Outsourcing in fintech is a practice of hiring third-party skilled professionals to handle specialized development tasks. These include crafting mobile banking apps, building compliance modules, or blockchain features.
Outsourcing resolves three core issues companies face in the highly evolving financial technology market: lack of expertise, high cost, and speed to market. Hence, fintech software outsourcing is an indispensable method for companies seeking to develop a reliable, regulatory-compliant project with accelerated delivery.
-
Fintech outsourcing is critical for companies by accessing global talent within a rational budget, ensuring fast time-to-market without compromising delivery.
-
Outsourcing provides immediate access to fintech-specialized compliance knowledge (KYC/AML, PCI DSS) and niche expertise, including blockchain and security testing to maintain quality and mitigate risks.
-
Efficient financial technology outsourcing partnerships require adopting proactive mitigation strategies like PCI DSS/ISO 27001, Agile methodology, and clear KPIs to prevent security breaches and poor delivery.
Key Benefits of Fintech Development Outsourcing
Outsourcing fintech project development is a current requirement among businesses of any size, as it simultaneously fulfills the industry’s critical need for speed, security, and regulatory knowledge, all while delivering benefits in costs, access to a talent pool, and simplified scalability. Here’s a short analysis of the benefits of fintech development outsourcing.
Cost Savings
Financial technology outsourcing provides companies with cost arbitrage, which contributes to a more strategic financial resource allocation. The concept of cost arbitrage implies hiring an IT specialist from a different market, where the price for the service is cheaper compared to the same specialization in the domestic market.
Outsourcing enables companies to cut expenses by significantly reducing the need to cover employee benefits, extensive recruitment procedures, and physical infrastructure, reducing the overall local operational costs.
Faster Time-to-Market
Since the financial technology market is oriented toward speed and productivity, delegating software development to a third-party vendor shortens the development cycle as they take the complete responsibility to hire specialized talent. Usually, it takes less time than traditional recruitment.
Financial technology outsourcing stimulates accelerated MVP development. The hired experts use established Agile workflows and can leverage pre-built modules or secure libraries to promote rapid development and deployment of a Minimum Viable Product, like digital wallets, custom loan apps, or P2P lending applications.
Instead of focusing on the internal development processes, businesses can offload technical execution and overall leadership to cover regulatory approval, strategic partnerships, and market acquisition for a more efficient financial technology project launch.
Access to Fintech Expertise & Compliance Knowledge
Outsourcing ensures access to proficient security experts who can perform penetration testing to ensure code consistency. This enables meeting the non-negotiable standards of transactional integrity, central to the financial technology industry.
Hiring a third-party vendor enables businesses to close the internal skills gap fast and effortlessly. The partner provides the company with high-demand experts for API development, algorithmic trading, and proficiency in blockchain technology to bypass the difficulty of hiring top talent internally.
Reliable vendors can lower the client’s legal and security risk profile by operating within the proficient knowledge of the global financial technology regulations, including KYC, AML, and PCI DSS standards.
Easy Scalability
Last but not least, scalability is a central benefit for fintech app development outsourcing, as the company can adjust hired personnel to the evolving project needs.
Outsourcing is a proactive strategy for a rapid team adjustment. The client can scale up the dedicated team when the project is in a peak development phase or scale down during the maintenance stage.
Additionally, business representatives can opt for staff augmentation services during the peak season to cover operational load within a relatively short time period and then scale the hired professionals down when the need for their skills is scarce.
Finally, outsourcing models offer flexibility in payment, as the Time & Materials model enables businesses to reduce hidden expenses, ensuring payment only for the precise hours and resources applied during the development cycle.
Review the skills fintech developers should master before hiring a partner.
What Fintech Tasks You Can Outsource
Financial technology outsourcing covers specialized functions from crafting consumer apps and ensuring regulatory compliance to handling data security and integrating advanced blockchain technologies.
Banking & Payment App Development
This outsourcing category reflects delegating the development of consumer-facing B2B applications related to financial transactions and account management. The third-party vendor can handle development cycles for the financial technology projects that deal with money management and banking interactions. This typically includes designing, building, and deploying secure and scalable mobile and web applications.
