Custom Software Development: Tailoring Solutions for FinTech Companies

It's not just about making payments work in FinTech anymore. Clients are coming to us now to build a long list of features from running compliance workflows in real-time to fraud prevention systems calculating risks. Users expect the business to give them everything on a silver platter while operating across jurisdictions that each have their own notion of what "verified identity" is...

Most companies don't bother to wait and just go ahead with third-party platforms. And, hey, I wouldn't blame them, as they look incredible at first: they offer working KYC flows, optimized payments, and dashboards with analytics that make the investors smile. Who wouldn't want that if they were just opening their finance business and wanted to A/B test some features?

Then you come to a point where Singapore flags transactions above $15,000, while Germany's threshold is €10,000, and each requires completely different data retention policies that your SaaS vendor never even thought of. That's when clients come to us and ask to ramp up parallel compliance systems that communicate with their current systems. We'll advise against it, because that's when your software becomes unmaintainable and difficult to scale.

Custom solutions give you a better chance every time. At Pynest, we engineer event-driven architectures that process multiple fraud signals simultaneously, approving transactions in milliseconds. You can handle traffic spikes of 10x or more. Our FinTech software is built in a way that you can deliver an urgent KYC security update without any repercussions for other systems, like payment processing or risk management. We treat compliance as a core engineering concern from day one.

Read on and learn more about how custom FinTech platforms compare to off-the-shelf solutions, when it's better to go for custom development, and how to choose the best partner.

The non-negotiables: compliance, security, and data privacy

Here is what nobody will tell you about building FinTech platforms: when your system crashes or loses data, you are looking at $4.4 million on average. I've watched teams spend half a year incorporating compliance systems into their applications after assuming "we'll handle that later." Unfortunately, “later” never works in FinTech.

You can't avoid building for regulatory compliance upfront. At minimum, you need to plan for PCI DSS when you handle card data and SOC 2 when you process and transfer personal data, especially when working with enterprises. GDPR for user data rights and PSD2 for open banking aren’t optional in Europe. These standards must be part of your design culture.

If you planned to store raw card numbers and you're part way through the project, you simply can't be going around saying, "Wait, we're doing tokenization here now,", just because your stakeholders became aware of the risks. Your database schema, your API endpoints, and basically your whole system will be derived from this design, so you should consider architecture before the devs start typing in those lines of code.

As a CTO, I work mostly on Zero Trust security, so my teams create stand-out authentication and validate every workflow and layer. It is daunting until you notice that if you're working in microservices and dozens of API connectors, the "secure the perimeter" model just doesn't apply anymore.What you need to realize is that the perimeter is now everywhere. You need to have appropriate authorization and data logging set up at every application layer.

Custom development gives you the ability to view compliance as a feature of your product. When you're in a new market and it requires additional KYC steps or data residency rules, all you'll be doing is adjusting configuration, not rewriting your transaction engine. Keep that in mind the next time you try to weasel out with the promise of "we'll fix that later."

From MVP to enterprise-grade: scaling without rebuilding

FinTech startups don't usually fail because of bad ideas. I can argue that in today's industry, so saturated with opportunities, you can find a market for almost any idea. That is if you implement it well. Most entrepreneurs try to ship as fast as they can, work their backs off to get to a level of traction, and then when the users show up, transaction volumes spike, and suddenly their monolith or platform build is on fire.

Tightly coupled business logic in software does not work. It's okay when you are a small firm and risk-taking is your motto. But once you start growing, you require a more robust backend. What works is being smart about how you decompose your architecture. You want to let services live their own lives.

For instance, payments, KYC, auth, and ledgering are all things you would want to build to be independent of the core systems. This works for instant responses, asynchronous work or live streaming. It's especially good when regulators come knocking at your door with their new demands, and you just need to change a few lines of code, which doesn't touch any other component of your solution.

If you're just starting out, use serverless functions for batch workloads like fraud detection, notifications, and webhooks. This way your architecture manages itself and it's quite hard to break. But when you want more control over something like transaction processing, you need a Kubernetes-managed set of microservices. Companies like Stripe deploy hybrid setups based on how popular a feature is.

The real test isn't your day-to-day traffic — it's when things get real. Like when you launch your bank partnership. When compliance forces you to refactor parts of the application. When you have a growth spurt that you can't prepare for.

