How to Start a Fintech Company
The fintech market in the US represents huge business in the digital age, with a number of associated sectors continuing to record remarkable growth.
For example, the market’s largest segment (digital payments) is projected to see a total transaction value of $1.511 billion in 2022, with the average transaction value per user in the digital investment sector reaching $48,915 during the same period.
Fintech refers to financial technology, and the use of innovation to disrupt traditional financial services. But how can you start a business in this space and achieve financial success?
#1. Choose Your Niche
As we’ve already touched on, the wider fintech market comprises several different niches, from online and mobile banking to mobile payment solutions and a diverse range of crowdfunding platforms.
This makes it crucial that you target a specific fintech niche, in order to streamline your efforts and ensure that your capital is invested as effectively as possible.
This also makes it much easier to optimise your future returns, while creating viable time-frames and business development plans for the future.
Most importantly, having a narrow focus enables you to respect and adhere to the relevant regulations, which may vary depending on your purpose and the precise niche in which your venture operates.
#2. Make a Partnership and Raise Capital
In terms of structuring your fintech venture, you may want to seek out a viable tech partner or team of technical experts that can help you succeed in your chosen niche.
Make no mistake; it’s the technology and unique intellectual property that’s central to any burgeoning fintech venture, while leveraging existing expertise in your selected niche can expedite your route to market and afford you an advantage over your competitors.
This may also reduce the cost of funding your fintech venture, with this type of business typically reliant on large sums of cash and investment even when operating as startups.
Once you’ve determined how much capital is required to launch your venture, you can consider the most relevant and viable solution from options such as crowdsourcing, bank loans, venture capital and bootstrapping.
#3. Create a Viable and Open Payment System
The single largest branch of the fintech industry is digital payments, which have made it easier, quicker and more secure for customers to process financial transactions in real-time.
Because the digital payments niche comprises open and accessible payment systems, you’ll need to ensure that you have your own such system established prior to the launch of the business.
Many of the best and most accessible open banking solutions are agile and can be tailored to suit different types of fintech business, optimising convenience and security across the board.
If you’re going to succeed as a functional, fintech business, it’s crucial that you either leverage existing payment solutions or learn from the market leaders to develop your own infrastructure.