Financial services companies must modernize their software infrastructure to survive and thrive. Software development is no longer a support function but the core engine of competitive advantage in financial services. Companies that embrace modern technologies (AI, cloud, APIs) and practices (Agile, DevOps) will reduce costs, improve customer experience, and outpace competitors.
The article is based on the financial software development portfolio of a custom software development company, Belitsoft. This firm has been building reliable financial solutions for EU, UK and US clients since 2014. They follow the best practices while developing banking and finance systems, web and mobile applications. Their services include creating new apps from scratch, modernization of existing software and assembling dedicated teams.
Financial Services Don’t Exists Without Software
Scope
Customers move money, arrange loans, trade assets, and buy insurance on their phones within seconds. Regulators expect near-instant reporting. Investors reward firms that respond to market signals before the end of the business day. In this environment, financial services software development – the process of designing, coding, testing, and operating tailored applications for banking, insurance, asset management, payments, and the broader FinTech sector – has become critical.
At one end, it covers budgeting apps that help consumers track grocery spending. At the other, it includes ultra low latency trading engines that cut microseconds from order execution. The common purpose of these solutions is to automate routine tasks, centralize and protect data, meet regulatory demands, and deliver the always-on experience that customers now expect as standard. Institutions that invest early in modern software reduce operating costs, open new revenue streams, and widen their lead over slower competitors.
Types
In retail and commercial banking, core engines handle accounts, deposits, and payments in real time, powering mobile apps that are now the main “branch” for most transactions. Embedded chatbots answer common questions, while predictive analytics warn small businesses of coming cash shortfalls.
Payment systems route card transactions, real-time transfers, and cross-border payments securely. Machine learning models check for fraud instantly. Digital wallets let users tap their phone at checkout, store boarding passes, or hold tokenized loyalty cards.
Capital markets rely on trading systems that combine price feeds, manage order books, and execute strategies down to the microsecond. Wealth management portals let high-net-worth clients see all their investments in one view. Robo-advisors bring similar technology to a broader audience at a lower cost.
Insurance carriers run claims platforms where image recognition estimates damage from photos, and policy engines issue quotes based on telematics or wearable data. RegTech vendors provide modular solutions for onboarding, sanctions checks, transaction monitoring, and regulatory reporting – all integrated via APIs so banks can add compliance functions without starting from scratch.
Personal finance managers connect to multiple banks, categorize spending, forecast bills, and offer automated micro-investing from a single app. Lending platforms run instant credit checks, auto-fill applications, and disburse funds in hours. The unifying theme is friction removal: tasks that once needed paper forms, long waits, or in-person signatures now finish in minutes, any time.
Benefits
First, efficiency: repetitive tasks such as data entry, reconciliations, and basic credit scoring shift from people to machines, freeing employees for work that requires judgment, like complex deal origination and relationship management.
Second, insight: well-designed systems aggregate data that was once scattered across branches, departments, or even continents, giving leaders a real-time view of liquidity, risk, and customer behavior.
Third, compliance: configurable rules engines and audit trails adapt as regulations change, reducing the last-minute panic that often precedes regulatory filings.
These capabilities matter across all major subsectors – commercial and retail banking, capital markets, insurance, wealth and asset management, and the fast-growing FinTech segment, where new entrants challenge incumbents with app-first models.
Technology Trends
Artificial Intelligence
The most visible is artificial intelligence, specifically machine learning models that learn patterns from historical data and act in real time. Banks use these models to flag suspicious card activity as it happens. Insurers use them to triage claims. Wealth advisers rely on them to build portfolios that reflect each client’s risk tolerance and stage of life.
Large language models, the same algorithms behind modern conversational agents, now draft policy documents, summarize earnings calls, and answer routine customer queries in a tone that feels human. The commercial impact is significant: faster decisions, lower fraud losses, and more personalized service for millions of users without adding headcount.
