How to start a FinTech company?

Do you have financial insight and want to build your business around it? Have
you ever thought about starting a FinTech company from scratch? If yes, then
in this blog, we will discuss every aspect of creating a FinTech company while
keeping it successful.  

From the prospects of developing a FinTech startup and
factors critical for FinTech startup to market insights and steps essential to
start a FinTech company, we will cover everything. So, let’s go deeper with
the concept of a FinTech app and understand how to create a FinTech
startup.

Why Is It The Right Time To Start A FinTech Company?

The one thing that every FinTech startup owner should know is the financial
prospects of a FinTech business model. As of 2023, over 1,00,000 FinTech apps
in Google Play and Apple Store combined. The global market size for this app
category has crossed $28,000 billion this year, and the valuation of more than
100 FinTech companies has reached $1 billion. FinTech companies secure better
financial deals from venture capitalists compared to other business models. It
is the most invested business category, with a 20.5% projected growth rate by
2027. In recent years, the number of FinTech apps has grown significantly.
Let’s understand the growth of FinTech apps with a table.

The table shows that the number of FinTech apps doubled every 5 years. The
increasing demand for affordable financial services has contributed to the
growth of this app category. The growing availability of smart devices and
high-speed internet access also drive the success of FinTech apps. Experts
believe that the FinTech industry is still in its early stages, and it is a
great time to be involved in this industry and build a FinTech app. So, if you
want to start a FinTech startup, the time is now!

Different FinTech Categories:

The FinTech services are The FinTech is a broad and ever-changing industry.
Many technological products and services fall under the FinTech business
category. These technological innovations facilitate financial transactions
and seamless financial management for individuals and organizations. To know
how to build a FinTech startup, you should have complete knowledge about the
FinTech categories and niches. It will help you decide the type of FinTech
service you want to provide your customers.

#1 Blockchain & Cryptocurrency:

Blockchain-powered trading platforms and the intersection of cryptocurrency
have transformed the FinTech landscape. Prominent cryptocurrency trading
platforms such as Bitcoin, Bloq, and Wirex use blockchain technology to
securely record financial transactions, transact, invest, and manage financial
assets. Digital currencies, tokenization, smart contracts, and smart tekone
offerings are some of the innovative solutions of this FinTech
category. 

Note: Do you know Coinbase is the market leader in the
cryptocurrency Blockchain FinTech app category? Powered by Blockchain
technology, Coinbase allows users to transact cryptocurrencies worldwide. The
FinTech company has over 73 million users in more than 100 countries. In 2022,
it has earn a little over $7.8 billion, a 100% revenue growth from 2021.

#2 Insurance (InsureTech):

It is another popular FinTech app category where companies use technology to
facilitate the delivery of insurance products and services while improving the
user experience. Insurance companies incorporate artificial intelligence, IoT,
and advanced algorithms in their insureTech apps to serve their customers
efficiently. High-value insure-tech solutions are transforming the way clients
buy insurance products. InsureTech offers several benefits, including online
remote accessibility, customized policy presentation, quick premium payments,
etc.

Notre: Founded 2015 in New York, Lemonade is the market leader in
the InsureTech business. It is a leading digital insurance company that uses
AI & ML to automate the insurance workflow. Lemonade has more than 1
million customers in 27 States Of the USA. The company offers various
insurance products for its customers. In 2022, Lemonade earned around $390
million in revenue, a growth of 400% from 2021. The company has also recently
secured a fund of $600 million from investors.

#3 Regulatory-(Reg Tech):

The introduction of RegTech in 2015 has opened up a new opportunity for
FinTech startups and other financial institutions to comply with regulatory
frameworks and obligations easily. Regulatory technology has opened up a
window for financial organizations to deliver seamless regulatory compliance
with the support of cutting-edge technology. As financial regulations become
increasingly complex, this technology can help organizations improve
compliance and implement regulations digitally. RegTech automates various
regulatory processes, including reporting, e-filing, transaction monitoring,
and compliance updates.