Plan for that. Put in managed databases that can be scaled out and in between regions with ease. Build cloud-native apps that enable you to lift-and-shift without having to get at that business logic.

Custom development vs. FinTech platforms: what do you choose and when?

I get why teams go with Mambu or Unit platforms when they're looking for Series A partners and they have a fundraising deadline staring them in the face. I'm not going to say that it's a mistake because I know that four months to production is preferable to bleeding eighteen months on compliance theater as your runway evaporates. A lot of our clients choose the same path. When you're pre-seed and every week you burn through what little you have, custom builds of $450K sound insane.

It's all true, but once you take that shortcut, you can't really go back, and you'll have to deal with the consequences sooner or later. Revolut found out the hard way: in June 2017, their card processor GPS went dark and the payments giant saw global payment failures. What'd they do? They had to build their own Mastercard authorizer from scratch. At that kind of scale, being dependent on a platform is not a good bet.

Nubank anticipated these challenges and built their own custom core in Clojure and Datomic. That's not to say that they're tech architecture masters. They just looked at what Brazilian banking actually required — 7% interest calculations, real-time transfers, insane regulatory complexity. No platform would understand Brazilian banking law well enough to handle it out of the box. Now they process millions of transactions through Kafka-based infrastructure and could care less about any platform outages.

Want a fun one? We had a client whose logging vendor was costing them enough to literally hire Lionel Messi as an engineer. They came knocking on our doors searching for a partner that would set them on the right track. And so we did — our engineers set them up with a custom build that cut their costs in half and gave them complete observability.

How do you make the call? Here are my final pointers:

• If you're working toward your first 5K customers, then choose one of the platforms.
• On the other hand, if you want real value and flexibility from the start, invest in a custom app.
• When going for a hybrid approach, keep the template features like card processing and basic KYC running with a FinTech platform.
• Anything connected to your value proposition, with unique workflows, or compliance-related should be custom.

How to choose a custom software development partner in FinTech

After years of building financial platforms, I've seen companies make the same costly mistakes, but not because of business misfires: it was because their tech partner wasn't capable enough to bring their vision to life.

Building a successful FinTech solution comes down to asking the right technical questions upfront:

Architecture reveals how your partner thinks

A recent case involved us re-architecting a lending platform from monolithic code, which crashed every time loan applications came in volumes. The problem was with the architecture. When one component was overwhelmed, the entire platform went dark because everything was so interconnected.

We separated it into independent services where loan processing runs isolated from credit checks and document verification. We utilized managed AWS services for load balancing. Now during promotions, only the related feature resources get scaled and not the entire application. This also helped them save thousands in infrastructure costs.

Bottom line: ask how they will structure your business logic and separate it from other parts of the system.

Control your long-term costs by making sure of code quality

Make sure to take a glimpse into their repositories and ask about their code complexity index. We once worked on a project where we inherited a payment processing system with intense code complexity. It was spaghetti code that branched through nested conditions checking card types, spending limits, currency conversions with special rules on the weekends, and premium tier exceptions. With a system like that, when everything comes crashing down, even the original developer won't be capable of tracing down those branches. We refactored down the complexity and now any engineer of ours can easily debug payment issues.

Check their marketing claims with a pilot project

Recently, a client asked us to evaluate another vendor who'd built them a payment integration POC. On the surface it worked — the transactions were going through just fine.

But when we reviewed their code, we found some key fundamentals done wrong. For instance, they didn't implement any retry logic for webhooks. If their server gets stuck when Stripe is attempting to send a payment confirmation, that payment record is lost. They also had no idempotency keys, so with network downtimes their customers would most likely be double-charged. They were storing some of the bank card data locally instead of using tokens, creating severe PCI compliance violations.

These are warning signs that your partner probably never shipped a line of FinTech code in their entire history of developing software. They could cost the business millions when fraud incidents occur, when they're fined for compliance, and eventually they could lose customer trust. A proper pilot project with code reviews would catch these problems before they become part of your solution.

Find out how well they can chart your integrations

Financial transactions are carried out within interconnected systems and they all communicate with each other. Streamlined data patterns with advanced security shields are what you should be looking for. Identity verification should authorize users while fraud detection screens transactions. Then the payment processing modules move the money. Security logging and monitoring create audit tracks. If you don't have these integrations designed as a seamless flow of data, you'll be struggling when it comes to creating even more finance features and optimizing the user experience.

