An insider’s guide to fintech backend development
It’s hard not to be drawn in by the slick user-facing experiences, sophisticated digital wallets, and robust encryption methods of today’s fintech products. But like every great technology, these apps are only as great as the behind-the-scenes systems that support their functionality.
Frontend user experiences might be readily apparent to your customers, but make no mistake: It’s the fintech backend architecture that ensures high performance and security — and therefore, powerful customer experiences.
Moreover, fintech backend development isn’t just important for maintaining a frictionless user journey. When backends break, financial services businesses can face consequences that are even uglier than unhappy customers.
The basics of fintech backend development
Backend development handles all the server-side operations that aren't directly visible to the user but are nevertheless critical for the app’s functionality. This can include server setup and maintenance, database management, stringent data security, and API integration. (More on that last one in a bit.)
Given the weighty responsibilities of fintech backend development, it’s obvious that handling and storing financial data securely and efficiently should be front and center. That’s why, to ensure regulatory compliance and uphold data integrity in the backend infrastructure, fintech companies rely on various database technologies, which include SQL-based solutions like MySQL and PostgreSQL, as well as NoSQL databases such as MongoDB — or a combination of both.
When it comes to the best backend development platform and which tools and frameworks help streamline processes and improve performance, Vention delivery manager Michał Bobczyński says chasing shiny objects doesn’t always work.
“Of course, there are the top web backend technologies such as Python, Java, and Ruby, but which frameworks are used — and more importantly, why — will be specific to each project,” he says. “In certain cases, niche technologies like Rust and Elixir are better choices.”
So with options open-ended, what should fintechs consider when choosing their tech stack and backend languages? What is the best backend development platform?
Michał suggests comparing the scalability of candidate backend technologies and how well they handle data for reporting, analytics, and machine learning. Flexibility is another important measure, especially for fintechs that must contend with differing regulatory standards across global markets.
“This is why when choosing the best backend development platform, fintechs should look beyond their MVP or v.1.0 to where they see themselves in a few years,” Michał says. “Their fintech backend infrastructure must be ready for future growth and challenges, while also addressing their needs from day one.”
Backend integrations in fintech
We’re not saying we’re trendsetters, but we’ve built enough fintech solutions to feel confident calling ourselves trend-spotters. To wit, Michał has noticed that frontrunning startups in fintech are focused on certain backend technologies. The winners are . . .
. . . integrations!
Wait, integrations? Yes, and we’re not talking about building the next Plaid or Polygon: Backend integrations are a pivotal aspect of fintech app development that connects and interacts with other financial systems and payment services. With such a wealth of functionality, fintech startups have found fertile ground in building user-friendly ways to bring all this information together for inspection, investment advice, and predictive analytics.
Some integrations for fintech backends include APIs, which have gained traction in the financial services industry in recent years. (And having built solutions for a leading fintech API, Upvest, our teams know a thing or two about integrations for the tech.) APIs are especially useful in open banking, which permits the sharing of financial information electronically.
By integrating banking APIs into the backend of their products, fintech companies can enable access to account data, transaction details, and other banking services that elevate the overall customer experience.
Payment gateways are another common integration for fintech development projects: They handle information transfers between a payment portal and a bank or other front-end processor. Integrating with financial data providers, on the other hand, can provide access to real-time data that makes banking happen even faster.
CRM integrations also play a crucial role in fintech backend development. By seamlessly connecting customer relationship management systems with financial infrastructure, these integrations allow fintech companies to consolidate customer data from a number of sources for more efficient processes. (Our client DealCloud is a great case in point.)
Any integration requires careful planning and comprehensive implementation, in no small part because it involves sensitive financial data that requires fortress-like security. But when executed correctly, these integrations transform business with improved functionality and convenience.
Best practices for fintech development
In the realm of fintech app development, strict data protection laws and regulations, not to mention the trust of users, necessitate the highest levels of data security, so backend engineers should adhere to secure coding practices to protect against attacks. Another must: encryption for data storage and transfer.
Backend development technologies must prioritize scalability while handling large volumes of transactions and users as an app grows. From database indexing and sharding to efficient memory management, scalable design helps future-proof particular technologies.
Embrace continuous integration/continuous deployment (CI/CD)
CI/CD practices accelerate finance software development and deployment processes, while also reducing risks. Plus, automation throughout the software lifecycle helps backend engineers catch bugs early, ensure code quality, and deliver updates more quickly.
Leverage microservice architecture
In a microservices architecture, an application is built as a collection of loosely coupled services, which can be developed and scaled independently. This allows teams to work on different parts of the application simultaneously and provides better fault isolation.
Adopt API-first development
An API-first approach involves designing the API contracts before coding the application itself. The benefits? It allows frontend and backend teams to work in parallel, speeds up fintech development, and ensures the APIs are well-designed and consistent.
Fintech’s backend future
Emerging technologies such as AI, machine learning, and blockchain are increasingly finding their way into the backend of vertical-specific applications, including fintech risk assessment platforms, fraud detection systems, and decentralized finance (DeFi) solutions.
Artificial intelligence and machine learning, for instance, are leveraged for fraud detection, credit scoring, personalized financial advice, and process automation. Blockchain, on the other hand, promises to bring unprecedented levels of security, transparency, and efficiency to fintech technology.
The industry’s evolution is also accelerating the adoption of serverless and headless architectures in fintech backend development, which can speed up deployment and reduce costs. Similarly, headless architectures provide flexibility by decoupling the backend and frontend, allowing each to evolve independently.
Another significant shift in fintech backend development technologies is the move from monolithic to microservices architecture, particularly within cloud environments. This not only enhances scalability and flexibility but also makes the applications more resilient.
“Backend development is an extremely important element of every application,” Michał says, “but in fintech its importance is greater due to the financial information that flows through it, which increases the need for stronger security and transparency.”
The continued technology evolution of finance — and the emerging ways for customers to interact with finance, are set to make fintech backend development even more critical. For backend engineers, staying ahead of emerging trends and technologies is essential to building financial solutions that are not only relevant today but will pay off in the long run.