Talent Gap: Outsourcing SWD, CX, and Back-office in Fintech
- By Florentin Lenoir, Infinit-O
- July 18, 2023
The fintech industry is disrupting traditional financial services through innovative solutions driven by software engineering (SWD), customer experience (CX), and Back-office (BO). However, a significant talent gap in these services within fintech hinders growth.
Research predicts a 4.3 million skilled tech workers shortage, including fintech, by 2030. To overcome this challenge, forward-thinking fintech companies outsource as a strategic solution to foster innovation and address talent scarcity.
The Growing Demand for SWD in Fintech
Changing customer expectations and technological improvements drive the fintech sector's fast expansion. Software engineering is essential for fintech businesses to develop cutting-edge products like blockchain systems, robo-advisors, peer-to-peer lending platforms, and mobile payment apps. These systems offer safe, scalable, and user-focused interactions.
A survey projects the fintech market to reach USD492.81 billion by 2028, reflecting a CAGR of 16.8%. This exponential growth highlights the need for skilled software engineers to drive innovation in the fintech industry.
Software engineering is crucial in addressing challenges and delivering transformative solutions in finance. It makes it possible to create:
● Sophisticated algorithms
● Strong security protocols
● Frictionless user interfaces
● Scalable infrastructures
Software engineers' skills are used by fintech businesses to traverse the complexity of the sector since they are aware of the importance of software engineering in determining the future of finance.
The Importance of Technology-driven CX and BO Services in Fintech
Customer Experience (CX) and Back-office (BO) services are paramount in the rapidly evolving Fintech industry. As the Fintech landscape becomes increasingly competitive, the differentiator often lies in delivering superior, seamless, and personalized customer experiences. Today's tech-savvy customers demand instant, reliable, and round-the-clock services, necessitating Fintech firms to deploy AI-driven customer support, intuitive UX/UI designs, and real-time analytics to gain insightful customer behavior patterns. This heightens customer satisfaction and loyalty and opens avenues for cross-selling and upselling, contributing to revenue enhancement.
Simultaneously, BO services also play a critical role, acting as the operational engine of any Fintech establishment. Efficient BO operations ensure streamlined process management, from regulatory compliance and risk management to financial control and reporting.
Specific back-office services such as identity verification and fraud investigation are critical in maintaining the integrity and trustworthiness of Fintech firms, ensuring adherence to stringent regulatory standards, and mitigating potential risks. On the other hand, efficient data entry and human resource management contribute to streamlined workflow processes and optimal resource utilization, respectively.
In addition, applying advanced technologies like Robotic Process Automation (RPA), Machine Learning (ML), and Blockchain in BO processes can drive operational efficiencies, cost savings, and improved accuracy, ensuring the robustness of the overall ecosystem. Hence, striking a perfect blend of enhanced CX and efficient BO services is pivotal for Fintech firms to thrive in this dynamic environment.
The Talent Gap Challenge in Fintech
The demand for top SWD, CX, and BO talent in the fintech industry surpasses the available supply, creating intense competition among startups and established firms. Attracting and retaining skilled talent is crucial for fintech leaders to drive innovation and avoid lagging behind competitors.
The complexity of fintech compounds the talent gap challenge, requiring professionals with expertise in finance, compliance, and regulations.
Fintech organizations must find excellent talent with technical skills and a deep understanding of financial systems, data privacy, security protocols, and compliance.
Despite salary budget increases, filling key roles remains a struggle, with a 13% voluntary attrition rate in the U.S. These statistics emphasize the urgent need for effective strategies to attract and retain software engineers in the fintech sector.
Benefits of Outsourcing SWD, CX, and BO Operations in Fintech
● Excellent Talent: Outsourcing SWD, CX, and BO operations in the fintech industry provides significant advantages in addressing the talent gap and driving success. One key benefit is accessing a global talent pool, enabling organizations to acquire specialized skills and knowledge unavailable locally. This allows fintech companies to create groundbreaking solutions and push the boundaries of innovation by collaborating with software developers from diverse backgrounds.
