Guide to Fintech Development Outsourcing: How to Make It Work

Indisputably, the enhanced market demand requires fintech-relevant organizations to continuously improve their applications to boost their user-centric design and efficiency and remain diverse to retain their competitive advantage.  

Technological optimization of a fintech app or a from-scratch product development might cost a fortune, considering the tech stack, feature complexity, and security measures, which motivates companies to search for alternative development solutions. 

Fintech software outsourcing is the optimal solution for the organization to optimize its working and development processes, as the company can assign part or all development responsibility to the hired third party. But what are its benefits, collaboration strategies, and pitfalls? Let’s find out. 

Why Outsource Fintech Development

Fintech is a promising industry as its core elements like mobile banking, digital payment solutions, blockchain, and crypto-wallets affect human daily financial operations. Outsourcing fintech represents an essential option to boost the effectiveness of the aforementioned digital solutions as the involved third party can reduce the operational load and impact the development process considerably. 

But what makes outsourcing strategy so attractive for fintech organizations? Here are the following benefits a business owner can consider when thinking about whether to hire or not hire an outsourcing team:

Cost Reduction

This benefit relates to the aspects of labor costs, workplace space, and paid working hours.

From the labor cost perspective, the organization can hire an outsourcing team to complete its project, which will significantly decrease the need to maintain in-house teams as it does not focus on the salary payment method and excludes the need for corporate gifts, training, and medical compensation. 

The hired team does not require a workplace space, meaning remote cooperation can complete the project without additional investment into office rent. 

Finally, outsourcing can benefit small businesses or entrepreneurs when they cannot afford a full, narrowly specialized IT department. Focusing on the monthly subscription basis, the third party can run the digital processes and cover technological optimization of the organization’s services in the long run. 

Access to Global Talent

Outsourcing is an excellent strategy for integrating an international team of specialists into the project development, considering the latest US fluctuation in the IT market. According to the research from Statista, 20.8% of the respondent organizations struggle with hiring and recruiting back-end developers in 2024. These notorious statistics, however, offer businesses and startups an option to consider hiring out-of-office international teams or single specialists who can cover the organizational requirements based on the required IT specialization. 

Focus on Core Business Functions

This benefit applies to cases when the organization already has an in-house team or needs to hire a team to cover all of its technical functions. 

In the first case, applying an outsourcing strategy can minimize the load on the in-house team by separating the workload and boosting the ultimate product development. While the in-house team focuses on its core obligations, like the maintenance, crafting new features,  and performing its current tasks, the outsourcing team can implement those new features and work on the inter-project solutions to broaden the project’s overall functionality scope. Hence, outsourcing can benefit the business organization by increasing the project’s capacity, enabling it to outperform its competitors in the global market. 

Another example of when outsourcing helps companies focus on their core business functions is when it does not have the required technical experience to control and maintain the tech functions. Statista sheds light on this problem by mentioning that more and more business organizations tend to hire Java/JavaScript specialists, while the IT market lacks talents in back-end and full-stack developers. The hired out-of-office team or specialist(s) can cover those requirements due to their experience in the narrow IT specialization. 

In the second case, outsourcing represents a win-win strategy for the organization as it can delegate its full-scale technological obligations to the hired competent team. 

Choosing the Right Outsourcing Partner

When choosing an outsource partner, the potential client may feel anxious about the vendor's insufficiency in the analysis. The client can contact the sales representatives of the potential outsourcing party, but they might not have a direct conversation with the people who will actually complete the required technical operations. For this purpose, it is essential to consider the factors below of how to choose a reliable outsourcing partner. 

Candidate’s Projects

The client can pay attention to the scope of the candidate's projects they worked on. Usually, there is a separate page named “Success Stories” or “Our projects” where the outsourcing company represents their key responsibilities, challenges, and achievements, which underline the level of competence and candidate’s reliability. 