Primary Deliverables:
-
Digital Wallets & Mobile Banking: businesses can outsource tailoring user interface and backend logic for software that lets clients view balances, P2P send/receive funds, manage cards, and access banking services all within the mobile device.
-
Custom Payment Gateways: dedicated teams can craft proprietary or customized payment gateways to process online transactions, integrating with different card networks and payment processors.
KYC/AML & RegTech Modules
As security and regulatory compliance are non-negotiable elements of the financial technology industry, outsourcing can help clients create, implement, and manage automated software solutions to promote identity verification, assess risks, and monitor transactions in compliance with local financial crime prevention laws.
Primary Deliverables:
-
Automated Client Onboarding: outsourcing experts can develop digital tools for ensuring customer due diligence (CDD), including automated identity verification (supporting biometric checks, document scans logic), real-time risk scoring, and abiding by the global sanction lists.
-
Transaction Monitoring System: hiring third-party talent is critical to build AI/ML learning-powered engines to automate continuous analysis of transactions and detect suspicious patterns of anomalies, promoting timely suspicious activity reporting.
-
Audit Readiness & Reporting: outsourcing partners can develop systems that automatically maintain precise, current records and generate secure, detailed audit trails, promoting sound compliance with evolving regulations.
API Integrations & Core Systems
Outsourcing partners benefit the financial technology industry, especially the banking sector, as they can create robust APIs that will act as secure, standardized layers for data exchange and ensure smooth integration of the new digital applications with banks’ outdated legacy systems.
Primary Deliverables:
-
Secure API Development: hired IT experts can build APIs that correlate with Open Banking Initiatives, including PSD2 and Open Banking in Europe, to enable external applications to access data with client consent.
-
Legacy System Integration: by applying middleware like an Enterprise Service Bus (ESB), developers can effectively turn and manage data exchanges between new applications and existing core systems, promoting feature updates without compromising stable core infrastructure.
-
Third-Party Service Integration: this incorporates integrating the client’s platform with crucial external services, such as major payment processors, credit scoring, and KYC/AML databases, to promote comprehensive functionality.
Blockchain & Crypto Features
This covers a full cycle of blockchain development, including design, testing, deployment, and maintenance of the core Distributed Ledger Technology and cryptocurrency functions by integrating narrowly specialized technical skills to craft tamper-proof applications.
Primary Deliverables:
-
Smart Contract Development & Auditing: this includes writing, testing, and securing Smart Contracts, typically in Solidity for automated financial procedures like asset transfers, while the outsourcing partners will prevent code vulnerabilities, providing essential security audits.
-
Decentralized Finance (DeFi) Integration: third-party IT experts are assembled to build elements like cross-chain bridges and decentralized exchange (DEX) features for integrating the client’s platform to existing DeFi protocols to ensure user seamless access to staking or decentralized borrowing.
-
Digital Asset Wallets & Custody Solutions: this is about crafting secure digital asset wallets, both custodial and non-custodial, and sophisticated key management systems to promote safe storage, sending, and receiving of crypto and digital tokens.
-
New Ledger Platforms: outsourced IT experts are involved in designing and deploying customized private or consortium enterprise blockchain (like those that use Hyperledger Fabric or Quorum) for financial technology functions like inter-bank settlements.
Explore enterprise blockchain: essence, types, benefits, and risks for implementation.
Data Analytics & Security Testing
Businesses can delegate two specialized tech roles, including rigorous testing of the system for vulnerabilities and constructing advanced analytical engines for fraud detection and risk prevention.
Primary Deliverables:
-
Financial Penetration Testing: specialists conduct penetration testing to simulate cyberattacks on the financial technology platform, APIs, and smart contracts to spot potential security weaknesses to prevent real attacks.
-
Vulnerability Assessment & Code Auditing: specialized professionals systematically review source code and infrastructure configurations to detect existing security issues to ensure the tech-fin software complies with stringent industry-specific protocols.
Key Risks and How to Avoid Them
Despite the range of benefits, outsourcing poses a set of critical challenges associated with code security, communication barriers, and compliance breaches that businesses have to keep in mind to select a truly reliable partner.