Notre: ComplyAdvantage RegTech company is the market leader in the
RegTech FinTech app category. It is a platform for financial institutions to
access and manage financial risk. The company has over 1000 customers, mostly
banks, financial institutions, and insurers. It has customers in more than 100
countries worldwide. ComplianceAdvantage earned around $100 million in 2022,
an almost 50% jump from 2021. It offers many services, including KYC, AML, and
CTF, to B2B clients.

#4 Lending (LendTech):

Lending Technology, or LendTech, is another emerging FinTech category that
facilitates lending and borrowing, providing customers with easy financing
options through technology. This FinTech category streamlines and simplifies
loan processing by automating loan application submission, underwriting,
peer-to-peer lending, and loan processing. The LendTech category uses AI and
ML applications to validate customer identity and secure critical loan
documents.

Notre: Founded in 2007 in California, Lending Club is the market
leader in the LendTech FinTech app category. It is a peer-to-peer lending
platform that connects borrowers with lenders. The company has over 10 million
members and gathered over $100 billion in loans. In 2022, the company has
earned over $1.3 billion in revenue, a growth of 20% from 2021.

#5 Payments (PayTech):

The payment or PayTech category is the backbone of the FinTech industry with
its revolutionary digital processing applications and networks. This category
offers services, including credit card processing, debit card processing,
peer-to-peer, and mobile wallet payments. Powered by robust internet
connectivity and payment security, PayTech platforms can significantly improve
user experience while securing consumer identity during transactions. PayTech
platforms offer various digital transactions, including mobile payment systems
enabling users to pay through technology.

Notre: Do you know PayPal is the global market leader in the PayTech
category? Founded in 1998 in California, it provides users an online payment
platform to send and receive money anywhere electronically. The platform has
over 400 million active users from almost all parts of the world. Users have
transacted around $1.3 trillion through this platform. In 2022, the company
has earned approximately $26 billion in revenue, representing a growth of 23%
from 2021. It offers services, including online payments, in-store payments,
mobile payments, etc.

#6 Stock-Trading (TradeTech):

TradeTech or Trading Technology is an emerging category of FinTech that
focuses on automating the stock trading process for investors and implementing
technology to streamline buying and selling. This type of FinTech platform
uses cutting-edge IT systems and innovative applications to facilitate a fast
and efficient trading process. These platforms include features like
algorithmic trading systems, trading analytics, electronic trading platforms,
market data analysis tools, and risk management solutions.TradeTech platforms
improve the stock market’s proficiency, transparency, and response
time. 

Notre: The latest survey reveals that Virtu Financial is the market
leader in the TradeTech category. It is an international electronic trading
firm that provides liquidity to the market and a platform for buyers and
sellers. It started its journey in 2008 in New York and has over $1.5 trillion
daily trading volume. The company has over 1000 workers and generated over
$4.2 billion in 2022. It represents a growth of 15% in 2021.

#7 Consumer Banking-(BankTech):

Nowadays, many financial institutions and banks use BankTech to deliver
services and banking solutions to their customers. Each financial institution
uses a digitized FinTech platform to provide banking solutions automatically
through apps. Economic technological companies help banks develop and
customize their BankTech platform. The platform has transformed traditional
banking methods and facilitated improved user experience, less operational
friction, and lower banking costs. 

Note: FIS has the largest market share in the BankTech sector. It
is a global financial technology company that provides various banking-related
software services to banks and other financial organizations. Since 1968, the
company has been the backbone of the modern banking industry. The company
employed over 55000 employees and earned around $14 billion in 2022. From core
banking operations to compliance and wealth management, FIS handles
everything.

The following table will help you understand the top FinTech categories and
their market leaders at a glance. 

Why Developing A FinTech App Is Necessary For A FinTech Startup?

FinTech services are the combination of finance and technology, and to
deliver services, you need an effective platform or application. Developing a
FinTech app is not a choice but a necessity for FinTech companies to provide
users with digital convenience. A dedicated FinTech app ensures 24/7
accessibility, personalized experience, and real-time updates. In addition, it
offers robust security features and compliance adherence. Developing a FinTech
app is crucial for managing sensitive financial data, making services
cost-effective, and keeping the business competitive. For starting A FinTech
startup, an app is not just a mere extension but a gateway to customer-centric
innovations.

