Fintech (Financial technology) companies seek to offer financial management needs to their users by automating the delivery and utilization of financial resources. Fintech companies provide superior solutions that almost threaten to kick traditional financial service providers at their game, owing to their efficiency. The fast-paced embracing of fintech technology has much to thank for, but one of the chief factors has to be the surge in demand during the pandemic. Buyers now prefer to use fintech apps in their transactions, and banks, insurers and lenders are making the most of the efficiency and streamlining offered by fintech apps.
It is safe to say that the market for Fintech solutions is ripe and will remain high. That presents the perfect opportunity for innovative minds that want to delve into the fintech business. It can, however, be hard to know how to navigate the industry, especially if you are a newbie in the business space. But with the correct set of tools and insight, it is possible to make the process more seamless. Here is a guide to building a fintech startup from the ground:
Be acquainted with the regulations
For starters, it is worth noting that the financial sector is among the most highly regulated industries. You should also be acquainted with the ins and outs of the sphere. You have to know all the regulations that apply. You should understand the laws that affect fintech in your country and region you will operate in. It is important to select the right business structure right from the start.
Also, since the fintech business requires you to interact with customer data, you should understand everything about the General Data Protection Regulation (GDPR). You also need to know anti-money laundering policies and adhere to the Payment Card Industry Data Security Standard (PCI DSS). These regulations require you to use robust passwords, data encryption technology, and antivirus programs and be prompt in scanning your networks for possible vulnerabilities.
Equip your business with the appropriate digital certificates and other authentication mechanisms too. It is also worth noting that the standards differ from country to country, and sometimes some states have different laws. Take time to go through the regulations and understand what licences you may need to get the startup going. That way, you do not risk data breaches and fines with the potential to bring your startup down before it has had a chance to get off the ground.
Tip: Seek legal help as you set up short to avoid making costly legal mistakes that could hurt your fintech business in future.
Select a niche
The fintech world has several subdomains. There is lending, personal finance management, mobile banking, trading and investments, international transfers, and crowdfunding, among others. You could also choose your niche by targeting a specific demographic group or geographical location. Fortunately, all the categories in the fintech software market have a considerable market that is continuously growing.
Identify your Unique Selling Point
Again, a competitive advantage makes you stand out from the crowd. Identifying a niche is the first step in carving a space for your startup in the fintech world. It does not stop there. You need to assess the competition and identify what characteristics distinguish your product from similar ones in the market. Your unique selling point could be anything from the improved quality of your offerings to a focus on a specific demographic.
The fintech market is extensive, but it can be hard to thrive without a competitive advantage. Admittedly, tech giants like Microsoft are the most dominant in the industry. That makes it seem unattainable to newcomers. However, with stellar execution and something to set you apart, you have the best chance to make a break in the fintech market. It is worth noting that even the best USP falls short if user satisfaction is wanted.
Find a reliable software development company
You may have an incredible idea. However, minus an appropriate development team, it may be impossible to hit the ground running. Collaborate with a software development firm that promises impeccable software quality, excellent performance, reliable maintenance, and compliance with set deadlines. The strength of your digital solution depends on the trustworthiness and quality of the fintech software development company you hire.
Be sure to evaluate project case studies for potential IT partners. That way, you can gauge their expertise before trusting your project in their hands. Consider other factors like the experience of their team and the level of support their software engineers will be willing to extend once they surrender the project to you.
Some companies go the extra mile and prepare technical specifications, help you choose a tech stack, perform quality assurance and keep the system running even after the launch. Such companies are more likely to give you value for money than those that offer the bare minimum.
Hire the dream team
One of the most crucial ingredients for startups is having the best team. You want to onboard people aligned with the mission and vision of your business. Granted, it can be a challenge attracting top financial app developers with a limited startup budget. An excellent alternative would be to hire an offshore software development team to provide excellent services cost-effectively. Build a reliable team by analysing the domain knowledge and relevant skill set before narrowing down on an offshore company.
Tip: Remember, you can choose to outsource various tasks like software development to help you scale up faster without spending much.
Choose your tech stack
You have the option of relying on third-party CMSs and frameworks to handle your transactions, but that is not always the most appropriate route to take. Custom software development will help you take care of all your heavy-weight fintech products.
Also, your performance is better with a reliable tech stack option. Be sure to select the best choice for your fintech development. Some of the programming languages you can consider are C/C++, JavaScript, Ruby, and Python. Node.js, Django, Spring, and React are examples of Frameworks you could apply to your fintech app. Have a reliable database for optimal operation. You can choose between MySQL, MongoDB, PostgreSQL, or Redis databases.
Think about your funding options
You will need a substantial financial investment to get your startup up and operating. And you may not have all that money. Fortunately, there are multiple avenues to raise funds for your startup. You could get a loan, crowdsource, opt for venture capital or consider bootstrapping. Another viable option would be to enter a startup competition to source funds or ask your friends and family to chip in and support you.
The avenues may be numerous, but you have a better chance of getting the financial aid you need if you have something to show prospective investors. Create a business plan and develop a visual prototype for your pitch. That helps them gauge if putting money into your venture will be worth the investment.
Do not forget about data protection
In the Fintech business, you will be interacting with confidential customer data. You, therefore, can not neglect data safety in your operations lest you land your business in consequential legal trouble. Put your house in order by encrypting sensitive data and ensuring that your product is secure. Store data in the cloud to always have a backup in case of a potential breach.
Do what you must to provide airtight data protection. That prevents sensitive information from leaking to unauthorised and malicious parties who could use it for fraud. Be sure to run frequent and extensive security checks for your source code to spot any vulnerabilities that cybercriminals could leverage. Use transport layer security (TLS) to eliminate unwanted API connections. The extra layer of protection ensures that your client’s data stays safe with an HTTPS SSL certificate.
It is also best to build your infrastructure on a cloud platform that assures reliable protection against DDoS attacks. It also backs the data making it easier to recover from network disruptions. Ensure that you educate your client on the importance of complex passwords and always employ multi-step authentication on the client side. You can go the extra step and introduce fingerprint scanning and face recognition options that offer high-level data protection.
Start with the minimum viable product (MVP) and improve
Start with building the bare minimum scope of features to test the waters. The MVP will help you gauge the potential profitability of your idea before you put all your money into it. You also get the chance to collect crucial user feedback that you can use to create the best final product. Be open to starting small and growing your product progressively. That is the best way to minimise potential risks that can be numerous in a market that is as saturated and competitive as the Fintech one.
Know the pitfalls to avoid!
In business, there is no magic potion or single ingredient that can promise overnight success. That said, a significant part of thriving and growing in the sector is knowing what mistakes to avoid. Some of the factors that have the potential to stifle your growth are having mediocre employees and neglecting the needs of your niche market.
Wrapping up
Success in any field depends on expertise, sane decision making and knowledge. And that is no different with the Fintech world. Aside from that, it makes a world of difference in the fintech startup success when you have a blueprint to guide you along the way. Remember, you don’t have to do it all alone. You can seek help from professionals and experts in aspects like law and tech to help you create a successful fintech business!
Author bio; Imala Green is an experienced writer specializing in financial technology and business niches. She has been working as the head of the content department at Outreach Monks for the last three years. She aims to make her readers aware of financial technology and help them run profitable businesses. Thus, you can find easy-to-understand language in her articles.
