Nick JonasAs new technologies start to generate new tools, they also constantly create new opportunities. This has been the case for generations of traders throughout history. Unsurprisingly, therefore, with the crypto boom and widespread automation of the past half decade, even the most conservative investors have slowly begun to turn their heads. Similarly, many fintech entrepreneurs are trying to harness this growing demand by creating new software solutions, often partnering with web development service companies. This is just as well, as these technologies present a plethora of potential applications for modern IT.
Different Types of Fintech Tools
Considering factors such as initial investments, the expected time to market and return on investment, the most popular fintech solutions will typically fall into the categories below:
- Tools to make money (e.g. cryptocurrency exchange platforms, or DEX)
- Tools to help make money (e.g. automated trading platforms)
In essence, both groups are usually complex web applications. Yet as their tech stacks evolve with every year, with more and more capital being funnelled into the cryptocurrency and NFT markets, the first group continues to revolve around blockchain and smart contracts, whilst the second one edges ever more slightly towards Artificial Intelligence, Machine Learning and Data Analysis.
Of course, the realm of fintech is a lot more expansive, but these are currently the most popular types of bespoke solutions. As the market continues to evolve, however, the availability of both pre-built components and ready-made products should substantially increase over time. Nevertheless, many entrepreneurs and companies might still prefer to build their own products from scratch — either due to the price vs ROI ratio or because they have dreamt up a number of original concepts, which as of yet have not been automated.
But is this really all as complicated as it sounds?
The Pre-Built Option
Beyond traditional Forex platforms, with the success of numerous crypto exchanges including Crypto.com, Kucoin and Binance, many companies are hoping to hop aboard the irresistible fintech hype train. The easiest way to do so is by licensing white-label software. Nevertheless, while this remains a popular option for companies seeking short-term results, it is certainly not the only path to follow. After all, many companies will not be satisfied with such a generic approach dictated by open platforms, while others might be seriously concerned about the security of openly available source code. As a result, a proprietary solution might present a much more enticing offer.
The Bespoke Alternative
On the other hand, building a bespoke DEX platform from scratch, for instance, would be nothing short of an ambitious project. This is primarily because at its very core, a DEX is a highly complex piece of software, so the total time to create this fintech app might take your software team 32 weeks (assuming three developers are working on the project).
However, this would only be the start of your journey, as the total cost to create a reliable exchange platform might eventually run in the hundreds of thousands of dollars. Yet by cleverly employing pre-built components and partnering with developers who know exactly what they are doing, these expenses can be greatly reduced.
The Challenges of Building a DEX Platform
In a nutshell, crypto exchange platforms are composed of up to four fundamental modules:
a) The trading engine (which calculates balances, executes transactions and matches buy & sell activity within the application)
b) The wallet (securely stores the user’s assets and deposits)
c) The user interface (self-explanatory)
d) The admin console (helps with various operations including trading fees, managing listings, adding or removing currencies, support issues and more).
As a result of this inherent complexity, creating such a fintech solution calls for a thorough understanding of the fintech market, including its principles, security requirements and standards. We are talking about niche expertise here, which is not yet available among a majority of software vendors. Consequently, some companies are likely to struggle with the ins and outs of developing trading software, at least to the desired standard. So just make sure you have enough confidence in your future supplier.
In the end, no matter what approach your company decides to take, your ultimate goal should be to launch the solution as quickly as possible and start to profit from the exchange transactions, as this is purely a money-making endeavour.
Trading On Steroids
Bots and trading terminals, however, are a whole other ball game altogether, as they are not only somewhat less self-sufficient, but are currently seen as supplementary tools. Both are used in high-risk investment to perform intelligent computational transactions, which are based on pre-established algorithms. In this way, they aim to replace human beings as much as possible.
Bear in mind that because these algorithms are often proprietary (read: confidential), there are not as many ready-made solutions that are available to prospective clients. In fact, many trading platforms today may create and provide their proprietary tools but only enable access to their own APIs after putting your company through an extensive approval process. Thus, if your company wanted to automate your own trading strategy, the existing solutions may not currently allow this. This is why bespoke web development is still so prevalent in this realm of fintech.
The Challenges of Building a Trading Terminal
Nevertheless, despite becoming increasingly attractive – as popular platforms like Interactive Brokers are, to put it bluntly, anything but affordable – building a trading terminal from scratch today is also not without its fundamental challenges.
1. Limited financial expertise
First, as with DEX platforms, most developers will have limited experience with trading solutions and terminals in particular, which in practice means you cannot simply request a terminal from a software vendor and expect it to be quickly delivered.
2. The problem of data visualisation
While developers can usually rely on the ubiquity of third-party components, when dealing with price charts and data visualisation options, the fintech industry is undeniably lacking. This isn’t to say that you cannot utilise any TradingView tools in your software, but it would mean that you would have to obtain a licence and would be barred from modifying them at will.
3. The web vs desktop decision
Finally, when deciding to develop trading terminal software, one of the most important questions you can ask yourself is whether you’d like to build its user interface for the desktop or the web. This is because both options come with their own unique advantages and disadvantages. If you would like to create a trading platform with a web-based UI, for instance, not all web browsers will be optimised to handle it. Similarly, when building a desktop trading terminal, be aware that there will be compatibility issues for different OSes, so you might potentially have to stick to a single operating system.
Thankfully, with a knowledgeable team of software developers by your side, you can take inspiration from the greatest success stories and build the fintech platform that is right for your company.