Things To Consider Before Starting A FinTech Startup:

Before starting a FinTech company, there are a few things every FinTech
startup owner should know. Among them, one of the most important things is to
refrain from copying any successful FinTech business model to build a
business. Just mindlessly copying a business model can end up in a disaster.
It may lead to winding up your company and losing all the money you have.
There is no substitute for in-depth market research and planning beforehand.
But that’s not all! Let’s discuss the things to consider when building a
FinTech company.

• Keep Your Business Concept Simple:
  Do not build any high-level business model to make your business idea
  innovative. Instead, try to figure out what problem your FinTech startup
  is solving. Invest your time and resources to identify the pain points of
  your target audience and how your FinTech solution can make their lives
  easier.
  
• Understand Your Target Market:
  Identify and analyze your target market to understand the FinTech
  solutions they are currently using. What are their needs? What age group
  do they belong to? What is the purchasing power of your target audience?
  
• Solve Multiple Problems To Make Your Venture Sustainable:
  Do not just try to solve one issue with your FinTech solution. Address
  multiple issues and find effective solutions to make your FinTech app
  successful and sustainable. It will help you build a powerful USP for your
  FinTech solution.
  
• Evaluate Available Identical Solutions In The Market:
  There may be multiple solutions available in the market identical to your
  solution. You must check them all out to identify their approach to
  solving the problems. Solutions may be similar, but your approach should
  be unique to address the issues.
  
• Develop An Effective Fund Utilization Strategy:
  As a FinTech startup owner, your job is still ongoing after securing
  funds from your investors. From the very start, keep a solid ROI plan in
  mind and develop a complete fund utilization strategy to track the
  expenses and identify the areas for improvement.
  
• Firmly Believe In Your Idea:
  Last but not least, considering all the factors and contingencies, you
  must believe in your FinTech solution and develop a robust strategy to
  make your FinTech startup successful.
  
• Join A FinTech Community:
  FinTech is rewarding; you will find people like you in the race. There
  are many FinTech communities where you can connect with other FinTech
  entrepreneurs and learn from their experiences.
  
• Get Engaged In Open Source Projects & Workshops:
  You may also consider getting involved in open source projects, attending
  webinars and industry events to learn about the latest FinTech technology
  and build your FinTech startup.
  
• Have A Robust Marketing Plan:
  One of the best practices for building a FinTech company is to develop a
  sustainable marketing strategy to reach the target market and acquire
  customers. Focus on creating a good marketing technique to penetrate the
  crowded market.
  

How To Start A FinTech Startup-Steps For Developing A FinTech App:

Now that you have a primary idea about starting a FinTech startup, the next
thing is to understand the steps for building a FinTech startup. Understanding
these steps will also help you develop your FinTech app and launch it
successfully.

1. Come Up With A Unique FinTech Idea:
   To build a successful FinTech company, you must first develop a unique
   FinTech concept with market viability. Each business starts with an idea
   to attract new users, give them something new, and address their pain
   points. In addition, the idea you come up with must convince the VC
   investors to fund your FinTech startup. As a FinTech startup founder, your
   business idea should be able to disrupt the market and attract new
   customers. It’s critical to understand that the concept you come up with
   may be familiar, but the approach you plan should be unique. For instance,
   consider developing your idea on a particular FinTech subdomain you are
   interested in, such as investment, trading, wealth management, payment,
   blockchain-based FinTech ideas, or something else.
   
2. Validate Your Idea:
   It’s critical to validate your FinTech business idea. According to
   statistics, almost 75% of all FinTech startups fail due to the
   non-viability of their concept. Idea validation is the most cost-effective
   way to prevent your FinTech startup from falling. To build the fittest
   minimum viable product (MVP) of your FinTech concept, you must follow a 3
   step idea validation process. You can start by defining a problem, then
   define and identify the customers who may experience the pain, and finally
   explain your innovation to solve the problem. Get approval for your
   FinTech idea from your potential customers. Then, make a few successful
   pitches to the investors. And lastly, complete 1 successful sale of your
   app idea. You may consider using cutting-edge idea validation tools like
   validation canvas and Javelin to analyze all the hypotheses.
   
