Financial Technology or FinTech outsourcing is a business strategy used by financing technology companies to hire a third-party service provider to handle the various technological operations. Outsourcing reduces the workload for a company’s in-house team and therefore is considered effective for startups and small businesses.
The Fintech market will rise to $309.98 billion by 2022, according to the Business Research Company. The startups are growing faster as the FinTech industry is advancing day by day. According to Inflexion, mobile transactions are expected to rise to 88% of all banking transactions. As with traditional banks and other financial institutions, they can’t offer that much efficiency by default. Therefore, they have also started grasping the concept of FinTech. According to Zed Founder and entrepreneur Alan Safahi, the US is the most prominent FinTech market, consisting of the largest number of startups. After the USA, comes Asian countries like China and India who made themselves familiar with the idea of FinTech.
Benefits of fintech outsourcing
Easy and efficient workflow
Most of the responsibilities are taken up by the contractors for an efficient fintech operation. They are responsible for developing, disposing, and extending technical support of your software and apps.
You don’t need to spend plenty of money to develop techs and apps from scratch. You can do so by outsourcing, which can be done at a significantly low cost.
No staff management expenses
Outsource companies select and train the staff for handling the tasks for your company. Outsourcing doesn’t only let your work done efficiently but also cuts the expenses of hiring and managing your team.
Fully professional relationship
A contract forges outsourcing partnership between the client and the company. As a client, you require to sign an agreement stating all the terms and conditions from both sides. This is to encourage a safe and secured partnership between the two.
You will only pay after seeing the results
While an in-house employee may waste a lot of time acting busy, outsourced professionals don’t. They are always focused on their goal completion. You don’t need to the contractors beforehand. You are only expected to pay them upon the final results of the task.
How outsourcing is helping fintech startups
Bigger companies tend to have in-house technology; however, in-house setups might sound a little intimidating for startups. In today’s world, spending a huge sum of money establishing and updating financial technology on regular terms seems impractical for startup businesses. That’s why outsourcing the tech needs is the fastest and cheapest method for startups. FinTech companies can use these outsourced technologies as building blocks to create their products and services. Outsourcing saves time and energy by taking off the loads that your company would have taken otherwise and developing your business.
By cutting down the cost
Outsourcing technology is cheaper than developing it in-house. As I have mentioned earlier, it’s expensive and time-consuming. You need to cover the payroll, supplier payments, computer costs, administrative and management fees, vendor payments, etc. You also need additional office space, which can be a little challenging if you have just started your business. By turning to outsource, you can easily cut down the expenditure and limit your budget. A report has shown that 59% of companies outsource technology for cutting the cost and skip the hassle of building technology from scratch. Using outsourcing technology, you can operate a lot of functions that are already built into the system.
By ensuring flexibility and scalability to the business
Flexibility is necessary for any business, and startups need it more. When you outsource the technology for your company, they make sure you get what you need to run a successful business. According to Alan, you don’t need to hire additional employees or designers to create plans or try out the new framework. The outsourcing company already has resources to assist you with everything. Speaking about scalability, FinTech startups can scale up and down to meet their goals, unlike full-time staff. A survey has been conducted that FinTech startups use 20% of outsourced tech companies for delivering innovative capabilities.
By speeding up the market time
As we know, outsourcing companies tend to contain more specialized employees and experts, which allows them to enable the service across the network. Enabling a more efficient service means speeding up the time to market. This speeding up doesn’t happen in the in-house development. A specialized outsource company consists of high quality, pre-made software like APIs, frameworks, industry-related libraries, etc. The greater your technology is, the higher your market value. The team’s wide range of expertise helps provide a better and more advanced technology than in-house ones.
Outsourcing tech solution is a smarter way of saving your money and working efficiently. That’s why most startups prefer this method to the traditional one. Outsourced technology companies help startups adapt and evolve and let them stay a step ahead of the competition.