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.
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!
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.| Year | Google Play Store | Apple Store | Total | Growth Percentage |
|---|---|---|---|---|
| 2018 | 20000 | 15000 | 35000 | – |
| 2019 | 25000 | 20000 | 45000 | 28.6% |
| 2020 | 30000 | 25000 | 55000 | 22.2% |
| 2021 | 35000 | 30000 | 65000 | 18.2% |
| 2022 | 40000 | 35000 | 75000 | 15.4% |
| 2023 | 60000 | 40000 | 100000 | 33.33% |
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.
| FinTech Category | Market Leader | Profit Earned in 2022 (USD) | Country of Origin | Operational Area | Current Valuation (USD) |
|---|---|---|---|---|---|
| Cryptocurrency | Coinbase | 7.8 billion | United States | Global | 68 billion |
| InsureTech | Lemonade | 390 million | United States | United States, Canada, Germany | 3.6 billion |
| RegTech | ComplyAdvantage | 100 million | United Kingdom | Global | 200 million |
| LendTech | LendingClub | 1.3 billion | United States | United States, Canada, Mexico | 3.3 billion |
| PayTech | PayPal | 25.7 billion | United States | Global | 194 billion |
| TradeTech | Virtu Financial | 4.2 billion | United States | Global | 23 billion |
| BankTech | FIS | 14.3 billion | United States | Global | 93 billion |
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.- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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:- You must conduct meticulous market research to identify the unmet needs of your target audience.
- Understanding regulatory compliance is paramount. It will help FinTech startups navigate this sector more confidently.
- Embracing agile development practices and staying adaptable allows for quick responses to changing market dynamics.
- A robust funding strategy will allow you to get past the hard times and nurture a sustainable relationship with your investors.