Client Feedback

Additionally, to ensure the understanding of the operational effectiveness and deadline fit, the client can take into account client feedback on the working progress and their level of satisfaction. One of the alternative strategies is for the client to contact the organization representatives (that placed the feedback on the candidate’s website) and clarify the details about the technical expertise team and the overall impression. By analyzing the feedback of the previous client, the business representatives can formulate a general team they will potentially work with.

Expertise in Fintech 

The expertise in fintech factor is central to consider as the domains the company excels at can demonstrate the candidate’s practical competence and technical capabilities. For instance, the outsourcing specialist(s) who worked on the cryptocurrency wallet and can shift to the neobank development show versatility in an experience that enhances the partner’s reliability.  

Years of Experience

The aspect of years of experience matters because the longer the company remains on the market, the more challenges it overcomes, which proves its reliability. 

Cultural Fit

The cultural fit factor represents the candidate’s values and ethics, which is extremely important because it can neutralize potential communication conflicts and misunderstandings and contribute to seamless collaboration instead. 

Gain insights into fintech outsourcing, its models, best practices, and challenges.

Best Practices in Fintech Development Outsourcing

Please pay attention to the top-3 essential practices, adherence to which will construct a solid background of trustworthy and profound cooperation with the outsourcing partner. 

Defining Clear Objectives

Defining clear objectives implies the client’s definition of their core need and objectives to determine the potential anticipated results of the cooperation they would like to achieve. The business or startup owners should prioritize a metric they will apply to measure and evaluate the success of the progress based on the business needs. The key questions to keep in mind when choosing a metric are:

Presenting Objectives

Clarity in presenting objectives should guide the overall outsourcing progress. The key element to consider is setting expectations about the goals the client wants to achieve.

Understanding Requirements

Understanding requirements is important to ensure the maximized clarity about technical and functional specifications between the involved parties regarding the upcoming custom-tailored fintech solution.

Business analysis is extremely helpful at the aforementioned stage as the professionals have the hard skills that ensure their effective and error free understanding of the project or task requirements. Business analysts have decent knowledge in the product life cycle, as well as in identifying and handling risks. 

The aforementioned professionals are aware of the MVP principles, which enables them to easily prioritize tasks at the early stage of the project and bring valuable results to the clients, showing decency in understanding project requirements. 

Communication Expectations

Communication expectations are about setting the goals and requirements to the outsource development team and expectations in line with theirs at the start of project development.  

• Am I looking for cost reduction and improved efficiency?

• Am I looking to implement a set number of projects or qualitative technical aims that can be defined through the metrics?

• Am I looking for a robust narrow-specialized team with solid experience to improve the business operations?

Defining clear objectives and setting metrics will help the client establish clear expectations and avoid misunderstandings when starting a collaboration with the outsourcing team or specialist(s). 

Establishing Communication Protocol

Establishing communication protocols between the client and an out-of-office third party is key to reaching a maximized understanding goals and expectations, and the outsource partner’s obligations. Prior to the start of collaboration, the client should clarify the following:

• clear communication style;

• clarified time of the expected response. 

• selected communication channel(s).

The communication style takes into account the client’s preference for the interaction style (formal, informal), which will circulate over all the communication-relevant activities, like business letters, reports, or oral communication. 

The business owner and outsourcing team have to determine the time of the expected response due to the differences in time zones to ensure smooth cooperation and fit in the deadline. 

Setting Up Project Management Practices

Defining project management practices is on the outsourcing team and can benefit both parties by tracking progress and defining the tech challenges that may occur. Here is a top-3 of the effective project management practices for outsourcing:

Clarity in Roles and Responsibilities

Defining clear roles and responsibilities can help the outsourcing team to get a crystal-clear vision of the tasks requirements, budget, and time. The RACI matrix can benefit in defining roles and responsibilities.

• R stands for responsibility and implies that the right team member will be assigned with the right work. 

• A stands for accountability, which means making decisions about the task. 

• C represents consultation and implies inputs about making the final decisions. 

• I stands for information and represents regular updates about the tasks. 

