Choosing the Right Fintech Integration Vendors in 2024: Guide

Fintech integration vendors essentially enable business owners and entrepreneurs to integrate their software with third-party solutions without spending much time and money on creating them from scratch. Thus, with fintech integration vendors, there would be no need to create a payment system or card issuing from the ground up, instead connecting with Stripe or Marqeta.

Due to the rise of open banking and fintech digital transformation, traditional financial institutions are seeking changes in their partnerships with fintech as a service providers, leading to the soaring expansion of this market niche. Currently, the US fintech as a service market is expected to reach a 17.5% CAGR from 2023 to 2030.

In this blog article, I will guide you through the fintech integration vendors, help you find the ones your business might need, and discuss the challenges of working with fintech APIs. Buckle up for practical insights, and let’s dive deeper into the topic!

How to Know Which Fintech Integration Vendors to Choose

First, let’s define fintech integrations:

A fintech integration vendor is a company that provides technology solutions to connect financial institutions, businesses, and consumers.

Approaching the topic of choosing suppliers for an integration platform in the era of fintech digital transformation might be stressful due to the wide variety of systems present on the market. So, to learn how to conduct fintech vendor selection for your software specifically, you might want to first focus on your project’s goal.

In this section, let’s focus on the main types of fintech vendor integrations, review their goals, and consider which one would best suit your business. The image below shows a shortened version of the most popular integration types I’ve encountered in my years of experience and might help you in your fintech vendor selection.

#1 Payment processing integrations

These integrations enable your business to process payments and transactions within the application. Integrating with them will enable your end-user to complete purchases, subscribe to your services, and convey other meaningful integrations connected to fund transfers.

Such integrations would benefit not only fintech businesses but also those applications seeking to provide in-app services or an opportunity to purchase products. They might upscale customer satisfaction and retention rates.

Best vendors: Stripe, Adyen, Braintree.

There are many options for payment processing integrations, and it’s easy to get lost in the variety. If you need help navigating this landscape, you can read an article about the top 10 payment processing companies.

#2 Open banking integrations

Open banking integrations have become essential in the era of fintech digital transformation. They are the main tool for connecting financial institutions to fintech without acquiring a banking license.

These types of integrations aim to build a connection bridge between your software and banking system, enabling data and funds transfers. For example, these integrations could not only process payments but also initiate them, withdraw bills, and transfer bank information such as accounts balances and transaction histories.

These integrations supplied by a banking vendor are mostly used by modernized financial companies, the travel and hospitality industry, e-commerce (POS) software, and real estate firms.

Best vendors: Plaid, MX.

#3 KYC integrations

These integrations are imperative for those seeking vendor tools to launch a financial platform. Their goal is to simplify customers’ onboarding process and prevent identity theft. KYC integrations are often paired with AMLs and aim to verify customers’ personalities to mitigate the risk of digital fraud.

KYC and AML are mostly considered useful for financial institutions and companies such as challenger banks, digital payment platforms, remittance payment platforms, etc., but they can also be utilized by real estate platforms or high-value retail.

Best vendors: Onfido, Veriff.

#4 Card Issuing

Card-issuing vendor integrations are specific vendor tools created to issue physical or virtual cards for customers. They are fully fintech-oriented and are mostly utilized by financial institutions, banks, and neobanks. However, sometimes card-issuing platforms partner with hotels or big retail chains. For example, Walmart has its own debit card that rewards customers for shopping in the stores.

Best vendors: Marqeta, Galileo.

Recently, my colleague published an article about Marqeta. I suggest you give it a look if you’re on the lookout for a perfect card-issuing vendor.

There are more than just these four types of fintech integration vendors that I cherrypicked for this blog article, but I found these ones to be the most important to highlight for this guide. However, regardless of which one you choose, they all fit into different categories of connection types.

Types of Fintech Integrations Vendor Connections

Let’s take a closer look at the two main connections between fintech as a service and the application. Services provided by fintech companies can be either directly or indirectly connected to your software. In the graph below, you can see how this difference manifests in practice.

#1 Direct connection integrations

These integrations build a direct connection between the API and your software. Financial data is transferred directly between them without any intermediaries.

It speeds up this integration, but it can also create security issues if you are not confident enough in the external vendor of your choosing.