3. Identify & Evaluate Your Target Audience:
   How to create a FinTech startup company? The best answer to this question
   is to develop a FinTech solution that serves your target audience in the
   best possible way. You must know who you are going to benefit from because
   not everyone will find your FinTech services useful. For instance, if you
   plan to launch a retirement savings service, your target audience should
   be more mature and elderly. On the other hand, if your business idea is to
   develop a digital wallet for smart buying and investment, you must target
   a younger audience. Setting a target audience will also help you analyze
   your Fintech startup’s ROI rate.
   
4. Idea categorization:
   This step is critical to build a FinTech startup. Why? Because this stage
   will determine the FinTech category best suited for your idea. This stage
   is also crucial for building a FinTech app to help you transform your
   vision into a reality. For instance, if you have an idea to build an app
   that will help farmers save their money on your app wallet and invest it
   in agricultural commodities for higher ROI, then you need to develop an
   investment app. Your business idea may also involve developing a FinTech
   solution for unorganized laborers who can know different government labor
   schemes and invest digitally; that’s a RegTech app. Idea categorization
   will help your FinTech app development partner understand your app niche
   and incorporate features and designs accordingly.
   
5. Define Your USP:
   Whether you are developing a neobank app, trading app, payment app,
   cryptocurrency exchange platform, or something else, you must
   differentiate your Fintech services. If your FinTech app domain is
   crowded, you need a few differentiating factors or USPs to create a
   competitive edge for your FinTech app. Consider introducing unique
   features, cutting-edge tools, and capabilities exclusive to your FinTech
   startup. Even if your concept is similar, develop a unique point of
   attraction for your target audience, setting you apart from the rest.
   
6. Know The Laws & Market Regulations:
   FinTech is a highly regulated and governed sector, and to create a
   FinTech startup, you must be familiar with every aspect of government
   compliance. You should acquire as much information as possible regarding
   legislation, governing bodies, legislations, restrictions, and criteria
   for developing a FinTech startup. It is worth mentioning that General Data
   Protection Regulation Authority (GDPR) rules apply to the common FinTech
   subdomains. It regulates all companies that deal with client data. But it
   is just the beginning. As a FinTech startup owner, you must comply with
   anti-money laundering guidelines, KYC norms, and PCI DSS, a dedicated
   FinTech regulation in the USA. Ensure that the app idea and the category
   you propose must adhere to the existing laws of the land.
   
7. Research Your Competitors:
   You need to know the existing competitors in your Fintech niche to
   deliver high-end FinTech solutions to your target audience. Once you
   complete knowledge of FinTech industry regulations, it’s time to research
   your competition. In-depth information about your rivals will help you
   develop your Fintech app much more efficiently while incorporating
   features of your own and using the existing features. Your hired FinTech
   app development partner will certainly want to have a few current business
   names of your FinTech category to understand the UI/UX and app features.
   Furthermore, it will give you an idea of how your competitors position
   their brands and design their FinTech apps. In-depth competitor analysis
   will also help you identify their mistakes for not repeating while
   developing yours.
   
8. Find A Good Investment Partner For Your Fintech Startup:
   Developing a high-quality FinTech solution is a costly affair for any
   startup founder. But you need a good investor and venture capitalist to
   start a FinTech company. From idea generation, validation, and app
   development to launching and maintenance, you need a reliable Fintech app
   development company that can take care of everything from the beginning.
   So, to hire an experienced and efficient FinTech app development team, you
   need resources. The high cost stems from maintaining that development
   team, renting an office space, digital marketing expenses, and buying
   software and technology licenses. cloud infrastructure, etc. To cover
   these expenses, you need a knowledgeable financial advisor who can give
   you money and guide you with genuine advice during difficult times.
   
9. Hire An Experienced App Development Partner:
   An inseparable part of building a FinTech startup is to hire an
   experienced app development company. Your app development company must
   have professionals competent in financial and technological domains. A
   proficient FinTech app development team will help you choose the right
   tech stack to deliver a functional product quickly. Consider outsourcing
   your FinTech app development team, with a proven track record of
   supporting reputed FinTech startups. They need to know the latest
   technologies required for building a FinTech startup. From app ideation,
   prototyping, and MVP development to product launch, support, &
   maintenance, a good app development firm can handle everything. You must
   also evaluate their abilities to develop a FinTech solution with a limited
   budget and time.
   
