Top 7 types of financial software systems

With such a big prize at stake, a lot of companies are in search for an optimal solution for business optimization. In this article, we will describe some game-changing financial software.

Types of financial software

The list of financial software types

Accounting systems

A growing business generates complex financial data and creates a demand for a scalable accounting system. Without accounting systems, such tasks as invoices processing, payment collection, payroll calculation, and reporting will take much time and will be more labour-intensive and error-prone. To deal with these problems, businesses use, for instance, such turnkey accounting systems as QuickBooks and Xero or turn to software development companies for a custom solution.

An accounting system is an essential tool for your financial data. Such software offers features to optimize business – from billing and invoicing to tax calculation to project management. It will also assist in:

• managing clients
• reconciling bank accounts
• simplifying payroll
• creating detailed financial reports
• promoting data accuracy
• streamlining tax reporting, and more.

Payment gateways

Payment gateways act as a secure intermediary between bank accounts of the merchant and the customer. Gateways perform a number of functions, such as checking details of credit cards and verifying funds sufficiency. Synch systems also provide an intermediary account to simplify data exchange between banks — especially for international or small banks that have no direct or simple routing for faster money transfer. The transition to online businesses due to the COVID-19 pandemic has become the main factor that has helped the payment gateways technology prosper. PayPal, Amazon Pay, Skrill are the examples of the most frequently-used payment gateways.

There are different types of payment gateway software:

Platform-based gateways. The ordering and payment processes are done through the merchant’s servers.

Hosted gateways. It is an alternative to platform-based gateways. Payments processing is done on someone else’s server – the customer is redirected to another website to complete payment.

Local bank integration systems. Customers are directed to the bank website to fill in payment details. After the payment is completed, they are redirected back to the merchant’s website.

Among the top benefits of this software we can mention:

• sensitive data storage
• virtual terminal instead of the physical one
• compliance with Payment Card Industry (PCI) standards
• encryption
• global payments support
• support of less common forms of payments (PayPal, JCB)

Personal finance apps

The personal finance apps market is expected to reach $1,58 billion in five years, thus becoming an additional factor in luring companies to work in this domain. According to Forbes, the most popular budgeting apps today are Mint, Personal Capital, and You Need A Budget.

Personal finance applications help not only keep track of incomes and expenses, but also analyze them. Such applications may connect to bank accounts and help you see your spending trends. In addition, they help you find out your major spending category, monitor upcoming bill payments (some allow you to pay bills directly via the app), and keep an eye on credit scores and investment portfolio. The best personal finance apps also provide such features as bill due dates, subscription tracking, e-mail reminders, shared wallets, etc.

In terms of functionality, personal finance apps possess the following features:

• integration with bank accounts to monitor transactions
• support of various currencies to track international payments taking conversion rates into account
• reminders which allow creating recurring payment schedules
• budget forecasts
• analytical dashboard for spending habits visualization
• customizable financial reports.

P2P lending platforms

Peer-to-peer (P2P) lending platforms offer a relatively new way to lend and borrow money. Borrowers and investors do not have to deal with traditional financial institutions, which is most beneficial especially in the field of small consumer loans.

A P2P platform is an intermediary that sets the rules for participants. The main advantage of using a P2P lending platform is its simplicity for users. Both parties do not need to meet in the office and wait for the processing of documents – everything happens online. Unlike banks, such solutions also reduce transaction costs and offer more attractive conditions for investors.

This platform provides technical support and electronic document management on the site and monitors the timeliness of payments. It is engaged in checking borrowers and preparing documents for the transaction. Some systems may also control borrowers and help them get back on schedule in case of delays. Upstart, Prosper, Peerform, and StreetShares are among the leading P2P platforms today.

Insurance software

The pandemic has significantly accelerated the development of some areas of InsurTech. The lockdown has created a habit among consumers that everything can be done online, including insurance. Insurance software solutions help people insure property and casualty (BriteCore), health (AgencySmart), cars (Metromile) as well as allow insurers and their clients to fulfill other affiliated tasks, such as document management, billing and invoicing, task management, and commission tracking.

Crowdfunding platforms

There are a lot of popular crowdfunding platforms such as Kickstarter or Patreon that help raise money for various projects. But few people know how these platforms monetize. They keep on average about five percent of the funds raised as a reward for intermediary services. Such huge profits explain the increased demand for the development of crowdfunding platforms.

To develop a crowdfunding platform which earns, it is vital to start with:

• Сhoosing a niche: non-profits, charity, social activities, small business, startups, and more.
• Decide on the model: donation, rewards, debts, or equity.
• Approaches for monetisation: subscription fee, service fee, listing fee, or percentage fee.

Based on the above points, the design and functionality of the crowdfunding platform is determined.

Cryptocurrency & blockchain

Blockchain appeared relatively recently, in the year 2008, so we are still learning how to make the most of its capabilities. Blockchain helps in data protection, personal identification, company verification, transaction registration, investments, risk management, contract signing, etc. This broad scope of application stems from the safety and reliability of the technology; therefore we can expect the same diversified blockchain development in the future. Other benefits of the blockchain technology are:

• Transparency of transactions. Any user can track the chain of transactions from the very beginning.
• Data security. The information is stored in blocks on the devices of multiple users. This reduces the risk of hacker attacks, as well as technical failures.
• Speed. It only takes a few minutes to complete any transaction.
• Cost-effectiveness. The fees for transactions without intermediaries are lower compared to transactions through banks.

The most relevant blockchain area for FinTech is cryptocurrency. Bitcoin value is growing, and other cryptocurrencies are trying to keep up with it. The demand for them is increasing, so the possibility of working with these currencies is important for banking applications.

Conclusion

Forty seven percent of traditional financial companies are considering taking up FinTech in the near future. Undoubtedly, the evolution of FinTech will result in people’s financial literacy. Financial technologies will also help businesses thrive by giving them the tools to manage their funds effectively.

Already have an idea of financial software development? Drop us a line, and we will help you translate your idea into an advanced solution.