#2 Indirect connection integrations

As opposed to the previous one, these types of external vendor fintech integrations involve some middle ground. Before data is transferred from your software to the vendor tools (or the other way around), it must go through an intermediary connection that facilitates the exchange.

From my experience with DashDevs, the intermediary is usually a back-end server connection or a third-party middleware integration platform. We prefer the former as it enhances security but can slow down the process slightly.

Choosing Fintech Integration Vendor: Strategy

Now, when we have the question of what types of fintech integrations there are and what this concept really means, we can consider looking closer at the strategy of choosing the fintech external vendor.

In this segment, I have divided the strategy into different steps to help you navigate this complex part of business operations.

The previous segment highlighted the types of fintech vendor integrations to help you understand which solutions would benefit your business. Now, we can focus on the strategy and go to more narrow steps. Hopefully, by the end of it, you will have a coherent idea of a fintech vendor selection process.

#1 Determine Required Integration Type and Objectives

First, you need to define the goals you pursue with fintech as a service integration. Since you will have to pay a fintech fee for a fintech API, you should be entirely sure that the software you are using fits the goals.

For example, the goal might be automating and enhancing payments integrated into your app. For this, you might integrate with different vendors that I’ve mentioned in a few sections above, but if you think you’d need more than this one service – consider an all-in-one solution, such as Stripe.

Therefore, it’s imperative to decide whether you require a full-scale integration, a partial integration, or other services provided by fintech companies to meet your exact business needs.

#2 Define the Geographical Area

Before you start looking for vendors, you should determine the region in which you will be working. Ultimately, not all vendors will be supported worldwide, and some would be more beneficial for specific countries.

For example:

1. MENA region can benefit from integrating PayTabs or Network International as general and invoice payment processing integrations.
2. The US would have an opportunity to cooperate with Stripe, Adyen, and Square.
3. The UK can also integrate with Stripe but has an additional opportunity to integrate with Worldpay.
4. The EU countries can utilize both Stripe and Adyen, as well as some of the local payment processing integrations.

As you can see, some of the vendors can overlap, while others do not distribute their services to certain regions. I strongly recommend you research the regulations and ensure that potential fintech integration vendors comply with local regulations.

#3 Shortlist and Evaluate Vendors

Conduct a thorough fintech vendor analysis to identify if the providers align with your business goals and technical requirements. Ask your network connections and the existing customers of fintech vendors you are considering integrating with. Word of mouth is a tool that can help you quickly get unpolished opinions about fintech as a service provider.

When you have decided on a few vendors that underwent the shortlisting, evaluate them based on your unique business-relevant criteria.

The table shows factors by which vendors can be evaluated, and specific parameters to consider for each respective criteria are provided below:

By using this or a similar evaluation table, you can evaluate and compare shortlisted vendors to narrow down your search to only two or three best options. Then, you may contact the chosen fintech integration vendors.

#4 Contact Vendors

After you have an idea of who you may integrate with, you should contact the vendor. When you contact them, you can request a presentation of the product and discuss the different APIs they provide in more detail.

It would also be a good idea to ask you to clarify anything that remains unclear from what you’ve researched about them. Some fintech integration vendors also provide demos for their products. When you have a significant portion of the information gathered, it’s time to make a final decision.

#5 Get Started with Your Fintech Vendor Integration

Finally, after the decision process is complete, you can proceed to work on a more technically complex aspect – integration. For this, you might want to consider getting help from a professional software development agency to integrate with services provided by fintech companies.

And last, but not least, consider the resources. Some vendors, especially those with solutions that require a direct connection, would require less development time. Some, on the contrary, would demand your team’s full attention for additional back-end services.

Challenges of Working With Fintech Integration Vendors

After figuring out the strategic steps you can take to integrate with software vendors, let’s discuss what bottlenecks you might encounter. I mentioned the documentation before, but I’ve seen more challenges in my practice, and I will share them with you.

#1 Lack of documentation.

Non-coherent, absent, or unclear information can hinder the development process. It leads to time overruns as the development team must spend significant time learning about the product and its specifications. It also impedes the team’s independence, leading them to lean on the vendors’ support and enhancing the risk of manual error.

Solution: To avoid this challenge, I recommend doing a significant fintech vendor analysis before integrating.

#2 Complex UI

Similar to the lack of documentation, complex UI would require more time for your development team to understand and work with. It might also be complicated to tie everything together from the front-end perspective if the complex UI impedes the seamless connectivity and workflow of an application.

