Two hands with medical gloves handing over a banknote, representing fintech during the corona year of 2020

How 2020 Changed the Fintech Industry – Trends and Developments

What a year… good thing, we have a new one in replacement. 

Last December, when putting together our annual industry recap articles (you can find some of them here if you are in for nostalgia), we could not have guessed that the fintech scene would be on the brink of profound change. Many predictions, fintech and banking experts had made for 2020, did not occur – or did not occur for the reasons that we assumed would provoke them. 

Everything considered, though, the financial industry got off cheaply in 2020, when compared to other industries. Some branches could even step up their game. 

The question now is, if the fintech trends of 2020 will continue in 2021 or if they will “return to form”, once the restrictions in worldwide trade, business and retail loosen again. A look in the rear-view mirror will give us some implications. 

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A banknote forming a roof over a tiny toy house, representing the niche banking industry.

Niche Banks – The Overlooked Financial Player

Imagine a bank. Now, what does it look like to you? 

We assume that most of you reading this would picture it as a building. Perhaps with a sleek, dark blueish glass front. Perhaps with towering pillars reminiscent of classic empires. Definitely with ATMs and clerks giving out cash, taken from underground vaults.

But let’s be honest here: Nothing of that represents modern banking services. Since the introduction of online banking and smartphones, banking is no longer confined to a physical place such as a bank building. And without the need of such branch offices, offering payment and banking services became an attractive option for companies outside of the traditional banking industry. 

In recent years, we have already seen a wave of new players that offer basic banking services. Those new banking players benefit greatly from the web-centric customer habits of today, if they capitalize on them. That’s especially the case with BigTech corporations and platform economy firms, who are pushing into the market. 

But aside from these financial giants, there is still room for smaller, more focussed financial institutions. Some cater to the general, tech-savvy customer, others occupy a specific niche that larger financial houses don’t address as purposefully. But what do those niche banks look like and what will be their role in banking in the future? 

We start with the basics. 

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Bogdan Dinu, Head of Product at Thunes and interview partner in this cross-border payments talk.

Finquiry #2: Bogdan Dinu on Cross-Border Payments

Since the dawn of the Internet age, global economies have grown closer – as did the underlying financial systems. Today, we can digitally purchase a product with materials from Eastern Europe, produced in Singapore, refined and branded for sale in Canada, and eventually shipped to Brazil. All countries involved in this supply chain have to maintain financial relationships and this also necessitates numerous cross-border payments.

However, that’s easier said than done. Complying to all regulations, security processes and technical requirements necessary to move funds from one country to the other comes with high efforts and costs for service providers.

For our fintech interview series “Finquiry”, we have asked cross-border payments expert Bogdan Dinu to break down what goes behind facilitating effective and low-cost transfers.

Our Guest: Bogdan Dinu, Head of Product at Thunes

Our interview partner Bogdan Dinu is the perfect expert to lead us through the dense jungle of the cross-border payments landscape. As the Head of Product in leading global payments network Thunes, he is set to support the business through its next phase of global expansion. 

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A computer mouse resting on a bundle of euro banknotes, representing electronic money or e-money, respectively

What Is E-Money – Definitions, Processes, Challenges

E-money, short for Electronic Money, is the electronic alternative to cash. Since it started as a concept in the 1980s and rose to prominence during the Dot-Com era, it has acted as one of the biggest game-changers in the financial industry. In a matter of only four years, from 2014 to 2018, the number of electronic money transactions in Europe alone doubled to more than 4 billion. 

This aspiring form of money deserves our attention. To provide a starting point, this article will give an overview of: 

  • The definition of e-money as a whole
  • The subtle distinctions in its applications
  • The process of electronic payment with e-money
  • The potential downsides of e-money
  • And finally, e-money licencing and who should apply for such a license  

Let’s start!

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A home office workplace, representing remote work in the software development business

Remote Working at Software Companies: Best Practices

Bear with us here: We will say a positive thing about 2020. That’s hard enough. But due to lockdowns and reduced mobility, one certain work philosophy has gained attention in the economic discourse: Remote work at the home office.

Now companies big and small are adjusting their work policies. They allow their employees to work from home and telecommute with their colleagues. Among them are many software and digital service companies who are used to their coder lounges or office cubes.

But remote work is here to stay: Just recently, the Center of European Economic Research (ZEW) conducted a study according to which 75% of big and 64% medium-sized companies want to permanently give their teams the option to operate from home office spaces. 

So, you will have to deal with remote work in the future – perhaps even include it into your working routines. But will you deal with exactly? And what are best practices to pull the home office challenge off at your software company?

First, the basics!

