The Secret to Successful Fintech Startups
Fintech is a young and rapidly growing industry causing disruption in the financial world for the last decade. Fintech startups have come to dominate traditional banks and other financial institutions with innovative technologies. There is no shortage of these startups in the marketplace today. But, what makes a Fintech startup successful? Fintech startups can be defined as an organisation that uses technology and innovation to make financial services more accessible and affordable. Financial Technology uses software to enable financial transactions like lending, investing, insurance etc. To start a Fintech startup, you need first to identify your niche. Once you’ve done so, take these five steps towards success:
Find promising markets with huge potentials
Fintech startups are found in every corner of the world, but some markets are more promising than others. The United States is a hotbed for Fintech activity, with over $24 billion invested in Fintech companies in 2016 alone. The UK is also a significant player in the Fintech scene, with about £13 billion.
Fintech is also popular in emerging markets with a high population of unbanked people or a low banking penetration rate (like Africa). It can provide better access to credit for the under-served populations there.
Create unique solutions tailored to those markets
The Fintech industry is constantly evolving and growing. This means that you continually need to innovate and develop new solutions for your target market to stay ahead of the curve.
A Fintech startup’s success depends on offering something that the competition doesn’t. This is what we call a “unique selling proposition” or USP. To find a successful niche, you need to find an issue in the market that your startup can solve better than anyone else. You should then develop a USP that caters to your clients. Research is vital, so you must research and find out what those markets need before investing heavily into a startup idea. If you fail to provide them with something useful, they won’t have any incentive to use your services.
Implement agile methods of work based on lean principles
The Fintech industry moves quickly and is constantly evolving. So to keep up, you need to be able to move just as fast. This is where agile methods of work based on lean principles come in handy. Agile methodology allows you to respond quickly and efficiently to changes in the market while keeping your costs low. It also helps you prioritise and focus on the most critical tasks. This is essential in a fast-paced industry like Financial Technology.
Build strong partnerships with banks and other institutions in the industry who are willing to help you succeed instead of competing against you
Networking is key to successful startups. Build and nurture relationships and rapport with all stakeholders. Fintech startups cannot succeed without the support of banks and other financial institutions. In fact, Fintech startups are often seen as a threat by these larger institutions. So it’s essential to approach them in the right way.
Partnerships with banks can provide Fintech startups access to key resources like customer data. Fintech startups can integrate technology such as AI and machine learning with existing financial systems to make the process of payments, lending and investing more accessible. According to Statista, “70 per cent of senior banking executives said that collaborating with Fintechs and Bigtechs to create a new service was an important opportunity for banks.”
Finally, stay committed to your vision by continuing to innovate
Always think of new ways and technologies that can disrupt your industry further.
Don’t be afraid to take risks.
Though the Fintech industry is still young, there are many opportunities for growth and innovation in this field!
Fennech is B2B Fintech, specialising in back-office automation of finance, treasury, and payments services. We deliver an enterprise-level platform to manage your financial operations on one powerful platform.