The landscape of financial services is transforming, moving from foreign outsourcing to a domestic software development approach. This strategic realignment isn't just about geographical preference. It's a more profound recognition of the benefits of aligning with US-based partners.
The financial services sector faces unique security challenges, heightened by the surge in high-profile data breaches in 2023:
TD Bank, where about 15,549 individuals were potentially at risk due to a hacking incident at a vendor, NCB.
Capital One, with a hacking breach impacting 16,779 people, involving account and card numbers.
PayPal, where 34,942 individuals were affected by credential stuffing, exposing Social Security numbers.
Bank of America was also impacted due to a breach at vendor NCB, with 494,969 individuals potentially at risk.
These incidents highlighted the immediate financial repercussions of poorly built applications and the long-term erosion of customer trust – a critical factor for any financial institution.
The financial industry is also one of the most heavily regulated sectors, and compliance is a significant concern regarding software development. New, existing, and pending regulations impacting real-time payments (RTP), buy now, pay later (BNPL), and other fintech strategies demand a nuanced understanding often lacking in foreign outsourcing arrangements.
Boots on the ground, localized experience, and a sense of risk and norms are always valuable no matter where you operate. If you’re operating financial technology stateside, having the most experienced local technology partner makes a lot of sense to ensure a smooth journey through the twists and turns of compliance risks inherent with innovative products.
There is a growing awareness that the cost of outsourcing – when factoring in the risks, communications challenges, and potential for error – can outweigh the initial savings. Because of this reality, major financial institutions are leading the shift toward domestic development. Examples include JPMorgan Chase and Goldman Sachs, which have reversed their outsourcing strategies, favoring US-based development to enhance control, security, and compliance. This industry realignment signifies a broader acknowledgment of the risks associated with foreign outsourcing and the benefits of domestic development.
Our approach at MojoTech echoes the ethos of LL Cool J's famous line, "Don't call it a comeback, I’ve been here for years." Since our inception in 2008, we have been committed to US-based development, providing the financial services industry with secure, innovative, and compliant software solutions.
Our successful collaborations with clients such as MoneyLion, CreditKarma, and Dow Jones showcase the advantages of this commitment. Together, we navigated complex regulatory landscapes and delivered high-quality, reliable solutions tailored to the specific needs of these leading financial service providers. These collaborations illustrate how a US-based approach can drive innovation while ensuring security and compliance in the highly regulated financial sector.
The shift towards US-based software development in financial services is not just a trend. It’s a strategic response to a changing global landscape. It’s about securing data, ensuring compliance, and fostering innovation.
If you’d like to learn more, we are happy to offer new clients a no-cost consultation and review of their 2024 roadmap and strategy.