We've consulted companies that spent $200K restructuring their codebase to properly integrate AML screening. That's functionality that usually costs around $15K or less if you think to integrate it from day one. Ask your partner how they approach FinTech integrations and which technologies they use.

The real deal breaker: compliance expertise

Certifications only prove they got the standards down, and it doesn't necessarily mean they can design for compliance. Can they tell you how they would help you process requests for deleting or altering personal data under GDPR? A quality partner should be able to guide you through even down to the way they provide PCI audit reports. They'll be happy to show you cases how their AML monitoring catches coordinated fraud patterns across accounts.

Ask your partner to provide examples where their solutions were subjected to compliance audits and whether they managed to weather the storm. Those who have been in the trenches will have a lot to say.

Lessons from the field: Pynest team’s insights gained on FinTech projects

It was only a couple of years ago that the regulators started coming in and asking companies to provide them with the real database schema and API logs. They no longer wish to see policy documentation. You'll need to prove that your software is complying with the requirements.

We had a client come in with a routine audit and the examiners wanted to see how a bad loan decision eighteen months ago had been made. Typically, without all the tech magic, it would require weeks of elbow grease research. But we engineer for those situations these days.

We had them implement their platform with event sourcing, and thus they could replay the same sequence: from application receipt to credit score retrieval to auto-rejection based on threshold rules. The whole reconstruction took minutes.

One of our clients needed help after their new payment gateway integration brought down the whole system as the third-party fraud service was not responding. The system would retry transactions every two minutes, leading to a pileup of 4,000-something pending transactions each day.

We actually have the bruises to know how to react to this. My teams engineer payment flows so we stop hammering at unresponding services after three consecutive denied requests. A circuit breaker mechanism is used to route these transactions to a different processing service. When the main service gets back up and running, we gradually reroute it again without flooding services with the entire queue of requests at once.

The biggest thing we've learned from all our years of doing work on FinTech: compliance engineers need to be part of the sprint planning prior to anyone writing a line of code.

Engineers who get things outside of just React hooks but have the whole OAuth token lifecycle in their heads are VIPs. They can spot problems early, such as when a product manager's user story suggests signing up without real identity authentication. They start thinking of passing audits right the moment they're creating concepts of new customer data flows. That's the kind of design thinking you need in FinTech today.

Final Thoughts: Building for Trust, Not Just Features

After building FinTech platforms for startups and established institutions, we've learned the industry doesn't need more software — it needs software that solves the right problems. Customers expect instant transactions and personalized advice, yet one security incident sends them to competitors. Off-the-shelf platforms force you to compete on the same terms as everyone using that vendor. 

The clients who worked with us, choosing custom development, are much more successful at scaling their software in the long term.

Here's the advice we usually share with our clients:

Treat compliance as part of the solution. RegTech tools and audit trails belong in the initial design. Event-driven systems provide the best logging tools as they make every moment and every change in status or state recorded automatically in the audit trail.

Build what differentiates you; buy the rest. We help customers make this choice on a daily basis. If your competitive edge is bespoke risk assessment or settlement, then that is worth custom development. For HR systems and reporting dashboards, use existing platforms. Take advantage of proven and tested solutions and put that engineering investment into areas that really set you apart in the marketplace.

Design API-first. Every FinTech platform we roll out usually integrates with banks, payment processors, KYC third parties, and some old stack no one knows how it works. With API-first development and good abstraction layers, replacing payment processors or KYC vendors is an encapsulated change instead of a months-long ordeal that impacts your core business logic.

Make compliance visible. Avoid the obvious red flags: the hidden business rules so deep in code bases that no one notices them, or those algorithms that only live in someone's head. These are the things that trip you up in audit situations: when the regulators are knocking on the door and asking you how it works, "I need to go ask the developer who coded that" is an answer they will not buy. So, make sure you build software where business logic is close to self-explained or better yet, documented, and auditable from day one.

Get these foundations right, and the trust and loyalty of your customer becomes the feature that the competitors can't copy. In the end, you choose whether an out-of-the-box platform or custom development fits your needs. My guide will help you make the smart decision.