferred because it is especially good for security.

You can ask the team to use .NET Framework, which will ensure language interoperability, meaning that you can use the code written in another language for building up additional functionality. The well-known con of .NET, however, is that it requires a Windows-based framework.

Another back-end tool that is 100% suitable for fintech startups is SDK.Finance. This is a back-end as a service platform for fintech startups which already covers integrations with Visa/MasterCard, banks and financial institutions, Risk and Analytics components, Salesforce, etc. By implementing SDK.Finance into your startup you will save time on development, save costs, and move further to the next round of funding.

Regarding  APIs, they facilitate the requests and responses that travel back and forth between users on the front-end and the server(s). Integrating the right API’s specifically to achieve your needs and goals will be the job of the developers/development team you choose to cooperate with.

There is a number to consider, and an expert development team will explain your options and make recommendations, based on the app’s nature. Some might include LDAP, for single sign-in and sign-out on the part of a user – a single username and password will gain access to all functions and sign-out ends all of that access.

Other common API’s include the following:

• Equifax, Intuit, Yodlee (for account verification, customer activities/needs, and customer support).
• Solid analytics in order to track consumer behavior (Google Analytics or perhaps Piwik).
• Stripe (for payments – secure and easy for developers to deploy).
• Kiva (micro lending site for those who cannot access traditional banks).
• Go Cardless (online direct debit provider which avoids credit card fees and/or a merchant account).
• SimplyTapp (making payments from mobile devices).
• Kontomatik (another banking API).

And it will not be out of the question for an expert team to develop customized API’s if existing ones do not meet the requirements.

Back-end Cloud Computing Integration

This can be in the form of public cloud providers, such as Amazon Web Services, optional private cloud environments, or hybrids. Those that are making lots of news right now include:

• Amazon Web Services (AWS): 100% public; outsourced services that are “pay-as-you-go;” other apps and services available, including those for security. AWS is adding a lot of partners in the financial sector.
• Google Cloud: mainly for consumer banking and retail purchasing.
• Microsoft Azure: this is a hybrid provider which is now adding UK data centers. Cross River Bank, an emerging leader in banking digitization, is using Azure. Seems to be a favorite in the UK and Europe. Azure is also collaborating with BofA.
• IBM Bluemix: some big banks area using Bluemix to interact with fintech startups.
• Alibaba Aliyun: this is a hybrid that has data centers in Japan, Germany, Australia, and two in the U.S. and is on track to develop a number of international partnerships during 2017.

The benefits of cloud integration are obvious – flexibility as you grow, backup and recovery, automatic updates (especially related to security), lower hardware costs, and the ability of your team to work from anywhere.

Front-End Development

Just as there are options for a back-end tech stack for startups, there are for too. UX and UI can make or break fintech companies, and it is not just a matter of a sleek, cool design coming from Photoshop or Fireworks. It is a matter of code that provides all of the elements you want and need.

If you were a Facebook or Google, all of your front-end elements would be coded from scratch, and it would be far more costly than necessary. Fortunately, there are solutions that include huge ecosystems (tools) for front-end development that can be borrowed or bought.

In your discussions with potential developers/development teams, you will hear names of technologies you will not know, such as:

• Angular.js: Javascript-based framework used to build single-page web applications. Angular.js is extensible and works great with other libraries.
• Materialize: an open-source responsive framework for apps based on Material design.
• React.js: a library used to build user interfaces. It allows programmers to develop large web apps which use data that can change over time without reloading the page. It’s scalable, fast, and simple.
• Bootstrap: is the most popular framework for developing mobile first web projects, which of course you will want.

Remember: Your job is not to understand how all of these technologies actually work. What you want is a great user experience and interfaces that allow users to do everything you want them to do, easily and quickly. It is the developers’ job to translate your needs using the right development tools.

Takeaways from Your “Crash” Course

Now, you have the basics of development for your fintech startup. You understand the terminology and, at least in a simple way, back-end development and front-end development.

Your task is to identify what you want your site/app to do - what services you are offering to users at the onset and how you envision growth (scaling). Only then you are ready to explore developers/firms/teams that can build what you want.

The good thing is you will not go in “blind.” You now understand that there are frameworks in place that can be used to keep costs down and that, certainly in the case of Java, there is a huge ecosystem of tools that can be incorporated as is or tweaked to meet your customized needs.

Obviously, you want the best developers. This means that you are looking for those with plenty of experience in fintech and stable teams with project managers. You want a team that will stay in touch, make informed recommendations, and see that every element is carefully tested. You will also want post-development support.

Consider Romexsoft. We are developers with the specialization in healthcare, media and entertainment, and fintech. Our top Java developers can provide the solution you are looking for. Give us a call and let’s talk.
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Written by Romexsoft on May 16th, 2017