Unless you’ve been living under a rock in the past year, you must have heard of the 2020 cryptocurrency boom. Ever since the COVID19 crisis hit the world, the price of bitcoin and other cryptos have skyrocketed.
The finance industry is experiencing a revolution. Most of us have already used the services of a fintech company, sometimes without knowing it. Fintech is a growing trend, and many startups have become successful by offering services like mobile payments, and solutions to buy bitcoin with credit card.
As such, many young entrepreneurs are looking to get into this industry. However, to be successful in this highly competitive market, you need a good dose of know-how before you get started.
In this article, we explore some of the most important challenges you will be facing as a fintech founder. This should help you avoid some beginner errors that can become quite costly down the road.
To begin, let’s go through the basics of what fintech really means.
What is fintech?
In a nutshell, any company or startup that provides any kind of financial service by using software solutions can be categorized as “fintech”. Among others, this includes cryptocurrency exchanges, mobile banking apps, money transfer services, digital wallets, payment processors, etc.
There’s a wide array of different apps that fintech can be applied to. However, the most successful ones are those that help users to increase their capital in one way or another. So, what are the essential steps you need to undertake to become a fintech founder? Let’s find out.
The 5 essential steps for launching a successful fintech startup
Like with any type of business, it would be unwise to jump in unprepared when getting started. Below are some of the most important steps you should go through to set yourself up for success.
1. Research and choose your niche
The first and maybe, most important thing you must do when starting your business is to conduct thorough market research. Fintech is quite an extensive industry, that includes dozens of different niches. Check out this article for a few successful fintech business models.
And like with any business, you need to figure out what your target market will be before you get started. To make thing easier, here are a few tips that you might want to follow:
- Identify your interests. After all, you wouldn’t want to be trapped in a business that you don’t like to work in.
- Find out which problems you wish to solve.
- Research the competition. Scrutinize both the successful and the failed startups. This will help you avoid some errors on your side.
- Calculate the profitability of your business.
2. Learn about the regulations in your country
Fintech is an industry that mixes finances and technology. While the tech part is easy to understand, every country has a different set of rules regarding financial solutions.
Banking and finances are highly regulated by governments and are subject to frequent audits and controls that might seem daunting at first. As such, it is vital for any fintech startup to seek professional advice on the regulations measures that apply in your geographical region.
3. Differentiate yourself from the competition
Your next step will be to find what your competitive advantage will be. Assuming you have done your research, you should already have a good idea of what your competitors are good at.
However, by reading online reviews you can also understand where they are lacking. Your product can exploit this weakness and provide a better service in this regard.
The product or service you are offering can also be a completely new idea, targeting an otherwise untapped group of individuals.
4. Hire a capable team
Having the right people at your side is one of the essential ingredients for startup success. Surround yourself with smart, like-minded individuals that are willing to put in the effort to grow your company.
In the beginning, you can also tap into outsourcing your talent abroad, which might be more cost-friendly. Thanks to the evolution of remote-managing tools, full remote teams are entirely possible and easy to manage nowadays.
5. Get access to funding
This point in our checklist will probably be the most difficult to fulfill. However, there are multiple ways to get your startup funded. You can apply for a bank loan or get crowdsourcing from a VC firm, for instance.
If you are confident in your idea, you might even involve family and friends in the funding, for small equity of your business.
In any case, make sure you are prepared to answer each question regarding your future business in a coherent and transparent manner. To make things easier, always have a short presentation ready on your phone to help you pitch your idea to aspiring investors.
Wrapping up
Fintech is one of the fastest-growing industries at the moment. It should be a no-brainer for young entrepreneurs with a good knowledge of finances and software solutions. Hopefully, our short post will help you get started and avoid some beginner mistakes.