Page 30 - Top 10 India's Financial Startup 2019

7 Things to
Consider Before
Launching a
‘Fintech Startup’
he impact of technology on the financial
industry has been powerful. Traditional
Tfinancial institutions, such as banks,
have discovered that new technologies are
indeed disruptive. This epiphany has forced
age-old financial institutions to develop their
own tech capabilities, and to stay ahead of
the game, many have partnered with fintech
startups or acquired promising new companies.
However, the shorthand, “fintech,” has become
a buzzword, encouraging budding entrepreneurs
to believe that they can simply hitch their
ventures on to the bandwagon in order to
make a quick buck. As with any endeavor, this
isn’t the case. New businesses, especially in an
emerging industry such as fintech, require careful
planning and thought. Here are seven things that
you need to consider before launching a fintech
startup.
1. Regulations
Regulations are why financial services can be
a tough industry to break into. Laws have been
put in place in order to safeguard financial
systems from abuse. In addition, the amount of
compliance that is required of institutions often
involves the need for accountants and lawyers.
However, fintech has ushered in new ways of
viewing and handling money and has become
a gray area for regulation. This is something
that has been drawing the attention of
lawmakers, especially in fintech companies’
charter applications to be “special purpose
national banks.” This isn’t as straightforward as it
seems since some fintech services such as peer-
to-peer lending operate using new models.
2. Competition from institutions
While banks have acknowledged the disruption
fintech has created, this doesn’t mean that they
will just accept defeat and step aside for the
new guys. It isn’t exactly banks as institutions that
are under threat as much as it’s the way we do
banking.
Banks still hold the assets, and many of them
have the capability and clout to either partner
up with fintech companies or buy them out. In
fact, this is already happening.
3. Customer trust
Security has come to the forefront of all
tech ventures today. Data breaches and
cyberattacks are still rampant. With the nature
of the information fintech companies handle,
they are becoming an optimal target for
cybercriminals. Getting attacked and having
customer data stolen is a surefire way to lose
customer trust quickly.
Customer trust is key in the financial industry and
it is becoming a rare commodity these days.
Many will be skeptical of any new services and
most people would be wary of the risk sending
out financial information or handing over
their money to fledgling fintech services. The
challenge lies in putting safeguards in place and
convincing prospects that your system is robust
and secure enough.
4. The need for a strong team
This might seem obvious, but fintech isn’t exactly
an area where there are turnkey tools and free
scripts one can use to come up with an app or
service. This isn’t like some other tech ventures
where barriers to entry are relatively low.
Financial, technological and business expertise
are all required to develop fintech. Then, there
are compliance requirements that may require
you to bring in legal help.
Building a strong team means that you must
attract talent in various areas of competence,