FinTech, short for financial technology, is a type of innovation that optimizes traditional financial services and delivery mediums like face-to-face banking. The most common examples of FinTech are mobile banking, smart investment tools, online payments services like PayPal, or eCommerce platforms like Shopify. Almost every consumer across the globe uses FinTech in some way.
Although the FinTech industry is competitive, new companies continue to grow and attract investment. These are some helpful steps to take when you are starting a Fintech business.
Determine Subfields & Market Demands
Before starting your business, selecting the appropriate FinTech subfield from the many available options should be your first step:
- Banking
- Lending
- Payment
- Saving
- Financial management
- Investment
- Insurance
In addition to selecting a FinTech category you’re familiar with, you should ensure that your product satisfies a market demand better than your competitors. Regan McGee, the founder of real estate app Nobul, stressed the importance of this in an interview with Superb Crew, sharing that “A key element for any business venture is the ability to fulfill a need.”
Study Regulations
The financial sector is intensely regulated by various national and international bodies. Depending on your audience, you may need to study various laws. You may also need to apply for several licenses. Doing this without professional help can be challenging, so consider hiring a FinTech legal expert who specializes in guiding businesses on regulatory compliance.
Prioritize Security
Young FinTech companies must prioritize cybersecurity in an age where ransomware attacks, SIM-swapping scams, spear-phishing hacks, and zero-day exploits are escalating.
Cybercriminal gangs are stealing millions from cryptocurrency apps and accounts every year. And victims often take legal action against the FinTech companies safeguarding their sensitive data or investments.
While your FinTech business will likely not be held responsible for social engineering hacks that rely on user deception, it may be held liable if a cybercriminal exploits a zero-day flaw to steal from your users. In a nutshell, a zero-day flaw is an unknown software vulnerability that hackers can use to breach a financial platform’s defenses and steal confidential information, cryptocurrency, or drop malware like spyware.
Some zero-day flaws are deliberately leftover by developers for exploitation years later. Zero-day flaws are also more likely in systems built on free, open-source software.
It’s always best to develop your FinTech in-house with a team of trusted experts to mitigate the risk of a zero-day flaw. If you’re outsourcing software development, you can prioritize security by selecting a reputable team that knows how to protect your future users.
Find Financial Backing
There are many financing options for you to explore for your FinTech business. But whether you’re approaching family, banks, venture capitalists, or angel investors for money, you should have a proof of concept.
A minimum viable product (MVP) with enough features to attract early adopters can help you secure investment. Feedback from your MVP will also help you with testing, marketing, and planning.
If possible, consider developing your MVP with your savings rather than money from investors. Developing a product demo with your own money will reinforce the notion that you have skin in the game and believe in your startup.
As your FinTech business expands, you should fine-tune your hiring process to form a top team of experts. You may also consider leveraging FinTech trends like machine learning, Big Data, blockchain, and microservices to take your product to new heights! By being proactive, innovative, detail-oriented, and creative, you can start a FinTech business that crushes its goals.
