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How Fintechs cut costs and increase efficiency with custom internal tooling

The Superblocks Team
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January 4, 2023

7 min read

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Fintech, financial technology, is used to describe technical innovations within the financial sector and includes established organizations as well as emerging disruptive companies. The fintech market is very broad, however, a few examples include banking, payments, personal financial management, wealth management, lending, and embedded finance. The fintech market has seen a lot of investment in recent years, and startups are investing a lot of developer time into finding new ways to make using finance easier, quicker, and cheaper.

Fintech Challenges in a Market Downturn

Fintechs are disrupting the market quickly by being as lean as possible. Their aim is to optimize the release of products and services while minimizing costs for onboarding and supporting customers. This is of greater importance within the 2023 market climate, interest rates are the highest in a decade, defaults are increasing, and risk must be carefully managed.  Developers will likely be the biggest cost line in a fintech startup’s budget, so it is of great importance that their time is used wisely for maximum ROI. Time spent building the company’s unique differentiators will increase the company’s growth, however, any time away from that will hold the company back from success.

Internal tooling for KYC & Compliance Admins, Credit Underwriting, Card Management, Fraud, and Risk Tools while important for the business, detract from engineering time devoted to core product. A wide range of skills and competencies need to be held by the team to build such tools:

Reducing the time and therefore cost to build secure, reliable, and scalable internal tools has a direct impact on the agility and efficiency of a fintech startup. During recent months agility and efficiency have become more critical for business profitability and raising future venture capital to continue scaling.

We see five key areas of focus as common use cases for internal tooling. Each one of these contains complex requirements that must be built out for a production-level internal application.  

Areas Requirements
Accelerating Client Onboarding & KYC
  • Gathering customer documents such as driver’s license and passport
  • Screening customer information from various government databases
  • Storing and managing this data for continuous monitoring
  • Real-time monitoring and alerting on risks
Underwriting
  • Investigating credit history such as looking for bankruptcies and overuse of credit
  • Verifying income and employment
  • Calculating debt-to-income ratio (DTI)
  • Verifying down payment (mortgage) and savings
Anti-Money Laundering (AML)
  • Know your customers (KYC)
  • Record management and software filtering - keeping detailed records of transactions and implementing software that can flag suspicious activity
  • Holding period - banks require deposits to remain in an account for a number of days
  • New technology - any new tech to identify suspicious activity linked to money laundering (AI, Big Data, etc)
Investigating Fraud
  • Spotting unusual activity that deviates from trends
  • Cross referencing data with third-parties
  • Blocking transactions or freezing accounts
Customer Support
  • Validating customer’s identity
  • Managing customer refunds
  • Reissuing lost and stolen cards

Why Fintech Companies Choose Superblocks

Superblocks is a tooling platform designed for developers. It includes features for building, securing, deploying, monitoring, and querying data. It integrates with various data stores, including databases, REST APIs, and GraphQL APIs.

Alchemy, who raised $564M and is one of the largest Web3 infrastructure providers, was blocked on invoicing and lacked analytics, so they used Superblocks to build internal tools to improve invoicing efficiency and understand customer usage across a scaling operations team.

Papaya, a global payroll and payment company who have raised $445M, was able to scale during the Covid-19 pandemic because they built Superblocks applications for their operations teams to review, manage, and pay hundreds of third-party in-country partners.

Payhawk, who raised $240m, built Superblocks apps for their Customer Operations team to efficiently manage thousands of customer accounts, credit cards, and suspicious transactions.

Accelerating Client Onboarding & KYC with Superblocks

Customers have built applications such as this credit approval application to build out secure mission critical tooling fast. Using Superblocks’ suite of integrations, it’s quick and easy to get all KYC data into one place and quickly onboard new customers.

Superblocks’ ability to integrate with any third-party API allows fintech developers to quickly connect with credit and KYC agencies to present customer status alongside their own first-party data.

With built-in, granular role-based access control and audit logging, developers can ensure that only the correct team members have access to customer data. Superblocks takes security to heart and is SOC 2 Type II and  ISO 27001 compliant.

Managing Customer Accounts

Large fintechs such as Payhawk and Motive have built out applications to manage customer accounts and credit cards. Here we see that it is easy to alter customers' credit limits, freeze, or cancel cards, and capture reasons for changes for auditing purposes. This can all be done in a single UI with just a few clicks.

Fraud Reduction and Anti-Money Laundering

Enable security ops teams to act on and mitigate fraudulent transactions that violate AML compliance. Combining third-party services with machine learning in Python can quickly highlight possible fraudulent transactions and pinpoint them on a map. Support agents are able to swiftly react and proactively protect customers' accounts.

Automating Issuing New Cards with Workflows

Challenger banks have disrupted more traditional banks by taking historically manual processes and automating them. A great example is the bank card replacement process. Traditionally, a customer would need to call a help center and sit on hold, before requesting a new card via a customer service agent. Challenger banks offer the ability to do this in-app saving both customer and service agent time. Superblocks Workflows provide a secure and scalable way to build out these processes via sequential steps. In the following example, a REST API endpoint is created, which can be called from a Superblocks app or any external service.

Once invoked, the workflow will look up the customer’s address in Postgres and terminate the customer’s existing card via a call to Marqeta, before issuing a new card and emailing the customer.

Investigating Fraud and AML via Reports

Scheduled reports are often facilitated by shell scripts executed by cron jobs. These scripts are hard to debug and maintain and are often forgotten. Superblocks Scheduled Jobs provides a centralized and version-controlled environment to build a job in the same way as both a workflow and application API is built.

This job runs every night, running the day’s transactions through a fraud detection service, before using Python’s Pandas library to process the data. The report is then sent to Slack for convenient and easy consumption by interested parties.

Get Started with Superblocks

Superblocks has helped hundreds of developers at fintech companies build and release internal tools faster, allowing them to focus more time on core product initiatives. Fintech companies have seen a direct impact in their time to market of new features and increased growth. Customer operations teams have realized greater efficiency as they are able to handle higher numbers of customers for less cost.

To learn more about how to create internal applications, jobs, and workflows with Superblocks view our documentation. Try creating your first application today with a free 14-day trial​​.

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