Fintech is not another popular slang on the internet. It is a key part of our everyday life. Regardless of your interest in bitcoins or blockchain technology, there is a strong possibility that you may have used at least one fintech application.
Fintech is booming and the numbers back it up. The number of fintech startups grew from 12,131 in 2018 to about 20, 921 in 2020 . That is a staggering growth of about 72% in a matter of just two years. It indicates that the adoption of fintech applications is rapidly growing. Besides, conventional data handling techniques will soon be replaced by modern and sophisticated financial operations.
As competition continues to grow across the fintech space, is there any scope for new entrants? How can one enter the fintech market?
Let’s admit it, with a mix of thousands of new startups and the presence of larger players, it could get tricky to make a mark. Having said that, it is not an impossible task.
With the right approach, a bit of forward-thinking, and out-of-the-box ideas, your fintech startup can make a name for itself.
Here are a few things you should remember before building the fintech company of your dreams.
Key steps to consider while building a fintech startup
1. Study the regulations in different countries
Fintech is one of the most regulated industries in the world. This is why it is a wise idea to study the ins and outs of this evolving ecosystem. Get a better understanding of the legal limitations, regulatory requirements, laws, and other complexes. A lot of these have become even more important after the GDPR has entered the fray.
General Data Protection Regulation primarily governs how businesses interact with their customer’s data. The GDPR policy is one of the many things companies need to keep an eye on while entering the fintech market.
Fintech regulations across the United States range from Know Your Customer (KYC) compliance requirements to anti-money laundering (AML) policies. Some fintech companies may also require digit certificates and other authentication mechanisms.
As a founder, you should also be aware of the different laws governing the fintech space in different countries.
2. Find your niche
Once you have made up your mind and decided to enter the fintech space, you should be able to find your niche under the relatively broad fintech umbrella. Some of the subdomains that fall under fintech include:
- Mobile banking
- International and payments money transfers
- Trading and investments
- Personal finance management
- Cryptocurrencies and blockchain solutions
- Financial products for small businesses
Choosing the most relevant subdomain will allow you to provide the most relevant products and services to your target market. In addition, you can also target your product to a particular audience.
3. Identify your USP
Now that you have identified your niche, you should try and understand your competitors. Once you have done that, you can determine what sets you apart from your rivals, a unique selling point.
Your USP can be anything from a new product designed for a particular demographic or quality improvement of an existing product. There are different types of business opportunities available in the fintech space. However, at the moment, big players such as Microsoft and other noteworthy fintech firms such as Coinbase and Stripe dominate the current market, making it difficult for new firms to make their presence felt.
It is very important to focus on product development and execution to be successful in the fintech market. You should focus on user experience and satisfaction even before you start writing a single line of code. Float your idea with as many customers as possible to find out if they resonate with it.
Successful fintech startups such as Robinhood and Mint discussed their idea before going on to create exceptional fintech products.
4. Team building
Let’s admit it! Creating a fintech company or any company for that matter is not a one-man job. Without a great and motivated team, it is impossible to build a successful fintech company.
Today, attracting the best financial application developers and product managers may not be very straightforward, especially if your location has a limited talent pool. If you are looking for experienced engineers and application developers, you may have to shell out some extra money.
As a new startup, the best way to go about this is to hire an offshore development team and look for cost-effective resources in Eastern Europe and Asia.
5. Tech stack
It is critical that your fintech company has custom software development. You are likely to take a major risk if you solely depend on third-party frameworks and CMS to handle transactions.
Some of the common elements included in the tech stack offered by a majority of the software vendors are given below.
Another factor you should consider is data protection and security. You should ensure that all data is encrypted and saved in the cloud. Vulnerabilities associated with sensitive data can be used to blackmail, fraud, and other malpractices.
6. Look for funding
With all the pieces in place, you should be looking for investors to fund your startup. There are different ways to pull in money for your fintech startup. Right from bootstrapping to pitching your idea to venture capitalists, there are many routes. There are also different startup competitions that take place around the world that provide a decent prize pool to kickstart your startup.
Idea to execution
After discussing all the key points you should consider to create a successful fintech company, take some time out and reevaluate all parameters. Create a roadmap, chalk out a timeline, and get the ball rolling.
It is now time to execute your ideas and choose the best path to catapult your fintech firm into the market. There is no set formula to be successful. However, these points in the article are some of the basic pointers you should keep in mind while building your fintech startup.
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 (2021) “Number of fintech startups worldwide from 2018 to February 2021, by region” Statista [online] Available from: https://www.statista.com/statistics/893954/number-fintech-startups-by-region/ [accessed September 2021]