Yes, we all have heard of Fintech but not sure what it exactly is, for the doubtfuls investopedia defines it as – a blend of the words finance and technology, fintech applies to any innovation in how people transact business. Since the past few years the term has expanded to include any technological innovation in the financial sector, including innovations in financial literacy and education, retail banking, investment and even crypto-currencies like bitcoin.
As per EY’s Fintech Adoption Index 2015, one in seven digitally active consumers were already fintech users and in 2017 this adoption grew to one in three. Since the time internet permeated every corner of our lives, fintech which initially referred to computer technology running the back office of banks and financial or trading firms, now includes a range of technological interventions into personal and commercial finance.
And that is why the market is seeing a surge in fintech startups even though the financial industry is extremely competitive and turbulent. Here are some factors to bear in mind for fail-proofing your fintech startup in an environment that doesn’t allow tender startups to grow –
1. Scan and analyse your market
Does your idea have a market? A seemingly promising idea might not necessarily work in practice. Therefore, begin thoroughly analysing the market as soon as possible to determine the size of the target market, nature of existing competition and the price of comparable or competing products and services. The market analyses should answer if your idea/business has a suitably large audience or not.
If fintech startups focus on addressing existing challenges or fulfilling unmet market needs, then their chances of survival and success are increased.
2. Understand how to use market data
If you are venturing into the fintech space you need to know how market data works and surprisingly many entrepreneurs don’t. Market data is the lifeline of many businesses and it is not free! You run the risk of legal issues and back charges in instances of using data for non-personal use from a financial portal. Assuming that the data available on Yahoo! Finance and Google Finance is ‘public’ in nature is a myth. You could also face retaliation in the form of a legal suit from exchanges and data vendors who originally own that intellectual property. Displaying real-time or delayed data is a complex issue and is subject to strict rules from exchanges involving agreements and fees. Not adhering to these rules could also make your investors wary of backing the venture. Hire dedicated fintech app developers to create bespoke mobile applications that curate and filter essential market data for you.
3. Secure funding/investors in advance
The funding essentials like needed capital, expected outgoings and potential profits that are a part of every business plan should be sorted before the firm is launched. At this stage you can explore loans, suitable grants and subsidies. As you move past this stage you will see yourself competing with banks and other fintech startups with capital aplenty, therefore making a quick move to attract investors early on is of utmost significance. The search for people who believe in the market potency of your idea and are readily going to invest should begin at the earliest.
Throughout the growth trajectory never lose sight of your startup’s financial status; keep your company liquid and have a grip on applicable taxes and overall accounting.
4. Carefully decide the organisation form of your company
For startups choosing the right legal form of organisation is crucial because once chosen it cannot be modified later. The selected form of organisation defines the taxation and legal framework within which your startup will be conducting its operations, thus, due thought is necessary in this area so that you finalise a form which suits your fintech startup’s needs.
Also apply for all needed licenses and make registrations on time.
5. Invest in people
You don’t have to poach staff from banks and other financial institutions. Just tap on potential, talent that will grow and decide the fate of your startup. The expertise needed for fintech is not easy to find, it has to be nurtured. Make sure that your staff has the necessary qualifications for meeting regulation requirements and don’t hesitate to invest in your team
For success in the fintech landscape, be ready to change, try and test different angles and business models. Flexibility and readiness to listen to your customer base shall have a big impact on your startup.