Blockchain
Blockchain technology also commands attention. At its core, a blockchain is a distributed ledger whose entries, once written, cannot be altered without detection. That quality supports the secure transfer of digital assets, whether cryptocurrencies, tokenized equities, or simply encrypted records that multiple parties must trust. Smart contracts – self-executing code stored on the blockchain – go further by automating the settlement of trades, insurance payouts, or supply chain finance transactions, all without intermediaries. Beyond the hype, real benefits are appearing: settlement cycles that shrink from days to minutes, reduced back-office costs, and a transparent audit trail.
Cloud computing
Ten years ago, most chief information officers hesitated to put sensitive data on shared infrastructure. Today, every major public cloud provider offers regions certified for financial services workloads, with encryption at rest, granular access controls, and compliance certifications. Shifting core workloads to elastic cloud platforms turns capital spending into operational spending, shortens procurement cycles, and provides nearly unlimited scalability during seasonal or intraday peaks. Combined with container orchestration and serverless runtimes, development teams can create test environments in minutes, release new features weekly, and pay only for the computing time they use.
Big Data Analytics
Cheap storage and distributed processing let firms retain transaction histories, clickstream logs, voice transcripts, and even satellite imagery, then run analyses that were not affordable just a few years ago. Risk officers use these tools to stress-test portfolios against thousands of economic scenarios. Marketing teams segment customers by real-time behavior, not just last year’s demographics. Interactive dashboards and natural language queries put this insight in the hands of executives who once waited days for a static spreadsheet.
Cybersecurity
Firms are investing in cybersecurity advances such as zero trust architectures, which assume no device or user is trustworthy until proven otherwise, and behavioral biometrics that recognize legitimate users by subtle patterns in keystrokes or touchscreen swipes. As quantum computers approach practical use, forward-thinking banks are piloting quantum-resistant algorithms to ensure today’s encrypted data cannot be broken in the future.
APIs
In several markets, regulators mandate open banking standards, requiring banks to expose secure interfaces so authorized third parties can retrieve account data (with customer consent) or initiate payments. This leads to a surge in FinTech innovation: budgeting apps that show all of a user’s accounts in one place, credit platforms that underwrite loans in minutes by pulling verified income data, and accounting packages that reconcile payments automatically. For incumbents, well-managed APIs are both a defensive necessity and an offensive tool, enabling quick partnership deals and new revenue from data services.
Obstacles
Regulation
Financial services is one of the most heavily regulated sectors in any economy. General privacy laws such as the EU’s GDPR coexist with payment rules like PCI DSS, anti-money laundering directives, sanctions regimes, Basel capital standards, and region-specific conduct rules. Regulations change often, and multinational firms must comply in every country where they do business. Embedding that complexity in software, updating it quickly, and proving compliance is a constant effort.
Data security and Privacy
Attackers target banks and insurers because financial credentials lead to high-value fraud. A single breach can bring direct losses, lawsuits, regulatory fines, and reputational damage that lasts for years. Encrypting data in transit and at rest is necessary but not enough. Development teams must also use secure coding practices, run penetration testing, monitor logs for unusual activity, and fix vulnerabilities before they are exploited. Artificial intelligence adds another risk: models can leak sensitive training data or be fooled by adversarial inputs unless defenses are built in from the start.
Legacy systems
Many large institutions still rely on mainframe applications written decades ago. These platforms are stable but difficult to modify. Interfaces use proprietary protocols, and there are fewer engineers who know the required languages. Integrating modern microservices with legacy systems often requires complex middleware, duplicate business rules, and dedicated data synchronization pipelines. Replacing old systems completely is risky and expensive. Leaders usually take an incremental “wrap and renew” approach, surfacing legacy functions through APIs while moving modules to new platforms one step at a time.
Scalability
If architects underestimate growth, the result is poor performance, unhappy users, and emergency infrastructure spending that cancels out planned savings. If they overbuild for maximum demand, they waste money on unused capacity. Striking the right balance means testing early, using good monitoring tools, and fixing performance bottlenecks before they become public problems.
