The Essential Guide to Building a Successful FinTech Company

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The Essential Guide to Building a Successful FinTech Company
24 Feb 2022
4 min read

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FinTech is booming. New companies are popping up every day, intending to provide financial services to traditionally underserved populations. These new-age banks offer everything from faster transactions to more competitive rates, but getting a FinTech company off the ground takes more than just a good idea and an understanding of the market. #TWN

This guide will teach you how to start your successful FinTech startup and will give you some tips for staying on top. From choosing the right business model for your company to developing your growth strategy, this guide will help you get ahead in the industry.

The Basics of Starting a FinTech Company

The first step to starting a FinTech company is to choose the right business model. There are many different models you can use, but they all fall into one of three categories:

  • Businesses that charge fees on transactions and interest rates
  • Companies that provide loans to borrowers
  • Banks or credit unions that offer traditional banking services

Market Research 

The first thing to do is research the market. What are competitors doing? What are customers looking for? What are their pain points? What are the new trends in the industry? The more you know, the better prepared you will be for your startup.

Understanding your Customer Base

One of the most important steps in starting a new business is understanding your customer base. You need to know who you are trying to reach and what their needs are so that you can design your product accordingly. Once you have identified your customer base, it's important to understand what they need from your service and how they want it delivered.

For example, let’s say we want to start a car rental company for people who live in the city but don't have a car. We would first need to find out where these people live and then come up with a pricing plan that would work for them. For example, we could offer monthly rental prices versus hourly or one-time rentals. Another important step is knowing how you plan on making money for your company. It will help shape the type of business model you choose for your company as well as where you spend your money on advertising and marketing efforts. It also impacts which kind of employees you hire because if the business model isn't profitable, then those employees won't be either.

Building your Business Model 

Choosing the right business model for your company is essential, and it’s important to be mindful of the various types of models before you commit.

The most popular business models are the following:

  • A marketplace model allows two different parties to trade goods and services using the internet. For example, an online platform could allow buyers and sellers to trade their goods with one another in a centralized location.
  • A distribution model works by providing software or hardware to other companies to make their transactions easier.
  • Advertising revenue is generated through more traditional means (think Google AdWords) where ad space is sold on a website for a fee.

Setting up your Team Structure for Success

The first step in starting a successful FinTech company is developing your team. A good place to start is by hiring the right employees for each position that you need to fill. As a startup, your team will most likely consist of a few people at first, but as your company grows, it will become increasingly important to hire professionals with the necessary skills. For example, if you need to develop an app for your company, you would want someone on your team who has experience developing apps. It can be difficult as not many programmers are experts in all areas of computer programming. To find the right person for the job, try posting your job opening on websites like Indeed and LinkedIn where you will find a more specialized group of candidates than you would on sites like Monster or Craigslist, which tend to be broader.

The second step in setting up your team structure is deciding how much control certain members of the team should have over different aspects of the business. You might decide that one person should handle customer service while another handles sales and marketing, and so on. The more responsibility each person has, the better they will likely perform their duties because they’ll feel more invested in the company’s success. Lastly, make sure to establish clear roles and expectations within each position. This way employees can easily know what their role entails without having to guess or ask questions about what needs to get done next. When hiring new employees, make sure that they understand their responsibilities before letting them onboard

Leadership and Management 

No matter what industry you're in, leadership skills are crucial for success. Without strong leaders, a company will lack direction. FinTech companies are no exception to this rule. Every successful FinTech company has a dynamic group of leaders. That's why it's important to develop your management skills early on in the process. And if you have the opportunity to learn them while still in school, that's even better! Many universities offer courses related to finance and entrepreneurship that will help you develop these skills.

Marketing and Sales 

One of the most important aspects of any business is marketing. Marketing is what you do to bring your product or service to market. It's the tool that allows you to tell people about what you do and why they should care. The best marketing in the world won't be effective if it doesn't have a clear message that resonates with people.

Technology and operations 

Technology is one of the most important aspects of your business. You may have an innovative idea, but unless you can make it work, it’s not going to get very far. Luckily, there are several different technologies that you can use to create your product or service. For example, if you are developing a mobile app for consumers interested in personal finance management and want to offer that service for free, you would need to find a way to generate revenue from somewhere else. If you are looking for technology partners like developers or designers who can help with your project, finding the right tech partner is essential. You want to find a company that has experience in the same field as your company and has success with similar projects. Another option is to build your team internally by training employees on the specifics of your technology. Either way, having competent technology will be key in creating a successful FinTech company.

Legal, Finance, and Accounting 

Legal, finance, and accounting are three important aspects of any business. However, they are especially important for FinTech companies.

The first step in starting a successful FinTech company is to figure out the legal implications and best practices of your business model. You will need to create a business plan that lays out all of the legal steps you will want to take to get started. For example, if you plan on raising money from investors, you will be required to file paperwork with the SEC. Your company's financials are also important and require a thorough understanding of how your company works under the hood: how much revenue it brings in, how much money is coming in through financing sources, how much expenses cost, and other metrics all play into your bottom line. Finally, many FinTech companies rely on software programs for their services. So, there must be accurate records of all transactions made by the program so that you can accurately track who has been using your services as well as what they have been using them for.

Development Strategy 

Your development strategy is key to your company's success. It should be a mix of organic growth, acquisition, and paid acquisition. Organic growth can come in the form of new customers coming to you because they like your product or service. The acquisition can come in the form of acquiring another company to grow your existing portfolio. A paid acquisition could be anything from PPC ads, social media ads, or the purchase of email lists. Once your strategy is set, you need to make sure you have the team necessary for it. You should be able to measure what each individual on your team contributes to both customer acquisition and retention as well as things like revenue generation and customer experience satisfaction. You must try different methods so that you can find out which ones work best for your business model and how much they cost.

Conclusion

So what does the future of FinTech look like?

A survey of 415 FinTech industry insiders revealed that the future of FinTech is bright, with many of the industry’s key players planning for exponential growth over the next few years. One area expected to see substantial growth in FinTech in Africa, with one respondent predicting that “Africa will be the next Silicon Valley.”

It’s clear that as more and more people embrace technology and become comfortable with sharing their data and spending online, there are big opportunities for FinTech companies to innovate and grow.

So if you have the entrepreneurial spirit and a creative idea for a FinTech company, the time is now.

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