10 min read

Strategic Outsourcing: A Professional Guide to Fintech Software Development in Challenging Economic Climates

More than half of finance companies outsource their software development projects. Why is outsourcing in fintech so popular and is it worth trying? In this article, we analyzed trends in fintech outsourcing on the example of Swiss companies, broke down outsourcing costs, and identified the key factors for choosing the right tech partner.
Written by
Mahira Chahine
Published on
December 27, 2023
Read time
10 min read

In the face of global economic turmoil, marked by rising interest rates, persistent inflation, and ongoing supply chain disruptions, businesses face the challenge of staying competitive and afloat. Financial technology (fintech) has become increasingly vital in this climate, revolutionizing how companies manage their processes and customer interactions. With rapid technological advancements, the trend towards outsourcing fintech software development is gaining traction as a strategic response to these challenges, offering a seamless path to embrace digital innovation. Let’s look at this tendency in more detail.

Why do tech companies choose to outsource?

Various statistics and forecasts indicate the rapid growth of fintech software development outsourcing. According to a recent report by Accelerance, a staggering 64% of technology leaders in finance have adopted outsourcing. Forrester’s predictions align with this trend, suggesting a surge in outsourcing, particularly in fintech solutions and fintech app development, as companies seek to mitigate financial uncertainties and capitalize on technological advancements.

Such a shift towards outsourcing is fueled by several key benefits:

  • Cost reduction: Outsourcing helps manage expenses effectively, particularly in an industry with tight margins like fintech.
  • Rapid adaptation and flexibility: The dynamic nature of fintech requires quick adaptation and scaling, which outsourcing addresses effectively.
  • Access to specialized expertise: Fintech’s complex technologies often require specific skills that in-house teams might lack. Outsourcing allows you to tap into a global talent pool and get the right experts fast.
  • Speed to market: Accelerating development cycles through outsourcing is very beneficial, especially in an industry reliant on innovation and rapid technological shifts.
  • Mitigating developer turnover: Outsourcing provides stability and continuity, mitigating the challenge of developer turnover, which continues in the tech industry.
  • Enhanced employee satisfaction and productivity: By relieving internal teams from extra workload, outsourcing allows them to focus on core competencies and strategic initiatives, enhancing job satisfaction and overall productivity.

Fintech outsourcing in the Swiss market: Trends and innovations

Swiss companies are increasingly adopting fintech outsourcing for digital transformation. For example, our company Modeso, a key player in the Swiss fintech outsourcing market, has driven innovation in sectors such as asset management, payment systems, financial reporting, and insurance through our expertise in custom software development and robust API integrations.

Here is a brief overview of our financial technology projects:

Client Project Delivered
Albin Kistler Advanced research database with robust API integrations, enhancing stock analysis capabilities for high-value portfolios.
TWINT Multiple products that expand the TWINT's ecosystem, including a digital voucher marketplace, a platform where multiple merchants can offer special deals and a location-based application that empowers users to discover TWINT-compatible points of sale on a map. These projects showcase our expertise in embedded finance solutions.
Aumico Cloud-based applications for financial reporting, simplifying annual report creation for SMEs, fiduciaries, and auditors.
Würth Financial Services Platform connecting insurance products with TWINT's user network, illustrating our skills in API integration and e-commerce solutions.
Visana Internal productivity tool using gamification for customer engagement within the insurance sector.
Blackhawk Network Establishment of an eGift Card shop for Lidl Schweiz. This project demonstrates our expertise in creating branded payment solutions.
Rietmann und Partner Digitization of the financial auditing process, emphasizing efficiency and innovation in financial services.

To learn more about these projects, please see the case studies on our website.

Costs and considerations in fintech outsourcing

Before choosing fintech software development outsourcing, understanding the costs involved is crucial. While an in-house development team entails expenses such as  taxes, healthcare, retirement plans, and paid time off, fintech app development with external partners can help you mitigate some of these expenses.

In general, the global rates for developing fintech solutions through outsourcing vary based on several factors.

  • Location. For instance, developers in Eastern Europe, Latin America, and Southeast Asia might offer more competitive rates compared to those in North America or Western Europe. This is due to the differences in living costs and economic conditions.
  • The level of experience. Teams or individuals with more experience in fintech development can add more value to the project but typically have higher rates.
  • English proficiency level. A good command of English is important for effective communication, especially for global projects. Developers from North America, where English is the mother tongue, can charge up to $100 per hour for their services, while a developer in Eastern Europe might charge between $25 to $50 per hour.

Modeso operates from Switzerland, and while our rates may be slightly higher compared to many companies in Eastern Europe or Latin America, we deliver a superior value-to-investment ratio due to our extensive experience collaborating with leading Swiss companies and rapidly expanding startups. To obtain a preliminary estimate for your project, kindly contact us with relevant details, and we will be happy to help you.

Regarding the pricing models in fintech development outsourcing, Fixed Price and Time and Material are the most common ones.

