How to build your FinTech company? Expert suggests these 6 key factors to set up a successful company

Currently, the digitization of banks, mobile payments, digital currencies, online mutual fund investments and others have given rise to fintech innovation. The recent stats show that India is one of the fastest-growing FinTech sectors in the world and has the highest FinTech adoption rate globally. Additionally, the industry was valued at $50-60 billion in FY20, which is further expected to cross $150 billion by 2025.

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Amit Kumar, the Founder of GalaxyCard said, "Considering the holistic scenario, FinTech is largely driven by non-bank entities that are offering solutions to the challenges presented by the traditional financial and banking system. It is transforming conventional value chain, business model and market positioning." He also added that it is enhancing customer experiences and expectations by involving a client-centric approach in the services of the sector.

Kumar also pointed out these factors behind the building of a successful FinTech company:

1) Awareness about regulations - The banking and finance industries are highly regulated. There are many laws that govern traditional finance as well as the FinTech sector. The laws such as anti-money laundering (AML), Payment Card Industry Data Security Standard (PCI DSS), Know Your Customer (KYC), and The General Data Protection Regulation (GDPR) play a crucial role in addressing opportunities and challenges arising with the adoption of new-age technologies. Thus, it is important to have in-depth information about regulations before starting a FinTech company. Kumar says, "Learning about these laws and regulations and how they are going to impact the startup’s business is another crucial point one needs to consider before starting up. Laws can vary from one country to the other and a startup anticipating global reach must apply for required licenses."

2) Identify your niche - In today's digital-driven world, FinTech is no longer a niche but it is a highly powerful and broad niche market. The Founder of GalaxyCard feels that works as an ecosystem offering better solutions in the industry. Whether it is an established financial company planning to move onto digital space or a novice, it is necessary to identify and have comprehensive information about the niche. Kumar further adds that with the adoption of advanced technologies, several niches have emerged such as lending apps that simplify loan approval and process for customers. The other most popular niches in the FinTech industry include electronic mortgage apps, Insurtech, Mobile banking, personal finance, peer-2-peer payment, trading and investment and crowdfunding.

3) Know your competitors - According to Kumar, FinTech is expansive and growing at a fast pace, given the multitude of business opportunities. So, he suggests that before starting up, it is imperative to know the competitors as one will be entering the market with existing solutions. He further adds, "To be a game-changing startup, the product needs to identify certain gaps in that specific niche. On the other hand, if a FinTech startup fails to introduce an innovation but improves the quality of existing products can also prove to be successful."

4) Build a team - Another important factor that this important for developing a FinTech business is building a team. He says, Building a team for FinTech is quite a challenging part. It needs the right balance of experts from the finance and technology sector to drive a unique FinTech business."  However, he also points out that this does not necessarily mean a FinTech startup needs to tempt the best people from established corporates and shell out massive salary packages. Kumar advises that prior to jumping on to conducting a hiring spree, it is absolutely critical to create the right hiring strategy. The strategy needs to be adaptive, at the same time innovative to meet the diverse challenges of the market. While FinTech startups with low financial capabilities choose to work with third-party technology experts, app developers, security professionals and others for a more cost-effective solution.

5) Choose your source of funding - Funding for a FinTech startup with expansive business plans initiates a strong foothold in the market. Kumar believes, "Given the competitiveness of the market, raising funds becomes an extremely challenging and tiresome task. There are many ways that startups can explore to get funded for their Fintech business including crowdfunding, bank loans, venture capitals, seed investors and many others." He also adds that the startup should focus on having a minimum viable product (MVP) that presents a proof concept for the startup. It plays an integral role in improving the product and getting investors’ attention.

6) Build the company - Kumar explains that this is the final step that requires precision in building that dream company. Also, it has to be remembered that it is ongoing and stretches long into the future. Furthermore, it involves a number of many important things such as launching the startup, starting operations, improving the product features/functions / quality and integrating new-age technologies to build an impactful business. The best way to build a company is to start small and keep improving the product basis customers’ feedback. This reduces the risk of failure and rushing into the highly saturated market.
 
It has to be noted that the FinTech industry is burgeoning with the emergence of startups with disruptive products and business ideas. Following the right set of steps and creating a robust strategy to build a FinTech company can offer the best opportunities to thrive in the market.

(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)