Hence, when applying the RACI matrix, the outsourcing team takes complete responsibility to solve the problem of assigning the right people to the required tasks to get the work done based on the time and budget. 

Clear Deliverables

Defining a clear deliverable is effective project management mainly for the outsourcing team as it covers the elements of the client’s expectations, needs, and project requirements that enable it to craft a large piece of work or functionality titled epic. 

Progress Tracking

Progress tracking is a beneficial practice for measuring progress, task completion, and managing time. Tools like Jira or Trello ensure a centralized collaboration. Regular check-ins ensure that the project is well-established, the roles are assigned, and the work is done per the determined deadline. The client can be sure that the team lead measures the progress removes blocks in their subordinates’ work, and reports the results to the business representative. 

Regular Progress Tracking

Establishing regular progress tracking represents the systemic evaluation and analysis of the outsourcing team’s project progress. This practice promotes direct communication and reporting on the progress, challenges, and solutions. Additionally, regular process tracking identifies and adjusts issues to present the maximized transparency and consistency of the outsourcing team’s work to reach the desired outcome. 

Agile Methodology

Agile methodology is a beneficial project management practice which elucidates the interactive development or breaks the projects in small sprints lasting from 1 to 4 weeks. Clients are active participants in the progress as they provide their feedback to make the product meet its needs. The focus on deliverables underlines reporting the tangible results of the developed digital solution at the end of each sprint. 

Common Challenges and Solutions

Regardless of the analyzed benefits outsourcing presents, there are core pitfalls that should be addressed when hiring an outsourcing third party. 

Challenges 

• Cultural Mismatch

The challenge of cultural mismatches represents a diverse scope of interaction-relevant dilemmas, like different values (collectivism vs. individualism) and subordination specificity (egalitarian or collaborative).

• Time Zone Differences

The barrier of time zone differences may affect the cooperation between the parties negatively as it can cause delays in the reporting or updating on the project progress or block the outsourcing team from clarifying additional details based on the time differences. 

• Language Barrier

The language barrier is the principal problem with an outsourcing team, as it can lead to an incorrect understanding of the tasks, requirements, time for reports, etc. 

• Privacy Concerns & Data Leakage

Privacy concerns represent a crucial challenge for the client because when sharing confidential information with the outsourcing team, there is a risk of data leakage. Data leakage can occur as a result of the inconsistency in security protocols between the client and the outsourcing team, undermining an optimal protection of the client’s data. 

• Project Control Issues

Project control issue like checking the progress and identifying/resolving barriers and challenges is another issue with outsourcing as due to the time-zone differences, there might be inconsistencies in solving and reporting them to business leaders. 

Solutions/Preventive Measures

Here is the list of the potential solutions and preventive measures to the aforementioned challenges. 

• Cultural Communication Report

The preventive measure of the cultural communication report implies that the outsourcing team initiates the discussion about client-vendor expectations from the cultural communication norms. The elements of cultural communication include formal/informal style, major communication channels, and frequency of the project report submission, assuring the client with a set of interaction boundaries that reduce technical and functional misunderstandings for the outsourcing team to provide a correct digital solution aligned to the deadline.  

• Emergency Communication Specification

Prior to the start of cooperation, it is important to clarify the communication specificity in the case of emergency based on the time differences when dealing with the time zone barrier. This preventive measure can inform the involved parties about possible issues that might require urgent solutions, enabling the outsourcing team to call or text the client representative.  

• Linguistic Competence

When overcoming the language barrier, one of the key elements for the client to pay attention to is the linguistic proficiency of the candidate. A reputable outsourcing team will provide the maximized quality of English communication by clarifying all the uncertainties and offering practical solutions. 

• NDA & Corporate Accounts

The solution to the privacy concern includes signing an NDA (Non-Disclosure Agreement) to grant access only to the required information. The solution to data leakage is to create corporate accounts to transfer data from the client to the outsourcing team and vice versa, as well as to implement SSH connection by adopting single sign-on. 