Pricing Model Suitable for Characteristics
Fixed Price Projects with clear scopes Offers budget predictability
Time and Material Projects with changing requirements Preferred for the dynamic nature of fintech app development; accommodates evolving project needs

It’s essential to balance cost considerations with quality in fintech software development outsourcing decisions. Choosing the right partner, based on a blend of cost, experience, and communication skills is vital for the success in fintech development.

Choosing the right outsourcing partner: Nearshore vs offshore fintech app development

In the Swiss market, choosing between nearshore and offshore outsourcing partners involves considering factors like business hour alignment, travel convenience, rates, and cultural differences. Modeso, as a local partner, offers benefits like time-zone alignment, local tech product ownership, and Swiss project management, though at a higher cost compared to offshoring.

Let’s consider some key factors when it comes to selecting an external partner.

Factors to choose the right partner for a fintech software development project

Taking Modeso as an example of an outsourcing partner, here are some factors important for fintech software development, which all contribute to collaboration and project success overall:

  • Technical proficiency: As an experienced service provider, Modeso developers are proficient in modern technologies for complex fintech projects.
  • Language skills: All Modeso project managers are fluent in English and German for seamless communication. And our engineering team, located in Egypt has proficient English speaking skills.
  • Experience in software development: Modeso has over 10 years of experience in software development. We’ve built solutions for different industries, with a particular emphasis on finance.
  • Time-zone adaptability: With offices in Zurich (Switzerland), and Cairo, and Alexandria (Egypt) and Dubai (the UAE) , Modeso can manage projects across Europe efficiently.
  • Expertise in fintech: Having collaborated extensively with Switzerland’s top financial firms, the engineers at Modeso possess profound industry expertise, enabling them to adeptly address highly specific challenges within the fintech sector.
  • Cultural alignment: With headquarters in Zurich, Modeso employees understand Swiss business culture and can offer smooth collaboration.
  • Transparent pricing: As a software engineering company, Modeso offers clear and competitive pricing.
  • Region stability: Modeso operates in a region with robust infrastructure and stable international relations.
  • Reliable team: Our rigorous talent recruitment and strong retention policy ensure uninterrupted services and smooth collaboration.
  • Client success: Modeso has completed over 90 successful projects, delivering tangible and substantial business value to our partners..

Overall, Modeso excels as a fintech development partner, blending tech proficiency, cultural fit, and strategic alignment — perfect for Swiss companies seeking a reliable team. But if you’re more interested in outsourcing your fintech software development project to an offshore partner, we would like to highlight certain risks for you to be aware of.

Risks in fintech software development outsourcing to watch out for

Potential risks in outsourcing include:

  • Cultural & communication gaps: Differences in culture may cause misunderstandings and even lead to conflict situations.
  • Quality of services: Consider analyzing the company’s portfolio and reviews on platforms such as Clutch to ensure they provide quality services.
  • Data security: Security is paramount in fintech software development, so you have to make sure your future partner maintains vigilance in safeguarding your intellectual property, securing your data, and adhering to industry-specific best practices for compliance..
  • Time zone challenges: Differences in time may eventually lead to delays in task execution, which negatively affects the overall team perfomance.
  • Control & reliability: Partnering with an offshore service provider, you will have limited control over the project, and will have to trust your partner’s ability to mitigate the potential issues.
  • Hidden costs: This may include sudden expenses related to the change of scope, the additional work hours and such.
  • IP concerns: The need for auditing a potential partner is also important to mitigate the risk of intellectual property theft.

In general, if you want to successfully develop your solution with a fintech outsourcing provider and avoid the abovementioned risks, you have to rigorously vet your potential partner. Ask them to sign all the required contracts, including NDA (non-disclosure agreement) and such, and pay special attention to communication channels. Remember, awareness helps manage outsourcing effectively, especially if we’re talking about fintech outsourcing, where data security and compliance are particularly important.

Why outsource financial software development to Modeso

Modeso stands as an ideal choice for fintech outsourcing, especially in the demanding Swiss market and challenging economic landscapes. With our solid track record, comprehensive understanding of local and global market dynamics, and bespoke services crafted to suit individual client needs, Modeso transcends typical outsourcing – we’re a strategic partner committed to your success.

Acknowledging the risks in fintech software development, we prioritize clear communication, robust data security, and stringent quality controls. Our transparent and competitive pricing ensures your investment yields concrete results. Operating in a vibrant and stable region further cements our reliability, providing a sturdy base for all your outsourcing requirements.

Collaborating with Modeso means engaging with a team that’s not only skilled and experienced but also entirely devoted to realizing your vision and ensuring your success. Whether it’s leveraging fintech app development, tackling intricate financial software challenges, or driving innovation within the fintech sector, Modeso is able to transform your aspirations into tangible accomplishments. Reach out to us today, and let us power your next successful fintech venture.

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