Financial Software Development Could Be Like Digital Lego

By Ionela Barbuta

Financial software development is changing

Software today is a big game of online Lego. Everyone integrates or disappears from the game board.

When trying to understand where a market will be in 10 years, there are simple things that make sense and others that are very risky to venture. As we are actively involved in financial software development, we tried to look at various angles and this one particular combination caught our attention: business software and FinTech.

There are two important things to consider when looking at the future of financial technology and how API’s play an ever increasing role:

Fintech fragmentation + Citizen Developer

FinTech fragmentation

FinTech is a prolific industry, regardless of the tough regulations market. It has generated more than 17 categories according to and it is responsible for more than 1000 companies being created in the last years.

Looking at this segmentation, you’ll find anything from highly niched areas as financial research tools or equity investment platforms, to broader areas as payments or business tools.

What drives attention is the specialization and vertical drive that each segment takes. While there are a number of companies building more generic products and services, there is a clear path towards breaking the financial industry into small segments, decentralizing it and basically rebuilding and innovating each segment at a time.

This scenario is great for generating a dynamic sector, especially in consumer-focused applications. But what about the business segments?

Small businesses are accustomed to fragmentation and can even draw value from it because their internal processes are simple; decisions are made more easily and the overall mindset allows for the organization to use multiple platforms and integrations efficiently.

Medium and large enterprises, on the other hand, have a different requirement set, and building using their own financial software development many times makes sense.

Let’s consider a medium financial organization looking at creating a digital infrastructure for their business using Cloud solutions.

The first brain teaser is the fragmentation – the more sophisticated the need, the harder it is to create a simple solution for it. Let’s suppose this company is looking to offer a new service with the following characteristic:

  • Clients can easily transfer money online into their investment portfolio;
  • Employees can offer clients a crowdfunding option for splitting a larger trade;
  • Employees have access to an investment tool that offers automation features;
  • Both clients and employees need access to the latest investment information;
  • The entire service operates as a separate division, having their own accounting and reporting procedures, as incoming transactions frequency is much higher than normal, while the transaction value is much lower.

Without disregarding the companies that might offer such tools, an option is to setup a combination of players from different FinTech segments.

A possible solution could look like this: Braintree as a payment solution and Tilt as an enterprise crowdfunding platform. Wealthfront could be the investment automation tool while Stocktwits and Seeking Alpha could fill in the investment news and financial market research area. Finally, Xero could connect to the bank accounts setup for this division and handle the back office management.

As the division grows, the company will struggle to manage the data across platforms and might even bring in a data management solution, or at least a visualizer like Tableu.

While statistics are not as easy to come by on this topic, this Quora thread sheds a grim light on the numbers. Respondents range the number of SaaS solutions on 17, 30 or even 53 per company. The bottom line, anything above five is already a data and operational challenge for a medium organization.

Citizen Developer

From large software companies to small startups, productized APIs are becoming the norm. The goal now is to provide other software companies or independent software developers with a way to create new custom applications, plugins or system integrations. Behind the scenes, each product hopes to increase usage and market share by exposing their feature set. For developers, feature integrations can be a simple way to increase their speed of development and time to market, or become part of a larger product ecosystem.

Beneath this market where software professionals build for other software professionals, an emerging concept is rising. One which could impact the market for business software. Gartner coined the term Citizen Developer, forecasting that this new breed of software creators will be responsible for 25% of new business applications by 2014. While it fell short on its forecast, citizen developers are a rising segment and business applications are part of their focus.

A brief overview shows that the Do-It-Yourself market for mobile apps is booming. Business News Daily is showcasing no less than fourteen best app makers. These applications use simple integrations (at best) and are mainly used to create isolated and limited featured applications.

Trackvia went further and defined nine areas for a successful Citizen Developer model. They understood that as a new trend is forming, a definition and guideline for the model needs to be in place to shape the market.

Source: trackvia

While all nine play an important role, the Zero Code and Connected ones stand out in relationship to an API discussion.

Citizen developers will be responsible for the creation of new applications and business models, by using the existing solutions and building on top of them, through a mix-and-match scenario. Building applications by connecting systems together and adding new functions or behaviors on top of those (through a Zero Code concept) is in itself a promising value proposition. Scale and Platform would also play an important role in enterprise level applications built by Citizen Developers.

Fintech and Citizen Developers

By connecting the dots between financial technology fragmentation and citizen developers, we can envision the rise of Fintech Citizen Developers, at some point within the next decade. We can expect businesses to regroup the segments and create new financial software and models by reusing  existing, highly specialized solutions.

It makes sense to use the top software available just as it makes sense to customize and integrate all these platforms into solutions that act as a custom made software. Fintech is well positioned in the API market as we showed in one of our previous articles, coming in only second when it comes to integration availability.

The market for financial software development is opening up to everyone. Blockchain is a revolution, Omnichannel is transforming how financial institutions are interacting and wearable devices are slowly embedding more payment capacity than credit cards. Considering the high level of APIs available, will Citizen Developers not play their part within the next years in this radical transformation we see in Fintech?

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