FinTech is a space that knows no boundaries. It has inspired, and continues to inspire, enterprising individuals and companies around the world. So what exactly is FinTech? And why do we need it? In the past decade, financial technology has made everyday transactions faster, easier, and more secure. The proliferation of mobile devices has also led to greater access to financial services. But this isn’t enough. Technology needs to continue evolving so that financial services are more accessible and affordable for everyone.
Fintech is often associated with startups and innovation. This is no surprise considering the rapid pace of change in financial technology in recent years. While this has generally opened up new opportunities for smaller players and accelerated growth, it also comes with its own set of challenges.
With an expected 20 percent growth rate over the next decade, the fintech sector provides a lucrative opportunity for any company. However, these companies will need to take on unique challenges to succeed in this space. There are many things that need to be considered when establishing a fintech startup—especially one with a social impact objective. You need to be provide an overview of the considerations you should have if your business idea has similar objectives as creating an impact through fintech services.
FinTech has disrupted the financial services industry so much that a new term — Social Finance — has emerged. The societal benefits of FinTech are clear, but scaling a startup in this sector is challenging for many reasons.
If your company operates in the FinTech space, you’ve probably noticed that smaller companies with niche products tend to thrive more easily than larger ones. This article explains why this is and what you can do about it.
What is FinTech?
FinTech is the financial services sector that is driven by technology. In the last few years, it has become an incredibly hot sector, with companies like Transferwise and Funding Circle making headlines with their innovations. FinTech is a very broad term, with the Financial Conduct Authority (FCA) defining it as “the use of computing and telecommunications technologies to provide financial services and products.” The FCA has three categories for FinTech – infrastructure-based, product-based, and process-based. Infrastructure-based is about payment and settlement networks, payment services, and access to financial markets. Product-based is more about financial products, and process-based is about how financial service providers operate.
The need for a fairer financial industry
There is no doubt that the financial sector has had its fair share of criticism – and rightly so. There are many who believe that the industry is neither fair nor inclusive. It’s also worth noting that just 5% of the world’s population owns 95% of the world’s wealth. In the UK, many people are shut out of the financial system because they are financially excluded. This may be because they are on a low income, are self-employed, or are in a financially challenging situation, such as having a mental health condition. The reason for this is simple: financial services are expensive. In the UK, banks are making an estimated £11 billion a year from unarranged overdraft charges alone.
Opportunities for fintech companies
As we have seen, the financial industry is ripe for disruption. There is a real opportunity for fintech companies to provide a cheaper and more accessible alternative to traditional financial services. A recent survey found that 50% of people would prefer to bank with a tech company than a traditional bank. And with the average person having 14 different financial accounts, the opportunity for fintech companies is huge. There are a few things that make the financial sector the “perfect storm” for fintech disruption. Firstly, it’s a multi-trillion-dollar industry that no one person or organization controls. Secondly, it’s a highly regulated industry with a lot of red tape. And thirdly, it’s quite a complicated industry, with lots of moving parts.
Challenges of building a FinTech company
Building a FinTech company is no easy feat. There are many challenges that you will face along the way – from securing investment to hiring the right team. Building a FinTech company with social good at its core will add even further complications. Here are a few things to consider: - Competition - There are literally thousands of fintech companies fighting for their share of the market. And many of these companies are extremely well-funded and experienced. - Funding - Securing investment is always difficult, but it can be even more so when you’re proposing to build a company that will disrupt an entire industry. - Building a team - For many, the idea of working at a FinTech company is very appealing. But finding the right people who believe in your mission can be tricky. - Unfair advantage - There are many things to consider before building a FinTech company. But one to really consider is whether you have an unfair advantage.
Building a FinTech company with social good at its core
Building a FinTech company with social good at its core is no easy feat. But if you can get it right, the benefits for both your business and the wider financial industry are endless. Here are a few things to consider: - Finding your niche - With so many FinTech companies out there, it’s important to find your niche and make sure you’re focusing on one problem in the financial services industry. - Defining your mission - This is more than just a sentence in your business plan; it is what drives your company. It is how you arrive at your product and market strategy. - Finding your funding - Finding funding is always a challenge when you’re building a FinTech company. But it is even harder when you’re planning to build a sustainable business with social good at its core. - Building your team - As we’ve already discussed, finding the right people to join your team can be a real challenge.
Conclusion
Building a FinTech company is incredibly challenging. But if you can get it right, the rewards are endless. With the financial services industry ripe for disruption, there has never been a better time to build a FinTech company. If you can find your niche, define your mission, and build a FinTech company with social good at its core, you could be one of the companies that leads the way for a fairer financial industry for all.
Post a Comment (0)