Fintech companies have seen a massive demand and integration of digital payments across business domains. According to this report by Yahoo Finance, the global fintech industry will grow at a CAGR of 26.87% by 2026. It registered $7301.78 billion in revenue for the year 2020.
Digital payments are not the only business model that fintech companies leverage. Modern technologies have enabled them to add many new products to the catalog.
According to Statista, digital payments and neobaking are the two most significant contributors to the global fintech market. However, with the digital payment transactional value expected to reach $13,845,526 million by 2026, fintech companies need robust systems. In addition, supporting transactions on a massive scale requires a flexible system and rapid scaling.
There are many challenges fintech companies face while creating flexible and scalable systems. DevOps can be an effective solution to cope with these challenges. We will discuss the critical challenges of fintech companies and how DevOps can solve them.
Challenges of fintech companies in 2022
The fintech industry is witnessing innovations and constant changes in customer behavior. For example, Blockchain-based cryptocurrencies are witnessing rapid growth across business domains. However, blockchain differs at its core from conventional digital payment technology, and fintech companies need to adapt accordingly.
However, switching to new technology is not the only challenge; there are many others like,
Security & Compliance
Financial services facilitate transactions for millions of users. For example, the US sees more than 108.6 million credit card transactions per day. Such a high volume of transactions needs regulations to avoid data thefts.
This is why many countries have a set of regulations for fintech companies. So, if you are a fintech company operating in any of these countries, you need to ensure compliance with their rules like,
- The USA- Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency (OCC), Securities and Exchange Commission (SEC), Financial Industry Regulatory Authority (FINRA), and others.
- The UK- Prudential Regulatory Authority (PRA), Financial Conduct Authority (FCA), [fintechs must be Registered Small Payment Institution (SPI) or an Authorized Payment Institution (API)].
- Europe- European Securities and Markets Authority (ESMA), European Union’s Anti-Money Laundering Directive
Compliance with all these regulations needs advanced security measures and regular auditing of systems. However, ensuring high security, compliance, and regular audits with the constant release of new app versions becomes challenging.
Fintech companies need to have an audit plan and security strategy to overcome such challenges. They also need effective collaboration between auditing teams, QAs, development teams, project managers, etc.
It can help resolve security issues quickly and maintain compliance with regulatory requirements.
Simplified IT environment
Every fintech company has many different IT environments due to the launch of applications, products, acquisitions, and mergers. In addition, many companies partner with conventional banking partners who have technological differences in systems. This adds complexities of heterogeneous IT environments.
Here’s an example of chatbot integration to a conventional backing system. A traditional banking system may be using an on-premise data center for data management, while a chatbot may be built-in in the cloud environment. So, fintech companies need to ensure the consistency of applications across the environment. In addition, a consistent experience across chatbots and a traditional banking system need efficient API integrations.
Staying fault-tolerant
Financial services process millions of transactions every second. As a result, they need a fault-tolerant system. According to Uptime’s 2021 Data Center Survey, 60% of respondents lost more than $100,000 due to downtime. Any Fintech company can’t afford massive downtime.
A fault-tolerant system can help these companies avoid transaction failures. It also allows higher uptime along with better system stability.
Now that we have some idea about the different challenges fintech companies face let’s discuss how DevOps can help.
DevOps for fintechs: A solution to overcome challenges
DevOps is a set of practices that break the departmental siloes to improve interoperability within an organization. It is a culture that enables improved delivery speeds, better collaboration between ops and dev teams, and reduces errors.
With a properly adopted DevOps culture, you can achieve,
- Improved ROI through effective performance monitoring
- Rapid error detection and resolution
- Continuous testing environments
- Faster time-to-market
- Quicker release cycles
Better compliance
DevOps improves security and compliance through quicker releases. It allows fintech companies to rapidly adjust their security systems according to the changing regulations and cyber threats. Another critical aspect is system audit and monitoring.
DevOps enables streamlined workflows, which allow you to optimize system audits, monitoring, event logging, etc. It also helps with test automation and helps in building continuous test environments. These improvements help fintech companies test applications for vulnerabilities and have early error detection.
Fail first; learn fast.
Fintechs can use the chaos engineering approach with DevOps and build a fault-tolerant system. For instance, Capital One is one of the top US banks and one of the early cloud adopters. Capital One teams needed a fault-tolerant system, so they used chaos engineering with DevOps.
The idea behind chaos engineering is to test applications for failure. Capital one teams built a “Cloud Detour” tool to test mission-critical apps against different scenarios. Further, this approach also helped them develop a robust data recovery strategy.
Similarly, fintech companies can use DevOps culture to develop a fault-tolerant and resilient system. It is a fail-first learn fast approach where applications are tested for failure, making quick adjustments accordingly.
Consistency improvements
DevOps allows you to simplify and standardize IT environments through streamlined processes. It also enables teams working across IT environments to collaborate seamlessly. As a result, fintech companies can leverage multi-cloud, public, and private cloud environments without compromising on performance with DevOps culture.
With the introduction of DevOps, fintech companies can push product versions rapidly across IT environments. The focus is on constant improvements and a shorter feedback loop. This will enable fintech companies to have consistent user experience across IT environments.
Conclusion
DevOps is not just about hiring a team of DevOps engineers but an organizational shift of culture, processes, and workflows. Fintech companies can leverage DevOps to streamline operations and improve systems security.
In addition, DevOps enables high availability and enhanced user experience. So, if you are a fintech company looking to overcome different challenges, DevOps can be the answer!
