Despite the challenges startups face, including a high failure rate and intense competition, it is still possible to succeed in the FinTech industry. By understanding the risks and being prepared for them, you can give your company the best chance of success.
The financial services industry is currently undergoing a period of significant change, as new companies and initiatives continue to offer more intelligent, faster, and accessible ways to manage our finances. Fintech is at the forefront of this change, with technologies such as crypto currency, NFTs, digital cash, blockchain technology, decentralized finance, Insurtech, and robo-advisors already having a major impact on the way financial businesses operate.
In this article, we present five tips and criteria for FinTech startups to foster growth and become reputable companies.
Get a Detailed Understanding of Your Market
The success of any new venture depends largely on its business concept. However, just because an idea looks good on paper doesn’t mean it will be successful in reality. Forex startups need to start market analysis early on to see if there is a large enough target audience for their product or service. This is an important step in ensuring the viability of the venture, as the most common reason for failure is the lack of a target market, according to statistics. Startups must be aware of the size of the target market, the nature of the competition, and the prices of comparable products and services. Market research is essential to ensure that your business strategy is aligned with the findings.
Making Sure Your Liquidity is Ready in Advance
When it comes to starting a FinTech company, funding is one of the most important things to consider. This is because such businesses typically require financial backing in order to get off the ground. There are two main aspects to this issue that startup founders need to be aware of. Firstly, they will need to create a standard business plan which takes into account all of the potential costs associated with setting up and running the company. Secondly, they should also try to answer any other key questions that need to be addressed before launching the business. By doing so, they will increase their chances of securing the necessary funding and setting their new company on a path to success.
It’s important to consider factors such as how much capital will be required, what kind of expenses can be expected, and what revenues are realistically achievable. One key step at this stage is to find a reliable liquidity provider who can offer support to startups. This is especially important because FinTech startups are often competing against larger companies with more resources. Therefore, it’s crucial to establish relationships with potential partners, investors, and liquidity providers early on. Look for individuals and organizations that believe in your idea and are willing to invest in your success.
Accessibility and Easy integration
As financial technology evolves, so too do the organizations that utilize it. This has resulted in changes for businesses across a variety of industries. New technologies such as AI, blockchain, and complicated algorithms can offer many benefits to businesses in many fields, as well as assist in avoiding revenue losses, gaining access to the proper customer, and making more accurate judgments.
The success of fintech companies depends on how quickly and easily customers are able to access them. Fintech companies need to offer customers services that are easy to use and attractive. The B2B service provider, however, should also ensure rapid and reliable system connectivity.
Fintech firms have the potential to become major players in the industry if they can provide easy access and speedy integration for their services. By partnering with banks instead of competing against them, fintech firms can create a win-win situation where both parties can benefit.
Preventing Financial Crime / Combating Money Laundering
Financial crimes are a significant menace around the world. Financial service providers must take a variety of actions to combat money laundering, terrorism funding, corruption, and fraud. These safeguards help prevent financial crimes and guarantee that no developments jeopardize the company’s image. FinTech firms are among the businesses that must take precautions to ensure that the numerous financial services they provide do not act as a conduit for financial crimes.
Making Sure to Apply for Licenses and Registrations
There are many reasons why it is critical to obtain a Forex broker license. A license issued by a reputed regulator will increase your credibility and work as an additional marketing tool for attracting traders. With the global reach of the internet, online brokerage firms can be registered in any country and operate worldwide. However, another critical factor must be considered when making the decision: the level of regulation in the chosen country. For instance, by establishing a Forex broker in a recognized financial center such as the US, the United Kingdom, Switzerland, or Australia, you instantly boost your reputation and gain access to larger markets. This gives you a significant competitive advantage.
It is important to note, however, that this process requires significant financial investment. For example, in order to obtain a US license, a corporation must commit at least USD 20 million in equity (excluding monies raised from consumers) and be willing to adhere to stringent reporting standards. The process of obtaining a European Union license can cost between $70,000 and $1.2 million and take up to two years.
If you wish to save time and money by expediting the registration process, you should consider a white label solution. By taking this approach, you’ll get on board faster and with higher quality.