• KPI

To resolve the project control issue, the KPI is applied to evaluate project performances and goals to guarantee the timely completion of the deliverables. Analysis of milestones can help the outsourcing team to identify and eliminate potential barriers and obstacles. 

Why Choose Agilie?

Selecting a custom-oriented outsourcing organization is a challenging task considering the client’s business needs of whether it is a from-scratch product development or implementing the unique app’s features previously developed by the in-house team. 

Agilie is an outsourcing organization that provides clients with time-efficient and cost-effective, and result-oriented solutions for over 14 years. 

Open-minded and aspired to excellence, our team shows enthusiasm for continuous professional evolution, which reinforces our domains of excellence: fintech; blockchain; mobile banking; and payment solutions. 

Agilie’s Outsourcing Models

Agilie stands out with the versatility in its outsourcing models, which divide into the location-based outsourcing and relationship-based outsourcing models.

Location-Based Outsourcing 

This type of outsourcing model divides into three categories: offshoring, nearshoring, and onshoring and focuses on collaboration based on the location specificity. 

Offshoring

Offshoring represents the model of collaboration when the client hires a team of experts that are far from each other geographically. In this model of cooperation, the business owner takes full control of the processes

Agilie ensures an offshoring collaboration with American clients on crafting from scratch projects and implementing digital transformative solutions to generate an additional competitive advantage for our clients. 

Nearshoring 

Nearshoring is an outsourcing model that enables clients to hire IT specialists from neighboring countries. The advantage of this model is the ability of clients and a team of experts to travel to elaborate on the details of the cooperation. 

Onshoring

Onshoring is an outsourcing model, which means that the business owner can hire a team of developers from the nearby city to elaborate on and implement various digital solutions. The benefits of this model include access to IT specialists and cultural/language fit. 

Relationship-Based Outsourcing Models

Relationship-based outsourcing models deal with the case of ownership and responsibilities between the third-party vendor and a client and how they build and maintain the duration and principles of partnership. 

Dedicated Teams 

Dedicated team is an outsourcing model applied for long-term collaboration and is beneficial for resolving the client’s crossroads of whether to hire an in-house team or prefer a financial app development outsourcing.

Agilie benefits of providing dedicated teams include cost-effectiveness, access to the tech talent pool, flexibility in the team range, which results in the improved efficiency of the project. Our company offers building cooperation with our UI/UX designers, DevOps, Front-end, and Back-end specialists, and QA professionals. 

The client can gain access to the vast IT talent specialists and preserve a full control of the progress. All our specialists are fluent in English and flexible in adaptation. 

Staff Augmentation

With the help of a staff augmentation model, Agilie addresses the client’s objective of a robust narrow-specialized team for the optimization of the working processes and solving the complex product needs. 

Staff augmentation focuses on collaboration with niche specialists for the business strategic objectives and increase in capacity. 

The strategic objective implies that Agilie can integrate niche specialists to your business to enhance your competitive advantage due to the high speed of the project completion our specialists can guarantee. 

Additionally, fluent in English, adaptable in communication, and compliant with the deadlines, our niche specialists can help you with increasing capacity, by optimizing production, which is beneficial for the high season.

Project-Based Outsourcing

The project-based outsourcing model is beneficial, to preserve the management resources of the business organization. This outsourcing model mostly suits those companies that lack in-house team. 

Nevertheless, project-based outsourcing provides the client with little control over the third party team. Project-based outsourcing accelerates the project development, which ensures maximized productivity, which enhances its overall competitive advantage on the market.

Gain insights into Agilie’s software development services.

Conclusion

Outsourcing is a beneficial practice for fintech business owners who aspire to save financial input and ensure the maximized efficiency of the project outcomes. The identified model of cooperation resolves the issue of hiring talented niche specialists by offering flexible and adaptable narrow-specialized teams to solve the issues with the speed of the project development and its effectiveness. Selecting Agilie as an outsourcing partner can bring you the strategic advantages of flexibility, complete control, and timely project submission to make your project stand out. Intrigued? Contact us in the form below.

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