So, what is it specifically that differentiates these exceptional startups from the rest of the crowd?
You might have observed that some of the words used to describe all of the listed products were?—?“simple” or “easy.” This can’t just be a coincidence.
Simplicity and ease-of-use are powerful differentiators that can separate any product from their competitors. The simplicity of these products gave them a competitive advantage over other established giants.
Mentioned below are the 7 steps you need to consider in order to establish a successful Financial Technology startup.
STEP 1: Identify your Niche
Fintech is a broad term and has a lot of dimensions to it. The classification of Fintech really depends on various circumstances.
It may refer to a specific set of start-ups and companies, or it may apply to initiatives enabled by technological innovations that contribute to the development of the financial segment.
There are many domains in fintech to consider, here are some of them:
Fund Movement, or transactions by giving or receiving payments.
- Payment Solution
Fund Placement, or the financing of planned or unplanned financial regulations.
- Alternative Financing
Data Management, to get insights for improving decision making
- Financial Management Tools
- Research and Data
For starting a fintech company, one must be crystal clear of the target market and the problem they are looking to address. Besides choosing a domain, your product should cater to a specific audience, e.g., a country, a state, a city or a particular demographic. However, it is always better to launch your startup locally first and expand to the global market later if needed.
STEP 2: Know the Regulations
The banking and finance industries are highly regulated ones’ and for obvious reasons. The regulations are why financial service industries can be tough to break into. Several laws have been put to place to ensure that these sectors are protected from frauds. Also, these regulations can immensely vary depending on the country, state or region you want to operate in.
The arrival of Fintech has ushered in new ways of handling and making money, and thus, have created a grey area for regulations. This has been drawing the attention of lawmakers.
So, whatever domain one wishes to venture in, it is of vital importance to thoroughly understand the regulatory measures that apply according to the demographics and geography.
STEP 3: Discover your Edge
Every unique product or innovation that has been able to disrupt a sector successfully has always been the one that has done something differently.
There couldn’t be a better example for this scenario than Robinhood. With their unique business strategy and viral marketing campaigns, they were able to successfully disrupt the trading and investments domain. Their distinctive business offering, like charging zero commision proved to be an instant hit amongst millennials with limited pocket.
The fintech industry is getting crowded. Many innovations are already underway. Still, a critical entrepreneurial question to ask is if your product/venture will be able to offer something unique and of high importance.
The danger for startups is to become a “me too.” If there is already an entity that is established and doing well in your niche, then you should divert your focus to something new and innovative.
Thus, it is vital for new-age fintech startups to focus their attention towards developing a product that offers a service or a feature that is exclusive to them. There needs to be some sort of nuance that your solution must provide.
This distinction would serve as the disruption that you might have been looking for.
STEP 4: Hire the Right Talent along with the Right Tech Stack
• Hiring the right talent
A successful enterprise is made from its people. Therefore, hiring crème-de la-crème from amongst the crowd is of vital importance. If your city has a limited talent pool, then attracting good talent becomes quite tricky.
In such cases, the best decision for a startup would be to hire a software development team offshore (consider India!). This not only cuts significant costs for up-and-coming startups, but also provides a solid team of specialists with specific domain knowledge and relevant experience.
If you are on the lookout for creating a great product and are considering hiring a software development company, then look no further, we have compiled a list of the best financial app development companies.
• Choosing the right tech stack
It is must for every fintech product to have a customized software. No decent startup relies on third-party CMSs or frameworks to handle their transactions. Additionally, no ready-made solution can match the performance capabilities of a custom designed software.
With finance, comes along the risk of data breach. Therefore, data safety is one of the most critical aspects of Fintech App Development.
Every startup needs to ensure that their product is secure and all the sensitive data is encrypted and stored in the cloud.
Step 5: Start by creating an MVP (Minimum Viable Product)
I strongly recommend starting with a Minimum Viable Product first.
For beginners, an MVP is a development technique in which a new product or website is developed with just enough features to suffice for the early users of the product. The final product, with all the elements, is only designed and developed once the feedback is received from the initial users.
There are numerous advantages of following this process, primarily:
1. Cheaper: An MVP saves you a considerable amount of investment because you’re not required to develop extra functionalities that may have compromised the product anyway. These cost saving are essential because you don’t know for sure whether the consumers will like the product. Through MVP you can test the waters and then dive into the deeper end of the pool.
2. Effective: Using the MVP approach means you end up with only those features that you require the most, so, there is comparatively less façade, and your product turns out cleaner and simpler.
3. Faster: Another benefit of an MVP is the Speed of Development. You’re not trying to create a perfect product right away; it serves as a platform to implement the idea, study its use, make amends and then proceed further. This makes the entire process a whole lot faster and easier.
4. Reduces risk: A startup with a Minimum Viable Product is more likely to receive funding from the investors, this is because an MVP gives you an opportunity to test the waters without directly building the final product. It allows developers to test the viability of your product amongst the target audience without requiring huge investments.
The lower the risk of the investment not paying off, the more likely investors are to fund your idea.
Step 6: Get Funded
Starting a fintech company is a costly affair. Making an incredible product requires talent, and talent isn’t cheap. As traditional organizations are trying to acquire fintech talent for themselves, startups would inevitably face competition in hiring. If your venture isn’t looking to partner with professionals who can create the entire product range, then stay prepared to shell out a reasonable amount for talent.
Now, if you don’t have deep pockets, it becomes quite difficult to stay afloat in this volatile domain. Thus getting an investor onboard becomes essential to not compromise on the product quality.
What entices Investors?
With the current wave of excitement around fintech. The global venture capital investments have crossed almost $17B. This, however, could also be a bane for early age startups, because the competition for funding is snowballing exponentially. VCs are getting more and more selective, and are seeking out companies with truly game-changing offerings.
Thus, it is required to make your value proposition more and more enticing.
Step 7: Build Partnerships
It is as essential for up-and-coming fintech startups to develop alliances with relevant institutions, as is getting funded.
Partnering is an excellent approach to build muscle in innovation and transformation. In which you can learn at minimal cost and minimum risk. The primary reason for partnering pertaining to this specific domain is, ‘Credibility.’
It could be hard for users to trust an emerging entity, and that too in such a volatile domain. Thus, when you are associated with a relevant name, it becomes comparatively easier to sail through those hurdles. Financial institutions also bring along a large customer base and comprehensive customer data.
Thus partnering can provide a considerable boost to startups and together they could improve product efficiency and build highly accessible products.
Fintech may not be the easiest industry to target. With all the pitfalls in consideration?—?It takes sweat, time and effort to create a successful fintech company. It demands expertise, creativity, and honestly, a lot of grit to launch a startup in such a frivolous and competitive domain.
There are numerous opinions highlighting the supposed discord between the slow-evolving realm of finance and the highly disrupting world of technology. The pressure on tech companies to deliver huge results rapidly is immense.
Still, if you believe that you will be able to solve financial issues for your users through innovative means, go ahead. You will also need the right people by your side. A team with strong technical skills and impeccable domain expertise will definitely help in building something great.
Just be shrewd with how you do it.