A few months back, we sat across the table with a mid-sized NBFC that had just walked away from a two-year contract with their previous IT vendor. The reason wasn’t cost. It was that the vendor didn’t understand what “audit trail” meant in the context of RBI’s digital lending guidelines. Six months into the engagement, a routine compliance check flagged gaps that took another four months and a fair amount of money to fix.
This happens more often than people admit. In BFSI and fintech, picking the wrong IT partner isn’t just a delivery risk — it’s a regulatory, reputational, and sometimes legal one. Here’s what we tell every prospective client to check before they sign anything, based on what we’ve seen go right and wrong across dozens of engagements.
1. Don’t just ask about security — ask how they prove it
Every vendor will tell you they take data security seriously. That’s not useful information. What you want are specifics:
- Do they hold ISO 27001 or SOC 2 certification, and can they share the actual audit report, not just a badge on their website?
- Have they built systems that comply with RBI’s data localization norms, PCI-DSS, or GDPR, depending on where your customers sit?
- What’s their incident response process if a breach happens at 2 AM on a Sunday?
One payments client we worked with rejected two vendors during evaluation simply because neither could produce a documented data breach response plan on request. That’s a red flag worth taking seriously.
2. Look for domain fluency, not just technical skill
A vendor can be excellent at building software and still be dangerous for you if they don’t understand lending workflows, NBFC co-lending structures, UPI settlement cycles, or KYC/AML requirements. Ask for case studies specific to BFSI — not generic “we built an e-commerce app” portfolios.
When we built a loan origination system for a fintech lender, half the early conversations weren’t about UI or architecture — they were about how NACH mandates fail, how CIBIL data should be cached versus fetched live, and what happens when a co-lender’s API times out mid-disbursal. A vendor without that context will burn your timeline learning on the job, on your dime.
3. Test their communication before you test their code
During the sales pitch, every vendor is responsive and sharp. The real test is during evaluation — how do they behave when you ask an inconvenient question?
- Do they give you a straight answer when a feature isn’t feasible in your timeline, or do they just say “yes, we can do it”?
- Is there a single point of contact, or does every query go into a black hole and come back three days later?
- Ask to speak with the actual project manager and tech lead who’ll work on your account — not just the sales team.
We once lost a deal to a vendor who promised a six-week turnaround for a KYC integration that realistically needed ten. The client came back to us four months later because the original vendor missed deadline after deadline. Overpromising during evaluation is often a preview of the entire engagement.
4. Check financial and team stability
BFSI projects are rarely short. A six-month MVP often turns into a three-year relationship with ongoing maintenance, upgrades, and compliance changes. Ask:
- How long has the vendor been operating, and what’s their client retention rate?
- What’s their attrition rate on technical teams? High turnover means you’ll be re-explaining your business logic to new developers every few months.
- Do they have a bench strong enough to scale if your project needs more hands suddenly — say, during a regulatory deadline?
5. Scrutinize the contract terms, not just the price
The commercial proposal is where a lot of financial services firms focus, but the real risks hide in contract clauses:
- IP ownership: Confirm in writing that all code, architecture, and documentation belong to you, not the vendor, once payment is made.
- SLAs with teeth: Uptime guarantees are meaningless without penalty clauses attached. “99.9% uptime” should come with a defined remedy if breached.
- Exit clause: How easily can you leave, and what’s the knowledge transfer obligation if you do? We’ve seen vendors hold source code or documentation hostage during disputes — get this in writing upfront.
- Data handling post-termination: Ask exactly how and when your data gets deleted or transferred if the contract ends.
6. Call their existing clients — and ask uncomfortable questions
References given by the vendor will obviously be favorable ones. Still, call them, but ask questions they won’t have rehearsed: “What would you have done differently before signing with them?” or “Did they ever miss a compliance deadline?” The hesitation in someone’s voice tells you more than their words.
In closing
At Speqto Technologies, we’ve been on both sides of this evaluation — pitching to BFSI clients and, occasionally, losing out to vendors who overpromised and later disappointed. Our advice to every prospective client is the same: slow down the evaluation phase, ask the uncomfortable questions, and treat the contract as a risk document, not just a formality. The vendor who’s fine with that level of scrutiny is usually the one worth signing with.
