Testing Investment Management Software: A Critical Step for Protecting Your Clients’ Funds

7 min readSep 28, 2023

The investment management industry is characterized by high stakes, demanding every measure be taken to safeguard clients’ funds. For developers navigating this intricate and complex field, delivering high-quality investment software is not just a technical pursuit — it is a commitment to security for the investors. Lately, the reliability of such software has become especially critical since the increasing number of professionals in this industry are planning to incorporate progressive technology into their work.

According to the 2023 Investment Management Outlook Survey conducted by the Deloitte Center for Financial Services, most leading investment management firms expect large spending increases on software tools. In particular, this concerns solutions that can help them automate tasks, improve efficiency, and make better investment decisions. Therefore, to maintain this trust and satisfy the growing demand, investment management software has to meet this industry’s strict requirements.

Thorough quality assurance is, without a doubt, an answer to this question. A meticulous testing process for such products is a preventive barrier, shielding against potential discrepancies and unexpected errors. Given the cost of a mistake in the investment management field, it is clear that planning and conducting proper testing activities require careful attention.

In this article, we will use our knowledge and experience in quality assurance of investment management tools to further explore the role of testing for such products and give useful tips to guide you in this process.

The Risks of Insufficient QA for Investment Management Software

In an industry where precision is critical, bypassing rigorous software testing can lead to drastic consequences. The results of deploying untested or inadequately tested software in this sector range from financial repercussions to compliance issues and irreversible reputation damage. Let’s discuss what developers truly risk when they do not pay enough attention to all the aspects of quality assurance for investment management software.

Financial Losses

At the core of the investment management industry is the responsibility to amplify and protect the financial assets of investors. When the software designed for those purposes is infested with bugs due to inadequate testing, it becomes a breeding ground for financial losses. These glitches can misdirect investments, miscalculate assets, or disrupt trading algorithms, leading to significant financial damage for both investors and investment management firms. Since the field is dominated by real-time and high-frequency trading, the financial consequences of even a split-second error can spiral into millions.

Compliance violations

Investment management firms operate in a tightly regulated environment, with strict adherence to a variety of laws and regulations aimed at maintaining market integrity and protecting investor interests. Failing to test software thoroughly can lead to compliance violations, exposing firms to legal sanctions, substantial fines, and heightened scrutiny from regulatory bodies. Such issues not only deplete financial resources but also cause the necessity to divert critical attention and time toward fixing regulatory infringements. This distracts the users of such software from the core focus on investment strategies and management.

Reputation damage

The reputation of investment management firms is their most valued asset, built meticulously over the years. However, it can be shattered in an instant due to a critical mistake. Software failures, especially those leading to financial losses or legal repercussions, can irreparably damage a company’s image. The subsequent loss of trust can result in a mass outflow of clients, a decrease in revenue, and even a threat to the firm’s existence. In an age where news travels fast, a single incident can lead to longstanding reputational damage, with companies struggling to regain client confidence and rebuild their brand image.

A Short Guide to Testing Investment Management Software

Four critical aspects that demand careful testing during the validation of investment management tools are the database, functionality, security, and software performance. Below is a concise guide outlining the essentials of testing each, ensuring the deployed software is robust, secure, and efficient.

1. Database Testing

The database is the backbone of investment management software and is responsible for storing, retrieving, and managing vast volumes of dynamic and sensitive financial data. While testing the database, consider the following steps:

Data integrity: Ensure the accuracy and consistency of data during operations like addition, deletion, and modification. Pay close attention to validating foreign key relationships, which involves ensuring that the links between different sets of data in the database are accurate and consistent. This is what maintains the reliability of the whole database. In addition, run queries to check for duplicate or missing data and compare the information in the database to other data sources, such as financial records.

Data migration: Test the migration process thoroughly to ensure no data is lost, altered, or corrupted when transferred between different environments or formats.

Query optimization: Evaluate the efficiency of database queries, ensuring they execute swiftly and do not overload the system.

