Billing System Development is Super Cool. Here’s Why
8 years ago, I joined a team that’s developing an online billing system. Back then, I had a very specific perception of the fintech industry.
Before I began, I thought:
- There would be a lot of legacy code.
- Most of the work would be batch processing of parsing CSV files and generating new ones.
- There will be very little innovation potential — even when introducing new features — and there will be no out-of-the-box thinking.
- The technological stack would be outdated, system design would be guided by passing mainframe file formats and the code would be written in legacy languages such as COBOL.
My initial impression of the fintech industry was based on legacy banking systems I use as a customer. My bank, for example, only allows downloading a mortgage report from the website during bank business hours.
So why did I take the challenge anyway? I thought there must be a better way to design financial systems and had a huge enthusiasm for merging business and software design principles.
After 8 years of developing a billing system, I must say I couldn’t have been more wrong about fintech. As it turns out, developing billing and payment products is very interesting and here I will try to explain why.
Complex business domain
You know how when you’re collecting items to a cart on Amazon, when you actually submit the payment, the operation takes a very long time? Did you ever wonder why?
The reason has to do with the number of various input and logical validation operations, the interactions with external systems and the operations required to pass a credit card payment in its lifecycle.
In the billing system I was developing, the architectural diagram of the checkout operation consists of 46 operations happening across 8 different microservices across 2 separate data centers.
In addition, downstream, we use a Payment Service Provider API which interacts with banks and card schemes as described below.
The entire flow is synchronous and has many points of failure, and on the level of banks and card schemes, the payment settlement is an async flow that introduces additional business complexity. Not only is developing a payment system way more complex than I thought, but online payments is also a relatively new industry that keeps changing and requires constant innovation. The finance industry is often times very conservative, yet digital solutions are helping the industry move forward.
Look at PayPal’s Venmo for example, which has completely revolutionized the industry of P2P payments in the US market, showing massive growth (up to 44% YoY) and great benefit for its customers.
Fintech is a tech industry which is positioned at the intersection of business, legal, finance and tech, so there is never a dull moment and tech designs keep on leading the engineering landscape.
Constraints => Innovation
“What drives big, breakthrough innovations? Often it’s constraints — limitations that force designers to rethink the whole problem and come up with something completely new to address it”
At some point in your career, I’m sure you, like me, have found yourself standing in front of a whiteboard with your teammates trying to solve a riddle.
As with most riddles, you were faced with constraints that can be reconciled with each other only by providing a new and innovative solution.
Here is where fintech really shines!
I am constantly designing new innovative engineering solutions to complex business problems in distributed environments while ensuring high availability and consistency.
When designing such innovative solutions, I am constantly encouraged to strive to the best possible design:
- Scalable systems.
- High code quality is valued as bugs are expensive.
- Big data driven decisions.
- CI/CD and Gradual rollout to mitigate risks.
- State of the art DB model — event sourcing & CQRS.
Fintech, fintech, I see fintech all around
Global investment in financial technology increased more than 12,000% from $930 million in 2008 to $121.6 billion in 2020.[11] 2019 saw a record high with a total of $215.3 billion of global investment in financial technology.Q3 alone accounted for $144.7 billion.[12]
The share of global VC investments into fintech startups increased overall during the period from 2012 to 2021. The share peaked in 2021, when 18 percent of global total VC investments were in the fintech sector. [link]
Many fintech companies disrupt the conservative financial industry with out-of-the-box thinking and state-of-the-art engineering.
Honestly, these days, in my local tech sector of Tel Aviv, everywhere I turn I see fintech companies. And it makes perfect sense as the industry is both highly lucrative as well as still scratching the surface of its true potential.
We are really only scratching the surface of the opportunity landscape. Because the conservative finance industry is in dire need of technical innovation.
One example of that needed change can be seen in small businesses, of which there are over 31 million in the US alone. Most of these businesses — which are responsible for $14 trillion (that’s right, Trillion, with a T) in payments annually — still use paper checks or bank ACH. Both are slow and full of friction.
So, as I said, we’re talking about a very complex system. And that’s before we mention the elephant in the room — you know, Cryptocurrency.
Key takeaways:
- The fintech industry is a fascinating business domain with many companies disrupting it.
- Business constraints are a strong catalyzer of innovation, so fintech is an excellent ground for innovation.
The fintech industry is very hot and lucrative, all major VCs work to focus on it, and you should too.