Solution: This challenge might be solved by partnering with vendors that allow high customization options or hiring professionals who have worked with this particular API before.

#3 Security

Security concerns are always the most drastic as they can lead to significant monetary losses, impede a company’s business reputation, and impose regulatory penalties. Therefore, when choosing a vendor, you should consider carefully whether their security patches are at the level you require.

Solution: In my practice, this challenge was also frequently solved by middleware developed by our team, which ensured encrypted and secured data.

#4 Pricing policy

Hidden costs might prove to be a danger to your budget, draining resources from important development, features, and other elements of the software life-cycle. Integrating with some vendors can also create a vendor lock-in, which will reduce your flexibility, forcing you to stay with one vendor if you are under a specific contract or integrated with a very specific vendor that makes your software less compatible with others.

Solution: To nullify this challenge, I can only recommend thorough research.

#5 Vendor’s reliability

Long responses from the fintech integration vendor can impede the integration process itself. Confusing communication or lack thereof might result in a series of misunderstandings. This, in turn, has a risk of wasting your resources.

Solution: This issue might be solved by paying careful attention to the customers’ feedback or maybe even getting in touch with some of them.

Despite the challenges, fintech vendor integrations still remain a more efficient way of implementing critical functionality to your application. Creating a payment processing solution from scratch would have many more risks and might even be unrequired for some products, while API integrations provide you with different options and faster time-to-market.

Practical Experience With Choosing Fintech Vendor Integrations

Now, here is my advice for when you decide to integrate with a fintech supplier. I’ve gathered these tips from my own personal experience, creating them so that you will learn not to repeat those aspects of the process that made it complex for me and my team.

1. Conduct competitive analysis through an effective network. Good connections and trustworthy development partners will help you construct valuable connections. Their reputation and network can help you connect with more professional and effective vendors. Thus, for Tarabut, a leading MENA open banking platform, we led constant negotiations with Regulator Bank, Commercial Bank partners, and Compliance Advisors, among all other options. This helped us see the full picture.
2. Be sure of the vendor’s regulatory compliance. When you’re choosing a vendor, pay double attention to the regulatory compliance and demands of your target market. Our success with Tarabut would not have been possible if we hadn’t been so rigorous about regulatory compliance. Our team ensured that the solution passed the CBB sandbox testing process and did tremendous fintech vendor analysis to ensure that open banking practices complied with MENA requirements.
3. Spend resources to find the most efficient solutions. Integrate with fintech providers that bring value to your product in compliance, fast performance, and functionality. This will help you save some money and achieve fuller fulfillment of your business goals. Follow the example of MuchBetter, an award-winning e-wallet that has numerous integrations, including CHAPS, Faster Payments, SEPA, and others, to enable global coverage for gaming e-wallets. Yet, this product was created in under $150K.
4. Keep the list prioritized. When choosing a fintech vendor, consider your business value and integrate only with solutions that can help you upscale the critical functionality first. For example, when working with Pi1, a cloud-based BaaS platform for banks and fintech back offices, our team prioritized choosing critically important vendors first and later expanded to more solutions. Thus, we achieved over 30 integrations and made this product truly innovative.
5. Globalize. When you just start with your business, it’s important to think ahead about your growth. Network and connect with companies and vendors that can help you achieve desired markets in the future. Our client, global hospitality payment solution iOL Pay, considered their future expansion when searching for vendors and expanded their list proportionally to their ambitions. Now, this solution is integrated with over 250+ payment options, ensuring its near-global coverage.

These are the three valuable tips I would urge you to follow if we have this conversation in person. I believe that these tips might help you deliver the best solution. Integrating with a fintech supplier might be complex sometimes, but it’s always possible with the right team.

Conclusions

Considering everything I discussed in this article, I hope you now have a better understanding of fintech integration vendors and how they can be integrated into your business. Of course, each has separate benefits and highlights, and it depends on which type or even which provider you choose, but generally, they can offer more new features in a shorter time span.

All these tips might be even more beneficial if you have a talented technical partner to help you on your course to success. Connect with experienced companies and get a consultation regarding vendors. For example, DashDevs has been on the market for over 14 years and delivered more than 500 products. We can help you choose who to integrate with and provide you with the integration services as well.

Contact us.