Jot This Down. Quick Notes on Building Your Own Fintech Solution
Dubai, UAE - January 16, 2022
New fintechs are being born every day. But In a space that is getting crowded with dozens of startups entering the market and billion-dollar giants running the show, it can be challenging to get your piece of the pie.
Before going any further with your Fintech idea, here are a few things you need to consider first.
Quick Notes on Building Your Own Fintech Product – A Recipe For Success
Entering the financial services industry is no walk in the park. Most fintech startups around the world are still struggling to achieve profitability.
According to Google Cloud's fintech Focus Report, based on a survey sample size of 100 fintech startups, only 6% are breaking-even and 84% of the continuing businesses reported increasing losses in their last financial year.
In order to navigate through the fintech ecosystem smoothly and build resilient solutions at scale, here are 3 crucial themes you need to explore first.
1. Regulations
The increasing use of new technologies, often untested, in the financial services space introduces new risks and regulators and supervisors have been taking specific actions in response to these risks. This has included the development of international standards, revamping of domestic regulations and rules, and shifts in supervisory priorities.
Firms entering the fintech space need to account for the ever-changing nature of regulation and supervision into their strategies, business planning, governance, and risk management.
In order to successfully break into the fintech industry, you need to be well-acquainted with all local and cross-border regulations of where you plan to do business.
Different countries have different fintech regulatory requirements. To set up a fintech business, some countries require organizations to apply for specific licenses, while others have more general licensing requirements. The UAE & Mexico are examples of countries where fintech organizations must apply for specific fintech licenses to meet regulatory compliance requirements. On the other hand, in the UK there is no legislation that is aimed specifically at the fintech sector. Fintech businesses will be most likely regulated by the respective industry in which the organization operates.
Designed to capture and monitor payment transaction details in real-time, RegTech can help you automate mundane compliance tasks and reduce operational risk associated with meeting compliance obligations. Using Regtech tools you can fully or partially automate regulatory compliance-related processes.
2. Funding
There are substantial investment opportunities for fintech startups today.
In 2021, fintech companies attracted $91.5 billion in global funding – almost twice as much of funding raised in 2020.
While in the Middle East, the value of venture capital investments in fintech is expected to increase to approximately $2.3 billion in 2022, compared to $78 million in 2017.
But what are investors really looking for in their next fintech investment?
Here are some of the main things investors look for when evaluating a fintech project or startup:
a. Products solving clear problems or customer pain points
They say “necessity is the mother of invention”
It's all about finding new approaches to solving a problem – improving a current legacy system, or introducing a whole new product or service that makes our lives easier.
For example, Monese, the first mobile current account in the UK, was built to serve migrants who couldn't open bank accounts because they didn't have physical home addresses.
Dubbed as the peace-of-mind money app, Monese is a digital banking alternative that allows anyone to open multi-currency accounts via a mobile application.
In a nutshell, investors pay attention to fintech ideas that go beyond short-term solutions that address underlying problems and meet the needs of our changing lifestyles.
b. Powerful Teams
A great fintech idea is just as important as the team bringing that idea to life. The ability to access top talent is a key growth driver in moving organizations forward. One of the key challenges found when building powerful fintech teams is striking a balance between technical and business needs. Hiring, training, and retaining capable business teams is crucial to be able to leverage the success of technical know-how and resources. Showing investors that you have built solid systems that can strike that balance can put you in a more favorable position.
c. Solution Scalability
Navigating the challenges of scaling and growth is a challenge for all startups. To win the hearts of investors you must demonstrate how you can scale your business – platform, teams, operations – to expand from a single segment, use case and market to a multi-X. As a fintech startup, you need to understand that, when scaling, you can't do everything yourself. Knowing how to scale various facets of the business, including being able to partner to access the right assets and capabilities to scale rapidly is important. Make sure you have a vision to share with investors regarding how you will cross that bridge when you come to it.
3. Integration
Traditionally, connecting platforms with banking and payment infrastructure required development teams to build integrations for each financial institution involved – this is very costly, complex, and time-consuming.
Today, there is no need to reinvent the wheel – you can save valuable time to market and mitigate costs by using fintech APIs as building blocks to avoid recreating functionality that already exists.
APIs are driving an explosion of new business models. Organizations looking to enter the fintech space need to learn to leverage APIs to power innovation and new product/feature development.
Aligning business objectives with the right technology is imperative to any fintech product's sustainable growth. If your value proposition is the brain of the operation, APIs are the heart. Figure out early on what you will develop in-house and whose technology you can utilize to help you grow.
Explore SimpliFi Fintech APIs
SimpliFi is a Card-as-service (CaaS) platform on a mission to democratize payments in the MENA region and Pakistan. SimpliFi empowers companies to build their own payment solutions with minimal effort using developer-friendly APIs and SDKs.
Explore SimpliFi's Card issuing API's Today.
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