Know These 5 Things Before Launching A Fintech Startup
Financial Technology (also known as FinTech), is the technology that aims to create a better, effective and a modern method than the current traditional methods in the delivery of financial services. Technology has greatly influenced the current financial systems and the traditional financial service providers are constantly trying to inculcate technology; as an entrepreneur, you may believe that starting a FinTech is a convenient method to increase profits but it is not always certain. Following are a few points to consider before starting a FinTech:
Although FinTech has become the most dominant financial service in the market, it is important to realize that banks are not yet obsolete; they continue to innovate, implement technology and continue to be a cut-throat competition against FinTech. Banks are still in control of assets; so much that they can partner with FinTech companies or buy them out. Bank of America is investing $1.5 million in fintech efforts in Charlotte, N.C. In Europe, Santander has started a fund to develop fintech startups.
With increased use of technology, there has been a drastic increase in cybercrimes and cyber-attacks; FinTech companies are particularly susceptible to such attacks due to its technological nature. In any case, a customer’s data is stolen will only lead to decrease in customer trust; customer trust is one of the most important aspects for a company’s survival. A survey by the National Association of Retirement Plan Participants in 2016 indicates that only 8 percent had faith in their financial institutions. The biggest challenge for you will lie in developing and maintaining your customer’s trust.
Building a FinTech is not a one-man job: financial, technological and business expertise is what is required for a growing FinTech company. You might also need some legal help in compliance requirements.
Unique and Valuable Service
There are now numerous FinTech companies but what will attract the most customers to your company is your uniqueness. Fintech startups are multi-disciplinary: personal finance, budgeting, payments, lending, investments and insurance. All startups aim to provide newer and better solutions to your financial problems. Fintechs are also currently only aimed at the Millennial; other ages are not yet aimed by these startups. Stock trading app Robinhood’s users have an average age of 26.
Technologies like blockchain, distributed ledgers, artificial intelligence, data and algorithm driven approach is a major part.