Want to learn what is Fintech? How to get into Fintech and benefit from this innovation? And how to start a Fintech company of your own?
Finance & Technology are two industries that have been thriving on their own for a long time. Can you think the possibilities these industries can achieve if brought together? Well, some individuals and businesses did, and a few years back brought us a new industry vertical, Fintech (Finance Technology).
We know that banks have been around for centuries and became the organization with a monopoly on financial services. But after all this time, banks have become an old concept which needs a significant upgrade.
This fight between Fintech vs banks and the shift of power was very aptly quoted by Bill Gates in 1994 when he said, “Banks are like dinosaurs, and the world needs banking services but not necessarily banks.”
Half of the banking customers globally are now using Fintech firms.
What Is Fintech?
We’ve praised Finance Technology since the beginning of the blog, but what exactly is Fintech and how to get into Fintech?
Fintech is an industry encompassing any technology in financial services – from businesses to consumers.
In layman’s terms, any company that provides financial services through the usage of a software or any other digital technology is a Fintech company. So a company that offers financial services using the internet, mobile devices, software technology, or cloud services is a Fintech company.
Goldman Sachs estimates the worldwide Fintech pie to be worth $4.7 trillion
The History & Future of Fintech vs Banking:
Initially, Fintech was a general classification for technologies that were applied in the backend systems of banks’ and other financial institutes, but as time passed Fintech grew to serve an array of other applications primarily focused on consumers, rather than just financial institutes.
It sparked the battle of Finance vs Banking. This was the point when Fintech and banks became two separate but co-dependent verticals.
One may not simply feel a revolutionary experience when paying for the food online or booking tickets via an app, but all of these are services only possible due to Fintech services. So whether you are purchasing a cup of coffee or managing your stock market profile, Fintech is all around us in 2020.
Fintech has disrupted traditional financial and banking industries, from mobile payment apps like Square to insurance and investment companies all are proof of a promising Fintech future and the potential threat to traditional, brick-and-mortar banks or financial institutions.
Fintech is moving strongly in the future while the banking industry’s only way to survive, let alone thrive in the future is only possible if it accepts and benefits from Fintech offerings.
For the nearly 2 billion people worldwide that don’t own a bank account, Fintech provides a chance to participate in financial services without the need of a bank account.
How to Start a Fintech Company: 5 Things Every Startup Owner Should Know
The best apps right now are the ones that are either helping its users make money, or invest their money to give good returns. Here are the 5 most important things to consider before creating new Fintech startups.
1. Identify your niche
The Fintech services mentioned above are not the only ones trending. You need to research and find out your particular niche in this broad vertical. Now you need to choose your niche based on a few factors like:
(a) Category and age group of users you are targeting.
(b) The country you are targeting.
(c) Your specific expertise in the finance industry.
Here are a few niches that you can choose from to start your own Fintech startup enterprise:
2. What’s Different About Your Fintech Startup?
Now that you have found your startup niche, find out who are your competitors. Find what are they lacking, what are the issues their customers have with them. These are your points to advance and become a superior option for the target audience.
Now your Fintech product or solutions have everything that your competitors provide and then some more, which will be the reason why users will make the switch from them to you. Another approach is to find where exactly your competition is not working and start growing your business from there.
For instance, no Online mobile payment gateways have collaborated with farming equipment and tools providing companies. Now your target niche is to provide online payment options for the rural farmers to buy their farming tools and equipment.
There are more than 12,000 Fintech startups worldwide out of which 5,779 Fintech startups are just in the US.
3. Know the Rules
When you are handling other people’s money, there are a lot of rules and regulations that you need to follow. Previously banking, and now Fintech has many such high regulations that new Fintech startups should abide by.
Before starting a Fintech company, you should learn about the concerning regulatory authorities, laws, legal requirements, and limitations. Remember that every country has its own set of regulations. If you offer your Fintech app and services to people from more than one country, then your Fintech organization has to abide by the regulation of all those countries.
4. Hire the team
The most important part of Finance app development (Fintech) is not the Finance but the Technology that powers it. You may have the complete knowledge of the nuances of the finance world, but you need an equally (if not more) knowledgeable team of technical experts to create your Fintech app or software solution.
You need to find the perfect technology partner as per your development needs as well as your budget. If going with the most expensive app development firm is not in line with your budget, then choosing the cheapest software development agency is also not an advisable option.
The best advice for you in this situation is to find the best Fintech software and app development company that has the top technical experts at a reasonable price. In other words, an offshore technical team supporting your in-house startup team.
McKinsey Panorama report that almost 80% of financial institutions have established a Fintech partnership.
5. Get funded
Funding is the most important and probably most difficult part of starting any company. You need to show the potential of your business venture. The thing that will help you differ from other pitchers will be an MVP (Minimum Viable Product).
If you don’t have enough budget to create a complete Fintech app, you can ask your tech team to build an MVP which you can show as proof of concept to potential investors and ask for investment into your Fintech venture.
With the funding that you receive based on your MVP, you can build a complete app or software solution for the market. That is how all large businesses grew their products and solutions.
The Most Popular Fintech Trends in 2021
Fintech Services are not just limited to ordering products online or accessing and maintaining your bank account via a smartphone. The latest Fintech and mobile banking trends are changing the face of the entire finance industry. After going through how to start a Fintech company, now get ready to see the full extent of Fintech services.
Best Budgeting Apps of 2021
The most common and simplest use of finance technology is developing New money management and budgeting apps. here is the list of the top personal finance apps of 2021 to manage your personal finance are Acorns, Mint, Quickbooks, YNAB, and Intuit.
Earlier people had to maintain a logbook or an excel sheet to track their finances. There was also the tiresome activity to gather checks and bills to maintain them in files. Fintech-based best budgeting apps resolved all such issues.