Backup and recovery: Regularly test backup strategies and recovery scenarios to protect against data loss due to system failures or other unforeseen circumstances.

2. Functional Testing

Functional testing is crucial in verifying the operational integrity of investment management software. It ensures that every functionality works according to the specified requirements, from user interactions and data manipulations to integrations and business processes. Here is a focused approach to functional testing for such complex tools.

User interface and interactions: Ensure that every interaction point in your software responds as expected. Validate all user commands, searches, data inputs and manipulations, and every other interaction scenario to confirm that users can operate without critical issues and receive correct responses from your software tool.

Transaction processes: Verify every software transaction, including trading transactions, funds transfer, portfolio rebalancing, order management and execution, reporting transactions, etc., ensuring not only their performance but also their accuracy and compliance with business rules. Testing should cover all transaction types to guarantee the users the reliability of all these functionalities.

Integrations and data exchange: Evaluate the software’s capability to interact and integrate seamlessly with other systems and platforms, confirming the accuracy and integrity of data exchanged. Make sure that integrations do not compromise the software’s performance, reliability, or security.

Business logic: Test the software’s business logic rigorously to confirm the correct implementation of all business rules and processes. At this stage, you can consult with real end users of the software to compile realistic testing scenarios ensuring that the software behaves intelligently and makes accurate decisions meeting the needs of investors and investment management firms.

3. Security Testing

Given the sensitive nature of financial data, security is paramount in investment management software. Here are the crucial components of security testing you should not miss:

Authentication and authorization: Validate the effectiveness of access controls, ensuring only authorized users can access the software and perform actions according to their roles.

Data encryption: Test the encryption mechanisms in place for both data at rest and data in transit to ensure the confidentiality of sensitive information.

Vulnerability assessment: Regularly perform vulnerability scans and penetration testing to identify and mitigate potential security risks. This involves simulating attacks on the investment management software to identify any security vulnerabilities that may have been missed during the previous checks.

Security compliance: Ensure the software adheres to relevant security standards and regulations, such as, for example, PCI DSS for payment information and GDPR for personal data protection.

4. Performance Testing

Investment management software should be capable of handling high transaction volumes and user loads efficiently. The following types of performance tests will allow you to ensure the reliable performance of your product under various conditions.

Load testing: Assess the system’s behavior under peak load conditions, identifying and mitigating bottlenecks that can impact user experience and system responsiveness.

Stress testing: Evaluate the software’s stability and reliability under conditions beyond its operational capacity (extremely high data volumes, concurrent user requests, network stress, unusual trading scenarios) to identify its breaking point and how it recovers from failure.

Scalability testing: Determine the software’s ability to scale up in response to increased loads, ensuring it can handle growth in user base and data volume effectively.

Response time measurement: Asses the time that the software takes to respond to user requests to find out whether it meets predefined benchmarks and offers optimal user experience.

In addition to general best practices for effective quality assurance of investment management products, we have asked our specialists for some experience-based tips to simplify this process and give you a competitive edge. Take a look at the following practical suggestions.


In the field where there is no room for error, developers constantly balance between delivering software that is advanced and secure at the same time. And the growing demand of investment management professionals for tools that can assist in their decision-making process shows that the requirements will gradually become even more complex. Therefore, the importance of up-to-date and relevant testing practices in your development process is undeniable.

However, the complexity of the industry and the software itself dictates equally challenging rules. In particular, the success of such products demands not only specialists with a good grip on general QA techniques but also testers who have an understanding of the intricacies of the investment process. Only specialists with this knowledge can ensure a comprehensive approach to verifying your investment management software.

The team of QATestLab has years of experience in testing web and mobile fintech software. Our flexible and expert assistance can help you look at testing your software from a new perspective and ensure that the development of your tool is backed by appropriate QA practices. Testing complex software should not be complex for you and your team. Leave us a message about your investment management product, and let’s discuss how our team can help it thrive.




QATestLab is an international provider of independent QA and testing services with 15 years of cross-industry experience. https://qatestlab.com/