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A computer besides a wallet, symbolizing payment gateways, online payment and ewallets

Ewallets or Payment Gateways – A Comparison

Online payment, via ewallet or payment service providers, is very convenient. At least that’s what over 3 billion customers in e-commerce could easily argue. Of course, it is a very different kind of convenient than we were used to over decades.1 Handing the cashier a number of coins from one’s pocket or wallet is no big deal either. Or waving with one’s credit card at a point-of-sale. 

The convenience deriving from modern digital payment is one of mobility – and sometimes the lack thereof. We can flexibly pay wherever we are, without the need of carrying around our physical wallets (our smartphones suffice). At the same time, shopping can take place at home. Even if we are bound to our own four walls, we can pay for goods and commodities with just a few clicks. 

But payment is just as much a broad term as convenience is. Behind the scenes of your checkout page, in the technical profundities of the software, it makes a huge difference whether the payment happens via an ewallet balance or a bank or credit card transfer, facilitated by a payment gateway. 

Payment Gateways vs. Ewallets? Not Quite!

However, make no mistake and don’t take “Payment gateways or ewallets” literally. The two are not exact opposites: You need PGs to process a transaction no matter what. The real question is: How exactly does using ewallets vs. regular payment providers influence the payment process, especially regarding user experience? 

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A software developer working on coding a payment gateway

How to Develop a Payment Gateway

Online marketplaces are complex systems. That’s true all the more when you decide to equip them with a custom payment gateway you developed (and there are many good reasons why you should do so). 

As a development company, offering CoreWallet, a software foundation for payment and ewallet applications, we are familiar with the complexity of creating payment gateways.  It’s important to approach the development process with a clear plan. To help you master the technical challenges, we have compiled the common stages of such a payment gateway project for you. And we’ve also collected a few best practices. 

So, let’s walk the walk. Let’s build a payment gateway. 

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Two businessmen lining out a payment gateway for their online marketplace and other platforms of the platform economy.

Empowering the Platform Economy

aye4fin Managing Partner Thomas Tittelbach, presenting 5 important topics when creating payment gateways on a business level.
Thomas Tittelbach, Managing Partner at aye4fin gives you a detailed overview of how to approach building a payment gateway from a business perspective.

E-commerce is a growing market – but it’s not taking place entirely within single online shops. By far not. Online marketplace environments have cemented their presence all over the web, be they specialized in dealing with certain types of goods or all-in-one digital warehouses. In addition to retail, service platforms and even comparison portals have found their niches as well. In short: We live in the age of the platform economy – driven by smooth-flowing online payment solutions.

Yet sometimes the last part is more wishful thinking than reality. Payment processing requires a payment gateway designed for the specific transaction flows, which occur in marketplaces. And if you want to design such a well-functioning solution yourself, you can turn it into a business case on its own.

Of course, there are things to keep in mind, from a business perspective. In this second part of our Article Series on Payment Gateway Building, we give you an overview of those. Here are five topics to consider when building payment gateways for marketplace platforms.

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The trimplement co-founders Thijs Reus, Natallia Martchouk und Matthias Gall sitting together and discussing the foundation of their software company trimplement

How to Found a Software Company

Enclosed you will not find the 6 definite steps, instructing you how to found a successful software company.

Bummer, right?

But don’t stop reading, yet. We just wanted to get this out of the way, right at the start.

There are mandatory steps to take when founding and co-founding software companies – like registering the company in the first place. But there is no such thing as a secret recipe for entrepreneurial success on the software development market.

Which does not mean you could not cook up a healthy and successful software business if you gather some specific ingredients. In this article, we will share some entrepreneurial best practices with you. We will give you an overview of what steps we took and what lessons we learned when establishing the trimplement software development company in Germany. (And what better occasion than our 10th anniversary to roll out such a menu?)

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A person holding a credit card facing an online marketplace, symbolizing online payment and the payment gateways in charge of the transfer

How to Build a Payment Gateway: Definitions and Central Questions

Digital platforms are the go-to spots for e-commerce – and terminals for countless payment transactions. Online marketplaces like Amazon or Alibaba present themselves as the popular top dogs in this area. But they only compose a fraction of the platform economy. 

Today’s online marketplace platforms offer goods, services, jobs, and business partners. And then, we’ve said nothing about comparison portals like Check24. They browse external platforms to find the best offers, acting as “meta marketplaces” of a kind. 

But whatever platform you use: The point will come when you will have to pay for what you have obtained. At this point, Payment Service Providers and Payment Gateways make their appearance. It’s their job to detect fraud and validate the purchasing agreement. And ultimately, to debit your account and move your money – in the virtual as well as the physical sphere.  

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