The open nature of fintech is a sharp break with traditional financial services. Where incumbents have complex legacy IT systems – often developed over decades – new fintech companies are small and nimble, using open services to build their applications.
As consumers have continued to embrace digitization in all aspects of their lives, they are driving the digitalization of the financial services they use, with payments leading the way.
The open technologies on which fintech services are based are new and reflect the new era of financial services in the hands of consumers.
“Fintech companies are emerging not only as important players in the industry, but also as the benchmark for financial services,” says Ernst & Young in its Fintech Adoption Index.
Blockchain is a central technology on which many fintech services have been built, especially in the P2P payment space. AI, big data and the cloud are all essential components of the services with which fintech companies innovate. With open APIs and intuitive user interfaces, these technologies form a new toolbox that every startup, in particular, is leveraging.
APIs have clearly had the most impact on the burgeoning fintech industry. Indeed, without them, these services could not exist. The API economy has grown since the inception of the Internet. Today, companies regularly develop APIs as a product to help businesses connect to their services.
“In today’s world, where demand is pervasive and AI is at the center of how we interact with our products, customers want the same user experience in all aspects of their lives,” says Ajay Vij, Senior Vice President of Financial Services at Infosys.
“Startups capable of taking advantage of technologies such as these; those built from the ground up in today’s mobile-centric world, are often able to serve their customers better through technology, whether it’s predictive customer support in the app, machine learning-based product recommendations, or a true omnichannel presence across all their devices. “
For companies in the fintech space, the diverse range of APIs and other technologies allows them to tap into niche markets with highly targeted applications. The most innovative applications now also combine APIs from multiple sources with data, which is then analyzed with AI technology.
The real winners here are consumers who now have a rich landscape of financial applications to choose from to meet their exact needs.
Nuts and bolts
With many of the major fintech services built on the same technologies, this creates a culture of easy switching between applications, which has become very popular with early fintech users. Users want frictionless financial services that work together seamlessly or allow easy and secure switching.
They also tend to be platform independent, moving with trends or via cultural popularity on their social media networks. A good example is the rise of the sharing economy which is supported by mobile apps that use fintech services to make reservations and accept payments.
The reason fintech apps are so powerful is that they are all built on well-understood open source tools and frameworks. The back-end used by fintech services is invariably built using Java with Spring Framework, praised for its excellent security features. Other options exist, including SDK.finance and .Net.
When it comes to building fintech apps themselves, a lot of effort goes into UI development. This is vital, as users have been exposed to thousands of apps over the past few years and expect a highly professional design that works seamlessly – a poorly designed or optimized app will never inspire the confidence to manage a user’s personal finances.
When it comes to full stacks, LAMP (Linux, Apache, MySQL and PHP, Perl or Python) is one of the most commonly used in fintech development, although new stacks are constantly being introduced – notably MEAN (MongoDB, ExpressJS , AngularJS and NodeJS).
When it comes to hosting finished applications, most businesses turn to Amazon Web Services. A popular service is Amazon Neptune, a fully managed graph database designed to run applications that rely on connected datasets, such as those in fintech. Of course, Microsoft Azure, and to a lesser extent Google Cloud, are also popular choices given the size of their reach.
Monzo is one of many disruptive startups offering mobile-only banking
The fundamental difference between traditional IT supported by financial service providers and the booming fintech solutions is the agility of the latter in the market.
Companies with existing IT investments will have evolved their systems over time, often with acquisitions. Modern fintech services do not have this rigid infrastructure, but rather are anchored in open systems on secure cloud services.
It says a lot about how the technologies that fintech is built on relate directly to their target user groups. Associate fintech with the developing Open Banking initiative and you have a rich development space where fintech can thrive, as it meets the often specific needs of small groups.
“Applications will certainly play a growing role in the financial world,” says Jo Howes, chief commercial officer at Crealogix. “Just look at the success of the mobile-only challenger banks like Revolution, Monzo, and Starling to understand the potential that has been relatively unexplored by the big established banks.
She adds that the implementation of Open bank As a result, regulations at the start of this year are expected to “lead to an explosion of fintech applications”.
Abhijit Deb, head of banking and financial services at Cognizant, says fintech apps are likely to become as important to banking as Facebook is to social media.
“We’re moving towards two billion people using mobile banking apps,” Deb says. “Therefore, as we increasingly use smartphones and store our financial data on them, as well as Open Banking initiatives creating disruption opportunities, future banks are starting to rely on these applications and evolve to create new ways of doing business.
“It is likely that fintech applications will be part of the banking world just like Facebook, Google, Instagram are part of people’s daily lives. “
LivePerson’s research found that nearly half of Gen Z respondents (born mid-1990s) (43.2%) said they believed big tech companies like Amazon, Facebook, and Google could replace banks in the future. If given a choice, 28.6% of Millennials surveyed would choose Amazon or Google as their bank over their current bank.
Dan Harvey, developer at digital innovation consultancy Futurice, says our interactions with fintech services are likely to become “almost completely transparent.”
“The increasingly impressive advancements in speech recognition, along with advancements in natural language processing and chatbot technology, mean that interacting with these services will not feel like using a computer at all. computer (or phone). “
The impact that fintech could have on the way we all manage and spend our money, and on the way companies offer payment and other financial services seems set to change recklessly. The rich development environment that fintech enjoys is a perfect storm of open architectures and a fertile API economy.