With these Best Budget Apps and Personal Finance Tools for 2021, the users could easily manage and keep track of their income, expenses, and investments.
By 2020, 90% of smartphone users will frequently make mobile payments.
Build Crowdfunding Platform Website
The new entrepreneurs don’t need to depend on a bank or any other financial institute for the loan to start their business startup. Fintech gave birth to a concept called crowdfunding platform. In such platforms, people can post their business ideas or prototype products and ask for investment.
People from around the world view this post and can give any amount of money they wish as an angel investor, a fan of the idea, or a patron. The most popular crowdfunding platform websites are Kickstarter, GoFundMe, and Patreon.
Create A Blockchain & Cryptocurrency Exchange Platform
Blockchain and more specifically, Cryptocurrency is the benchmark of excellence of Fintech in action. Due to the advance and elite nature of Financial services in blockchain, Cryptocurrency exchanges like Coinbase and Gemini help users in buying and selling cryptocurrencies such as bitcoin Ethereum, and Litecoin.
SEE ALSO: create your own cryptocurrency website
Blockchain is not just limited to bitcoin & Cryptocurrency Exchange Application Development, Bitcoin Trading Application Development, Private Coin Development, Bitcoin Exchange System and etc.
The combined market share of Apple Pay, Samsung Pay, and Google Pay in mobile payment will reach 56% by 2021 just in the U.S.
Starting a Insurtech Startups
How tiring was it in the 90s to go after your insurance claim? Going from one office to other, sometimes more than a day wasted behind a simple query. But all this changed when Fintech disrupted the insurance sector and changed it into Insurtech (that’s a real thing).
Oscar health insurance startup secured $165 million last year, increasing their valuation at around $3.2 billion. Other Insurtech companies like Credit karma, reached a valuation of $4billion in the 1st quarter of 2019. These Insurtech examples show the level at which Insurtech is thriving.
AI-based Investment Assistance
The stock market has many times witnessed a market crash due to human error. The best way to avoid such an error is by bringing in artificial intelligence that can calculate all the factors and give a foolproof output for your investments. This is the future of Fintech for stock trading and investment.
Such “smart” advisers will make sure that your investment portfolio is completely calculated and decided after taking all the factors into account. The stock-trading apps that can analyze various portfolio options 24/7, work on such AI-based advisers.
The mobile payment revenue will surpass 1 trillion U.S. dollars globally by the end of 2019.
List of Top Fintech Companies & Applications
If you decide to start your Fintech startup in NYC or Chicago, then you have a better chance of succeeding. Chicago, New York, and San Francisco are turning out to be the Fintech hub for this industry.
If you are planning to invest in promising best Fintech startups, then you should look out for these Fintech Startups:
SEE ALSO: Stripe vs Braintree: Which is the Best Payment Process Service Provider?
If you aim to build your own Fintech app or just looking to download an excellent app to manage your money, here are the best Fintech startup apps for you:
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Now Start Your Own Fintech Startup
People need banking, not banks. This statement of Ranjit Sarai has been proved true with the thriving Fintech industry. It is not far fetched to say that in a couple of years machines will debate with you on your investment hypothesis and probably prove you wrong.
The world is moving in the fast lane with Fintech, and you can either stand in the sidelines and watch it pass by you or be one of the forerunners of this revolution. I guess now you exactly know how to start a Fintech company. Find the right technology partner for your Fintech startup and grab the best Fintech opportunities this industry offers.
FAQs on FinTech Startup
Fintech is an industry encompassing any technology in financial services – from businesses to consumers. The companies that offer FinTech services come under the FinTech company umbrella.
The growth in FinTech vertical is showing a staggering rise each year, and we may see such a pattern for at least 4-5 more years.
Starting a FinTech-based company is a technically challenging task. But, with a clear plan of action, you can create your FinTech startup in 2020.
1. Find the right niche for your FinTech Startup
2. Learn the regulations & legalities
3. Find how your FinTech startup can be different from others
4. Get the best talents with the precise tech stack to build your startup’s digital side
5. Get the fund to build and expand your FinTech startup
5. Lending Club
Presently, Goldman Sachs estimates the worldwide FinTech pie to be worth $4.7 trillion.
This is a massive growth when we consider the past two years. In 2017, the FinTech market was worth about $50 billion. Then, in 2018 the FinTech market size in 2018 reached $111.8 billion, a 120% rise.
The financial assist apps that have changed the way business is done today come under th FinTech app umbrella. Fintech apps (or financial technology apps) are most popular among today’s users.
Such apps include categories like financial education apps, peer-to-peer money transfer apps, retail banking and lending applications, cryptocurrency-powered apps, online investment apps, among several others.
4.International Money Transfers
FinTech is a very broad vertical and there are several types of companies that provide different kinds of services. Services like:
1.Stock Trading Apps & Websites
2.Peer-to-peer lending sites that open competition for loans
3.Online Robo-advisor Services
4.Algorithm-based Portfolio Management
5.All-in-one Online Personal Finance Management
Many government financial bodies are responsible for regulating FinTech companies. A few of the top ones are:
1. Consumer Financial Protection Bureau (CFPB)
2. Federal Deposit Insurance Corporation (FDIC)
3. Office of the Comptroller of the Currency (OCC)
4. State Banking Agencies
5. Commodity Futures Trading Commission (CFTC)
New banks have business models that rely heavily on Fintech. FinTech plays a central role in all these new-age banks.
1. FinTech for banks brings several digital services like:
2. Innovative ways of reaching & interacting with customers
3. Automated Loan Approval
4. Easy-to-use Mobile Apps
5. Modern Designs
6. Strong social media presence