10. Develop The Prototype, MVP, & Final Product:
    Your app development team will help you build your FinTech application by
    completing several phases. These phases include discovery, design, MVP
    development, product launch, and product improvements. Developing a
    FinTech app needs many technologies, including artificial intelligence,
    blockchain, microservices, and cybersecurity. With the help of these
    technologies and good coding, your team will be able to build an effective
    prototype for your FinTech app. Quick prototyping ensures quick MVP
    development. Getting to the MVP development stage will reduce your cost
    and time for launching your final product. In addition, it will also help
    you gather user feedback quickly and improve your FinTech app.
    
11. Test Your FinTech App:
    A competent app development team will then carry out various QA and
    testing such as user testing, functional testing, security testing,
    performance testing, and usability testing. The quality assurance review
    of your FinTech app to evaluate UX/UI, grammar, typos, and other errors.
    App testing after development will allow you to find and fix problems and
    bugs early and help you save money and time in the long run.
    
12. Launch Your Product & Improve Its Performance:
    Once your MVP is tested, the final step is to launch your FinTech app on
    popular Play stores. Releasing your MVP will enable you to collect
    valuable user feedback and improve its performance. To start a FinTech
    company, launching your FinTech app is just the end of the beginning. From
    this stage, you should begin testing new concepts and introduce new
    features to improve user engagement. A comprehensive marketing and
    promotional strategy will help you reach your target audience easily and
    work on their opinions and feedback.
    

How Can You Prevent Your FinTech Startup From Failing?

A recent study shows that around 70% of FinTech startups fail within the
first two years of their inception. The primary reasons are inadequate market
research, regulatory challenges, and inadequate funds. In addition, the
absence of idea validation also prevents FinTech startups from success. To
tackle these challenges, FinTech entrepreneurs should incorporate various key
strategies:

1. You must conduct meticulous market research to identify the unmet needs
   of your target audience.
   
2. Understanding regulatory compliance is paramount. It will help FinTech
   startups navigate this sector more confidently.
   
3. Embracing agile development practices and staying adaptable allows for
   quick responses to changing market dynamics.
   
4. A robust funding strategy will allow you to get past the hard times and
   nurture a sustainable relationship with your investors.
   

How Logic Square Technologies Can Help You Start A FinTech Company?

FinTech is a challenging sector, and you need the help of an expert app
development company with a proven track record of developing FinTech startups.
Are you planning to start a FinTech startup of your own? Stop getting anxious!
As a specialist in FinTech app development, we can help you create a FinTech
company by providing you with the best solution. Contact us now to learn how
to start a FinTech company.

We can help you with the initial planning and strategizing of your FinTech
startup. Our expertise in frugal engineering sets us apart from others,
allowing you to build your FinTech startup cost-effectively. We can help you
develop your FinTech app from scratch and can also help you improve your
existing FinTech app, which could be performing better. We keep you covered
from prototyping and MVP development to testing and deployment. In addition,
we provide expert consultation to help you connect with the right FinTech
investors. Our developed MVP can help you secure funds promptly and grow your
FinTech app company. Make us a technological partner of your FinTech startup
and keep your venture successful.

Final Words:

Hopefully, this article helped you understand how to start a FinTech company
in detail. The steps for building a FinTech startup mentioned in our article
are optional for all FinTech startup owners. The step sequences may change
based on your business goals, target audience, app idea, and fund. For
instance, many FinTech firms start by raising funds as soon as they develop an
innovative FinTech idea. 

Creating a FinTech startup is challenging, and you need an experienced app
development company to translate your idea into a reality. Compared to other
industries, this sector has more regulations and complexities. To start a
FinTech company, you need a strategic partner who is more than a developer. An
efficient app development company can help you grow your FinTech venture by
providing valuable industry insights and marketing support. If you need help
determining how to start a FinTech company, reach out to us. With us, you will
grow your FinTech company for sure.