How to Prevent Your Fintech Start-up From Failing?
The rate of transition in the banking industry has been surprisingly sluggish compared to other industries that have already been affected by the technology revolution. What many perceive to be an outdated system riddled with red tape is now primed for reform as the tastes and aspirations of consumers change.
Even, achieving success in this room is a struggle. Even if the Fintech project starts with a decent amount of capital, the costs are high. According to the Wall Street Journal, over 75% of venture-backed start-ups have crashed. Five years from now, and there’s a fifty-five probability that the company will succeed. Given the demand for innovation in the finance industry, the prospects are not for Fintech start-ups. It’s easy to see why.
As for all start-ups, there is the problem of financing, competitiveness, customer attitudes, preferences and more. FinTech’s, though, also contributed to the complication of regulatory enforcement, recognising the finance market and digital borders. These conditions forced even the most ambitious fintech companies to fold. And they’re not going to be the last to go down in flames.
But these hurdles have not intimidated inspired VCs. FinTech’s across the globe raised a whopping $39.57 billion in 2018. This was an improvement of 120 percent from the previous year. In this post, we will look at the reasons that lead a fintech start-up to fail as mentioned by the top finance app development company India.
Why Do Fintech Start-ups Fail?
Settling with the wrong partner
Money is important, but the one who gives it to you is, too. Investors you work with don’t just write a check, they lend their name and sometimes their talents and experience to help you get your company off the ground. Choose the wrong one, and you could make a tragic mistake.
There are a few paths that investors can follow. You can opt to use a VC firm or an angel partner, or you can raise capital from an existing, experienced business such as a well-established bank or insurance broker. No matter how you go, you need to search for an investing partner with expertise in the financial sector.
Experience in the start-up business field is not always mandatory, but it is critical when it comes to fintech. The investor will need to help you manage the finance industry, and their experience and knowledge of this field are key to your progress.
You’re still going to need to create ground rules with your investor. When an existing organization embraces you, you’ll need to find a way to integrate into their well-established community. If you’re working with a person, talk about how they want to be involved, what kind of reporting they’re expecting from you, and what kind of governance they’re considering for the organization.
Deviating from the start-up’s identity
Not all start-ups are made the same thing. This idea is much truer when it comes to tech entrepreneurs. Yet none of them is more complex than fintech. Finance app development company India forms the core identity of any modern cutting-edge fintech start-up.
Many Fintech entrepreneurs make the mistake of setting up their company as if they were just like any other technology start-up. They’re not, because they’re not meant to. Not only do these fledgling firms have all the usual difficulties of launching a company, but they have a daunting job of knowing capital at an intuitive stage.
Undermining the competition
Marketing a Fintech start-up correctly is indeed a special proposition. Once again, fintech cannot take their identity for granted and do all they can just as any other start-up can do. People won’t react to the Uber commercial the same way they will do the Venmo marketing pitch. To get this right, sophisticated knowledge of your clients and your competition is essential.
Failing to understand customer’s requirements
Understanding how consumers view money cannot be overstated. If you can’t understand this, you can’t make it as a fintech start-up. A finance app development company in India can help you in singling out the customer’s requirements precisely.
You need to know how every human, every demographic, saves, invests, and understands their income. For example, when it comes to mobile personal banking applications, 20-some are looking for money management software, while 30-some are looking for better debit card incentives and interest rates. In the meantime, customers aged 40 and over are just worried about interest rates.
Avoiding the regulations
Adherence to the rules and regulations is critical. Ignoring the letter of the law, no matter how fantastic your product or service, will lead to a quick, sudden (but not painless) death for your fintech. A strong, well-planned legal strategy will deter this from occurring.
FinTech’s are in a particular role, for not only are they subject to the regulations regulating information technology (sometimes called cyber-law), they have the additional complication of complying with the infinite amount of red tape that binds the finance sector.
It doesn’t matter if you do it, just do it. Seek the counsel of a knowledgeable, seasoned solicitor on all matters before you launch your Fintech. Finance app development company India can help you stay aware of all the financial regulations in the area of the operation.
Law, like technology, is a living, breathing entity that is in a continuous state of transition. It is continually being adapted to satisfy the needs and demands of everyday life, and so it should be. You have to be flexible when it comes to regulatory enforcement. Only because anything is legal today doesn’t mean it’s going to be legal tomorrow.
Conclusion
When you start a fintech company backed by a finance app development company India, it might sound like you’re against the universe, and it’s in a lot of ways. The feeling could be much more pronounced when you launch a fintech. Understand what you’re up to, get to know the usual traps, and stop them. Dig your heels down, do your homework, and fail is the farthest thing from your mind.