Fintech Trends – How do Ukrainian IT Specialists Influence on Restart of the World Financial System

IT Cluster IT Cluster

“Digital technologies have rapidly expanded all over the world, and now we have a prospect to speed up the procurement of digital dividends”, “technological development and increased interest from new players lead to fundamental re-design of processes and business models in financial industry’. these statements are available at FinTech and Financial Inclusion by World Bank Group.

There are some major studies, which are going to prove fundamental changes in world financial system and its technological items.  Among them are BCG: FinTech in Capital Markets, McKinsey Report: Bracing for seven critical changes as FinTech matures, BCG White Paper: FinTech in Capital Markets: a Land of Opportunities, and many others. Analysts cite figures, diagrams, tables, and build hypotheses.

But how do IT experts see the financial services’ transformation while putting the changes into life? And even more, who are these people, and do they live in Ukraine?

Certainly, Fintech as a global trend has originated in the West. It has been and mainly remains the product of startups, software companies which contain non-standard ideas and innovations. Fintech sets to the users rapid and convenient services – cryptocurrencies, instant online payment systems, online money transfers and many other things.

But it’s far from all startups that can succeed. A great number of them die beaten by the competition, while service IT companies with their experience and resources do the job in a sustained way. According to research data of IT UKRAINE: IT Services and Software R&D in Europe’s Rising Tech Nation, in 2016 Ukraine contained more than 1000 service companies and more than 100 multinational R&D offices. These rates are gradually growing.

Many in-house developers do have an expertise in Fintech. Ukrainian and particularly Kharkiv companies work for major players from America, Europe, Middle East, Asia, and Australia. Our developers are often not able to name their clients and don’t reveal specific features of their projects. Nevertheless, we managed to find out some details.

“In one of the countries we work with there exists a governmental system operating with statistic data. It provides with information banking institutions. But its current information delivery is inconvenient. Roughly speaking, one should take some data and then spend much time to process and visualise it for getting the conclusions needed. We participated in a project that was by nature a production of the service taking the data, processing it in its own special way, preparing user-friendly reports and giving them for banks to operate”, – noted Anton Borysov, Marketing Director AltexSoft.

“We focus on implementation of private cloud infrastructures for our clients. Our main task is helping customers to migrate into ‘private clouds’, building the Mirantis Cloud Platform on the base of the open source and our software solution. In terms of Fintech we have got some clients in banking and financial sectors. They are the large banks ranking among TOP of American and global financial markets. In spite of the cases could be different, our customers migrate into cloud generally for reducing operational costs. That allows them to concentrate on business tasks. And our platform would automatically perform for them typical IT tasks, such as application deployment, setting up the apps, their scaling, and so on. As for instance, one of our clients has got a payment system. Its load demand grows exponentially durind  the period of Christmas bargain-sales. Due to the “cloud” our customer can dynamically scale the infrastructure for uninterrupted payment processing”, – said Dmitriy Andrushko, Mirantis.

Service companies have different extents and working models. Somewhere staffing level acquires a few hundred of people, somewhere it is about a few dozens. Here are both solely Ukrainian based companies, and multinational R&D offices where Ukrainian developers work. Some medium- and small-sized companies cooperate with startups.

“Fintech startups often come to us. They have original ideas, but can’t really understand how to embody them. We usually deal with former staff members of banks and other financial organisations, who decide to make their own product. Basically they’ve got nothing except an idea, it’s also meant a lack of money. They have to build a minimum product to show it investors and to raise funds for the further development. Frequently these are one or two people who want to launch their own platform. We also have another type of customers – big accomplished organizations that have their well-established “traditional” business. These may be both financial institutions, and financial customers, for example, building companies. I think they see the world changing and want to implement digital solutions to optimize and augment their main activities”, – mentioned Konstantin Boyko, CEO JustCoded.

This several cases reveal us that service companies play an unordinary role in Fintech industry. Their top managers communicate with both large-scale financial institutions, and startups. That is to say, service companies are responsible for great and laborious task – writing the code of Fintech services, developing functional solutions, testing and adopting new systems for the software that is in use. May be, that’s why service companies see the picture of changes in financial world substantially and profoundly. Cause they know it up inside.

“At the one side of Fintech we have startups – modest-sized, flexible and agile companies which can quickly create a product and swiftly possess a piece of market. At the other side of Fintech we see large-scale financial institutions, Investment Banks, Commercial Banks, Trading Platforms, Insurance Companies, International Corporations. But they look like antiquated, slowly create and adopt innovations. They have got the established IT infrastructure, which they maintain and develop. But it takes a lot of time, because of their large dimensions. Herewith, large companies have financial resources. They win due to their funds, but loose on account of innovations”, – commented Vasyl Soloshchuk, CEO and Co-Founder at INSART.

Economists also talk about unwieldiness and immobility of banks and large financial companies. At the same time, experts mention: over the past few years two global communities (financial institutions and startups) started to move towards each other.

“I visited many Fintech conferences, including the USA ones. I see that for the last few years banks started to communicate with startups much more. Previously banks had been not so interested in financial startups.

Furthermore, banks gradually initiate distinct Innovation Departments. As for instance, Wells Fargo in San-Francisco launched an Innovation Department, and it doesn’t depend on IT Department. It’s a kind of sandbox, where new technologies for the financial market are incubated. For example, they even try to apply VR and AR technologies for improving the user experience of bank’s customers. Now banks are mainly interested in such topics as mobile and digital banking, blockchain, wealth management, robo-advisors, cross border payments, big data analytics, online security, fraud detection and prevention, compliance with local and international regulations», – shared his thoughts and observations Vasyl Soloshchuk.

In 2016 we could find on the web studies proving that Fintech Boom started to decrease. For example, KPMG и CB Insights published research ‘Pulse of Fintech’. Experts argue that in 2016 the number of investments in Fintech was less, than at the same period in 2015. While the year 2015 was notable for rising investments in Fintech. But despite the certain decline, innovative financial technologies are still interesting to the world, and carry within them a great perspective. It could be said that we see the trend become stable.

Does it mean that the role and tasks of service IT companies would change in the near future? May be, yes. In Western media they actively discuss the digital transformation of financial services and banks moving to Digital Banking and Digital Enterprise strategies.

So, there is quite enough job in Fintech. Some Ukrainian IT companies do see their future in Fintech business-domain. They shape specialized teams that work with financial sector clients only.

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