2016 is a year of fintech. It is the year that financial technology has become as popular as “mobile” and “big data”. It is the year that private equity and venture capital have poured billions of dollars in fintech. Although we have witnessed the emergence of many startups in the fintech industry, the market is not yet saturated. If you are planning to a start a fintech business , there are several things you should know for a successful fintech startup.
- Decide your fintech area and your entrance strategy
Decide the area of fintech you want to cover: insurance, investing, blockchain, lending, and payments. Then, determine your entrance strategy. You should know that finance is a very competitive industry, and many areas have incumbents already. Therefore, it is advisable to target a particular niche and then expand it. For instance, SoFi focused on student loans and later expanded to other products. Also, Avant started with near-prime personal loans and later expanded.
- The capital needed
If you are planning to start a capital-intensive company such as insurance and lending, go and raise a lot of money. If you can’t raise millions of dollars to get off the ground, start another type of startup or team up with someone who understands the fintech industry.
- What you should look for
If you are not connected, look for people that are connected. Finance is bureaucratic, heavily-regulated, and relationships with key incumbents are very beneficial. They will give you access to major data sources, access to affiliate networks, access to capital, and so on. In addition, look for the best talents in the fintech sector and your potential customers.
- Market Data is very important
I am always amazed by the number of entrepreneurs venturing into the fintech space without knowing how market data works. It is a surprising trend because market data is the lifeblood of almost every fintech business. Market data might be less crucial for companies operating in lending and payments, but significant to all those focused in capital markets.
- Little changes bring Big Impacts
It is possible that your original idea that made you drop out of college or leave your cushy job will not work. You will likely not get very far if you can’t listen to potential customers, stick to an idea without flexibility or can’t try out different angles. You should know there is a big difference between stubbornness and persistence. Are you looking for success or vindication?
Today, most successful fintech startups attempted many business models before they succeeded. They abandoned big original ideas and embraced what they did not anticipate. Fintech business needs a lot of fine-tuning. So, if you want to be a star in the fintech industry, be ready to change, iterate, test, try and optimize in a way that puts you far from your initial ideas.
In conclusion, even though the fintech sector can be difficult to navigate, the above tips might greatly improve your chances of a successful fintech startup. If you are planning to start a fintech business, try following these guides.