Resistance
None of these technical challenges matter if users do not adopt the new tools. Employees used to spreadsheets may resist automation. Customers may distrust biometrics or struggle with multi-step onboarding. Without careful change management and user-focused design, even the most advanced platform will see low adoption and weak business results.
Talent shortages and budget limits
Security architects, data scientists, and blockchain engineers command high salaries. Competing with large tech companies and fast-growing startups is difficult for firms with slow hiring or fixed pay scales. Meanwhile, boards expect clear returns on big investments, especially when capital is expensive. Effective governance that aligns initiatives with strategy and measures results is required.
Practices That Separate Leaders
Agile development
The most successful firms use modern delivery methods. The first is Agile development – a mindset and set of practices that emphasize small, cross-functional teams, frequent iterations, and constant feedback. Instead of spending months writing detailed specifications, Agile teams break work into two- or four-week sprints, deliver working software after each sprint, and adjust priorities as the market changes. For C-level sponsors, Agile means earlier visibility into progress and risks, plus flexibility to adjust budgets as needed.
DevOps
Agile alone does not guarantee fast, safe releases. That is where DevOps – and its security-focused version, DevSecOps – comes in. DevOps unites development and operations, automates the build, test, and deployment process, and embeds monitoring so problems appear before customers notice. Security and compliance checks run automatically with every code change, blocking releases if standards are not met. This reduces lead time dramatically: updates that used to require quarterly release windows now happen weekly or even daily, with no increase in operational risk.
Security first approach
Encryption keys rotate automatically, secrets are stored in vaults, static code analysis catches common vulnerabilities, and red team exercises test the system. These steps start at the design phase, not after development is finished. This prevents costly rework and helps demonstrate strong controls to regulators.
User experience design
Designers map customer journeys, prototype interfaces, and run usability tests that feed directly into development. Clear typography, simple error messages, and flexible layouts matter because an elegant interface speeds adoption. Frustrated users will abandon digital channels for higher-cost options such as branch visits or phone support.
Cloud-native patterns
From an architectural perspective, leaders favor cloud-native patterns: microservices that scale independently, container orchestration for failover, and event-streaming backbones that separate data producers from consumers. Monitoring tools collect metrics, traces, and logs in one view, helping engineers find the cause of problems. Disaster recovery drills and chaos engineering prove the system can survive failures and outages. All infrastructure is written as code, stored in version control, and can be deployed with a single command.
Building and Retaining the Right Talent
The financial-services market moves quickly and penalizes delay. Firms that hold on to old systems, neglect data security, or release products slowly lose ground to competitors that act faster. Technology gives speed, but people – who understand both finance and tech – turn that speed into real results.
Winning teams share three traits:
Strong technical range
- Engineers pick the right language – Java, Python, C++, or JavaScript – based on the task.
- Data scientists clean data, explain model results, and build ethics checks into every algorithm.
- Blockchain experts write secure, efficient smart contracts.
- Cloud architects automate infrastructure and design zero-trust networks that adapt to new threats.
Deep domain knowledge
- Quants turn insights about market mechanics into trading profits.
- Credit-risk analysts meet statistical standards while staying inside regulatory rules.
- Compliance officers convert policy changes into software logic that reduces manual work.
- UX designers use psychology and accessibility guidelines to create screens that busy clients can use immediately.
Clear, cross-functional communication
- Engineers translate technical trade-offs into business impact so executives can decide quickly.
- Product owners turn client feedback into usable features.
- Leaders support constant learning – hackathons, certifications, job rotations – so skills stay current and employees stay engaged.
About the Author:
Dmitry Baraishuk is a partner and Chief Innovation Officer at a software development company Belitsoft (a Noventiq company). He has been leading a department specializing in custom software development for 20 years. The department has hundreds of successful projects in such services as AI software development, healthcare and finance IT consulting, application modernization, cloud migration, data analytics implementation, and more for startups and enterprises in the US, UK, and Canada.