Risks and Mitigation Strategies for Fintech Outsourcing
How to Choose the Right Fintech Outsourcing Partner
Businesses have to prioritize three core components: expertise in financial technology, security, and compliance standards, strategic communication, and transparent collaboration models for flexible budget control when choosing an outsourcing vendor.
Experience in Fintech Security (KYC/AML, PSD2, PCI DSS)
Financial technology software is not a general applications that circulate with highly sensitive user funds and personal data, requiring them to abide by the stringent global and regional laws. A partner with limited experience in these areas can face unacceptable legal and financial challenges.
KYC/AML (Know Your Customer / Anti-Money Laundering)
These standards are mandatory to verify the client's identity and monitor suspicious activities to prevent financial crimes. The outsourcing partner must showcase expertise in implementing automated onboarding flows, intertwined with biometric checks, to build a transaction monitoring system that would adhere to the global watchlists.
PSD2 / Open Banking (Payment Service Directive 2)
A European directive that mandates banks to reveal data to regulated Third-Party Providers (TPPs) via secure APIs, promoting innovation and competition. The outsourcing partner has to be skilled in crafting secure and compliant APIs that would meet standards for Open Banking, promoting customer consent management and authentication.
PCI DSS (Payment Card Industry Data Security Standard)
A global set of mandatory security standards for any entity that stores, processes, and transmits credit/debit card data. Speaking of businesses that support online or PoS payments, vendors have to craft code and systems compliant with PCI DSS at their core.
This ensures the protection of cardholder data in accordance with the industry’s high standards.
Healthy Communication
In outsourcing, communication is a strategic tool required for promoting project alignment, managing expectations, and overcoming the challenges of geographical distance. A proactive partnership relies on a vendor’s ability to maintain proactive and strategic communication.
Poor communication leads to project failure, especially in complex, high-stakes financial technology projects. There are the following key aspects should be included in healthy communication:
-
Language Proficiency: the development team should master English proficiency to prevent tech concept or requirements misinterpretation.
-
Proactive Reporting: communication should be strategic and reactive, addressing the client’s questions directly. The vendor should initiate regular, structured updates, usually via daily stand-ups and weekly sprints, underlining the progress, roadblocks, and discussing the next steps.
-
Dedicated Project Management: the project manager serves as the sole point of contact (SPOC), acting as a liaison who translates the client’s business needs into technical requirements and ensures continuous, clear information flow back to the client.
Transparent Cooperation Models
Selecting an outsourcing partner with clear collaboration models is a strategic decision that will directly influence budget, affecting the control of project scope, timeline, and flexibility to adjust within the full cycle of financial product development.
The Determinants of Transparent Cooperation Models:
-
Clear and Flexible Pricing Structure: vendor has to provide a clear breakdown of costs, including hourly rate per seniority level.
-
In-Depth Reporting for T&M: the partner has to provide weekly reports with detailed analysis of the performed tasks, which specialists were incorporated, and how many hours they spent. This approach ensures accountability.
-
Flexible Transition: the outsourcing vendor should support the transition between payment models, offering clients strategic options. For instance, a fixed-price model for MVP and T&M for the overall development.
Why Partner With Agilie
Agilie is a software and web engineering company that provides full-cycle fintech development services. With our cross-industrial expertise in digital finance, logistics, marketing, and healthcare, our development team applies unique strategies and approaches to project development, economizing resources and time for final delivery.
Agilie crafts its workflow strategy within Agile or relevant methodologies and, with security at heart, delivers products compliant with PCI DSS, GDPR, and KYC/AML standards. Our proactive services include:
Discover Agilie’s work and case studies.
Summary
Fintech software development outsourcing is a proactive strategy to receive strong, regulatory-compliant software. With access to a global talent pool and cost arbitrage, the organization can close the corporate IT skills gap, delegating the project development to a reliable software developer.
To stimulate effective interaction, the company should pay attention to the partner’s certification, set Agile workflow with KPIs, and implement mandatory QA procedures to make sure the code is error-free before deployment.
Seeking a fintech development partner? Agilie will empower your vision!
