Page 44 - Banking Finance May 2024

ARTICLE

new age technologies such as Cryptocurrency, Block chain,
IoT, cloud computing, artificial intelligence, machine
learning, data analytics and big data. Though these
technologies have not been utilized to their full potential as
lot more is to be explored.

In fintech industry the technical hand is required to be
expert on technology and finance sector front. It is quite
challenging to find such experts as all the companies are
looking for such techies resulting in increased competition.
Since all the companies do not have an in house team for
building an app hence they tend to outsource it for
Image source: www.coinspeaker.com developing a user friendly app. Building a team of
professionals involves time and cost for recruitment and
Funding and Investment training while outsourcing helps in reducing costs significantly
and it also allows to meet the timeline for achieving goals
In a time when so many start ups are coming into the
efficiently.
market very rapidly, standing out from the crowd to draw
the attention of potential investors is essential to get
Moreover rate of technological disruption is very high. It
adequate funding which ensures the freedom of
completely changes the way things are done. Company may
development.Venture capital is one of the key elements that
come to know that there a new technology has been
make a startup grow. However, attracting the right investors
introduced well before it could implement its earlier app with
is still a challenge. Despite the potential for innovation,
an old technology. New age technology is well known and
securing funding for fintech startups can be challenging,
implemented by very few tech elites. It is quite challenging
especially during economic downturns or when competing
for other developers to keep pace with it. Sometimes it is
with established financial institutions.
so fast that even consumers do not understand and embrace
it completely.
Finding sustainable business model that attracts investors
while delivering value to customers is critical. Several
Apart from these key challenges fintechs also face issues
questions are asked during the due diligence process such
related to integrating new fintech solutions with traditional
as problem solving capabilities of the app, inherent risk
financial institutions as compatibility issue often arise which
related to the business, market size and available
makes the process more complicated and costly. Additionally
opportunities. Investors also evaluate the capabilities and
scaling up the services rapidly without compromising
expertise of founders. It is also considered that how the fund
will be utilized and whether it will add any value in order to
achieve the product's goals.

Ultimately the goal of every investor is to get exponential
returns by investing in a new idea, hence a presentation on
detailed plan with realistic and achievable estimations along
with a business model and strategy that differentiates the
company from so many similar and existing players, play a
key role in convincing the investors.

Technological capabilities and Disruption
Fintech companies provide solutions by depending on several

BANKING FINANCE | MAY | 2024 | 39