● Cost Effectiveness: Outsourcing software engineering in the fintech industry brings cost advantages and flexibility in scaling development teams. Hiring full-time employees can be expensive, with costs per hire exceeding three to four times compensation. To compete for qualified talent, companies must offer high remuneration, including wages, incentives, and benefits, increasing expenses. Outsourcing provides a cost-effective and scalable alternative. By partnering with external providers for SWD, CX, and BO tasks, fintech organizations optimize resource allocation and allocate funds to other areas of growth and development.
● Turnaround Time: Time-to-market is also a concern in the dynamic fintech landscape, and outsourcing SWD, CX, and BO plays a pivotal role in expediting product and service deployment. By leveraging the expertise of outsourcing partners, fintech organizations can accelerate the development cycle, circumventing protracted recruitment processes and lengthy onboarding periods. This acceleration empowers companies to seize market opportunities promptly, positioning themselves at the forefront of industry trends. In an environment where innovation sets the pace, the ability to expedite time-to-market can make a substantial difference in achieving market leadership.
Overcoming Challenges and Mitigating Risks
While outsourcing SWD, CX, and BO offers numerous benefits, addressing the associated challenges and mitigating potential risks for successful partnerships are crucial. The key lies in identifying the right outsourcing partner with specialized expertise in the fintech domain. Fintech companies should seek outsourcing providers who deeply understand the industry's unique requirements, including finance, compliance, and regulations. This expertise ensures that the outsourced teams can develop solutions that align with the specific needs of the fintech company and adhere to industry standards.
1. Strong Internal and External Communication
Strong cooperation and communication between internal and external teams are crucial for successful outcomes. To achieve seamless integration and excellent project execution, fintech businesses should set up efficient communication channels, regular meetings, and open reporting procedures. The delivery of high-quality solutions is ensured by the collaborative approach, which makes sure that the outsourced teams have a thorough awareness of the needs, priorities, and goals of the fintech organization.
2. Data Security and Privacy
Another crucial component of outsourcing SWD, CX, and BO operations in the fintech sector is addressing data security and privacy issues. Information privacy is important since fintech businesses work with sensitive financial data. When choosing an outsourcing partner, it is vital to consider strong data protection measures, non-disclosure agreements, and industry compliance. Extensive due diligence should be carried out to evaluate the partner's security practices and confirm that sufficient safeguards are in effect to protect sensitive information.
3. Leveraging Different Time-zones
Effectively managing cultural and time zone differences in distributed teams requires proactive measures. Fintech companies should establish a robust project management framework that considers the outsourced teams' diverse backgrounds and time zone variations. This includes implementing effective coordination strategies, maintaining regular communication channels, and utilizing collaborative tools to mitigate challenges associated with distributed teams. By fostering a cohesive working environment, fintech companies can leverage the diverse expertise of their outsourced teams while minimizing potential hurdles.
Future Outlook and Trends
As the industry continues to evolve, a futuristic trend may emerge, offshoring. Fintech companies may increasingly opt to outsource SWD, CX, and BO to countries that offer cost-effectiveness and similar cultural environments. This strategic shift enables enhanced collaboration, minimizes communication challenges, and cultivates closer working relationships between the fintech company and the outsourcing partner. In a continually changing sector, offshoring promotes seamless collaboration and accelerates the speed of innovation.
In the future, the financial sector will continue to lead technological breakthroughs. Blockchain, AI, and the Internet of Things (IoT) are expected to see an increase in financial transactions by 2023–2024. Automation and integration will advance to unprecedented degrees of complexity, revolutionizing the delivery of financial services. This change will give customers access to highly customized services suited to their specific needs, resulting in a more personalized and seamless user experience.
In conclusion, the talent gap in fintech SWD, CX, and BO poses a significant challenge. However, strategic outsourcing of these operations provides a compelling solution, offering access to a global talent pool, cost advantages, and faster time-to-market.
Fintech companies can overcome these challenges by prioritizing effective communication, domain expertise, and robust security measures. Embracing specialized knowledge and industry best practices, the sector can survive and thrive amidst increasing digital demands. Looking ahead, breakthrough technologies and evolving outsourcing patterns will continue to drive the fintech sector forward, paving the way for success in an industry defined by boundless innovation.
Florentin Lenoir, the vice president of people operations and transformation at Infinit-O, wrote this article.
The views and opinions expressed in this article are those of the author and do not necessarily reflect those of CDOTrends. Image credit: iStockphoto/VectorUp