Case Study: Developing a High-Scale SMB Funding Platform

Summary

Industry: FinTech.
Location: Western Hemisphere.
Project duration: August 2020 – Spring of 2022.
Size of the project team: 4-13 experts.
Software product: a Web application.
Expertise delivered: Product Development (the analysis of the client’s business processes, refinement and expansion of the functional specification), UI/UX design, Custom Software Development Services.

Challenge

In the summer of 2020, one of SPD Technology’s eCommerce clients recommended us to a Western lender that intended to implement a complex Fintech software product. The company is a well-established provider of business funding and real-time financing. As of early 2023, they have funded several thousand businesses for a total amount of $ 250 + million.

At the time they got referred to SPD Technology, the client already owned an SMB lending app for long-term lending. To increase their business presence and diversify their service offering, the lender made a decision to develop a larger-scale SMB lending platform. In addition to SMB funding, the platform was to allow the client to provide short-term lending to diverse merchants in various industries against future receivables (or proof that the corresponding funds were due to these merchants at a near date). The solution aimed to immediately provide merchants with the working capital they needed, thus eliminating any weekend- or holiday-related delays and the resulting extended settlements.

After a detailed discussion, the client engaged SPD Technology to implement the whole of their project.

The Client’s product

The client’s SMB funding platform allows merchants to quickly get registered, verified, and obtain funding the same day, if they qualify. The information a merchant provides during the registration in the Merchant part of the application includes their personal credit score, number of years in business, and gross monthly revenue. The system checks the merchant’s credit history externally via an integration with a corresponding service. Its algorithm uses the merchant’s credit history and their transaction history to determine the most suitable funding option. To calculate the funding rate, applicable in each specific case, the platform uses info on the merchant’s bank transactions, cash flow-related information, and some of their credit information.

For real-time financing against future receivables, the merchant also links their account in the system with their bank account to give the platform access to their account information. The user’s account can be with any bank.

Once the merchant is recognized as eligible for an advance payment, this payment is transferred to their bank account. It is then possible for the merchant to transfer the received funds to another person’s or a business entity’s bank account or bank card, or to another user’s account within the system. Besides, the platform also makes it possible to replenish the account, or use the funds in it to pay some business-related expenses with the help of a payment card. This payment card is issued by the client’s partner bank that handles all the settlements for the transactions that pass through the platform.

Solution

To implement the project, we initially assembled a core project team that consisted of just four experts: 1 Business Analyst, 1 Software Architect, 1 Business Analyst/Project Manager, and 1 DevOps engineer.

This core team quickly grew to include at first 7 team members and then more software developers and other experts. The largest number of experts on the team (a total of 13 people) was during the project’s later stages. Among the other experts, the team included 1 UI/UX designer.

Throughout the project, we were working in close collaboration with the client’s CTO, who provided the initial detailed product vision we subsequently refined and significantly expanded. It has taken our project team around a year and a half to complete the project and deliver the full scope of the planned functionality.

In implementing the project, our team has encountered a host of imposing challenges. One of the more significant engineering challenges was developing the intricate calculation functionality of the client’s platform. This functionality calculates and distributes commissions, while taking into account a diverse array of factors. In addition, we needed to make this functionality robust and reliable enough to rule out any possible financial losses.

The UI of the client’s funding platform was very challenging to implement because of the great number of details it had to include, while remaining intuitively user-friendly.

During the architecture design phase, our experts needed to embed enough scalability and the ability to sustain high-loads: each of the thousands of merchants the system was planned to service could concurrently generate hundreds of transactions per day.

The need to comply with the numerous and diverse compliance requirements created an entire array of major challenges we had to deal with too. More specifically, we needed to ensure the solution’s full PCI and GDPR-compliance. It was also necessary to implement the required KWC/KWB procedures, which involved adjusting the system functionality and has taken us a considerable additional effort.

While working on several 3rd party integrations, our team was communicating with various external partners and taking part in risk analysis and system analysis. We also frequently collaborated with the members of the client’s in-house team, who provided maintenance for their first lending solution.

Lastly, our project team extensively interacted with the clients’ prospective partners. In particular, we’ve been instrumental in defining the profile of the partner bank that would suit the client’s needs. We’ve also assisted the client in selecting this bank by being directly involved in negotiations with multiple candidates.

Technical Solution

SPD Technology’s project team has used the following tech stack to implement the project:

• Java 11
• Quarkus
• PostgreSQL
• Hibernate
• Kafka
• Kubernetes
• AWS

Result

SPD Technology has delivered the full scope of the client product’s planned functionality on time, on budget, and to the client’s complete satisfaction.

The solution successfully went live in the spring of 2022, making it possible for the client to proceed with their business expansion plans.

With our assistance, the client has been able to tap into new market niches and attract several thousand SMB clients.