Why Apache Fineract is becoming Fintech’s core banking application?

From financial inclusion to financial accessibility

The financial market has made huge strides in achieving financial inclusion. More people than ever are now supported by financial services through brick-and-mortar banks, mobile phones, or the Internet. Following the success of financial inclusion, the focus has now shifted toward growing financial accessibility. Financial accessibility is a huge market. The need to provide better services, better apps, and core banking that allows Fintechs to connect with mobile phones, blockchain, API’s, etc. is the next step in the evolution of global finance.

What are some of the challenges Fintechs are currently facing?

Today’s Fintechs are working through a range of challenges including the need to make their services more API-driven and cloud-native while keeping up with a fast-paced financial environment.  Fintechs are striving to selectively choose and use the features they need without having to deal with high entry barriers and high licensing costs. These needs are leading Fintechs to prefer open-source software. In fact, in the past year, more new Fintech companies are adopting Apache Fineract as their core banking application than ever before.

What are the advantages of open-source software?

Financial transactions are the gateway through which people can connect at the service level, offering access to other people’s talents and skills. Open source offers low entry barriers for collaborations and for contributing back to the community. Financial institutions therefore greatly benefit from working through open-source solutions, gaining access to the fast pace of the new financial world and its evolution, preserving their relevance and competitiveness while simultaneously expanding their business.

 Synergy is the future of software development

Open source is based on a community of contributors versus an owner/vendor relationship. Community always outperforms the individual in open source. A community of companies is always more powerful than a single company. Open source is the pathway through which software is to be developed and standardized in the next decade. Another advantage of open source is the ability to maintain the IP on new developments. This is very important, especially for startups that need to retain their IP and their “secret sauce” to generate profits. Open source also eliminates recurring license costs.

In the new financial world, different financial entities require different features and services. Building a marketplace around Apache Fineract can be leveraged to grow your business. Open-source solutions offer advantages in many areas, specifically in new types of services such as:

 $        Decentralized Finance (DeFi): Building a DeFi system requires refinancing, loaning, account and user management, scheduling, and repayment capabilities., all easily be created on Fineract.

$        Banking as a service: a new service that is gaining traction. Independent financial entities now offer regulation or banking services to their customers based on the infrastructure they attain from financial institutions.

$        Knowing Your Customer (KYC) management: KYC can be achieved to great benefit with Apache Fineract. Fineract allows financial institutions to connect with startups that offer KYC services. Using a simple picture, video, or picture of your customers’ ID, these companies can then process the information with machine learning and provide you with a comprehensive report including any alerts or callouts regarding your customer.

These companies develop the connectors, making them available to the Apache Fineract community through the Apache Fineract platform. Global financial institutions can then seamlessly use and benefit from these systems through Apache Fineract.

$        Loan management systems: One of the most powerful functionalities that Apache Fineract has are multiple loan capabilities. These include individual loans, group loans, mortgage loans, asset loans, etc.

$        E-wallets: Customers require the ability to transact based on their account. They may have multiple accounts or accounts in multiple currencies. E-wallet providers use Fineract as a core banking application to manage the complexities of E-wallet services.

$        Exchanges: Customers logged into a crypto exchange have an account with different currencies. Balances can easily be displayed in Apache Fineract based on different software. Apache Fineract enables the creation of an easy-to-use exchange platform. The order book, now the core functionality of any exchange, is integrated with Apache Fineract and other open-source modules.

$        Investment accounts: Investment companies use Apache Fineract for managing their customers’ investment portfolios or specific investments for each customer. In fact, building a complete set of functionalities based on Apache Fineract is what makes Apache Fineract so attractive to Fintechs, and is one of the leading reasons for Fintechs to make Fineract their core banking app for the expansion of their systems.

How do new financial players benefit from Fineract?

$        Neo banks and digital banks are banks created from scratch. They typically do not have buildings or branches to visit. The bank is essentially in the palm of your hand – on your cell phone. Many neo banks are now being built based on Apache Fineract because Fineract is perfect for them.

$        Online lenders: Online vendors are growing quickly globally, using Apache Fineract as their core loan management system. One of the best features of Apache Fineract is that it allows any lender to use it out of the box with minimal configuration and customization, saving hundreds of thousands of dollars in licensing and software purchases.

Thanks to its API-based infrastructure, Apache Fineract allows Fintechs to create services, and connect with multiple front ends and service providers, credit bureaus, channels to clients, banks, and KYC services. The Open API movement is making banks more hub-like rather than just value storage vaults. Its openness, collaboration, and flexibility make Apache Fineract highly attractive to Fintechs around the world. With its active community and the thousands of financial institutions and Fintechs using it, Apache Fineract offers a robust platform that is leading the way in the new world of finance.