As the name suggests, FinTech is a combination of Finance and Technology. It combines the different banking and finance-based solutions with digital technology to offer a customized and easy to use platform. The industry has witnessed growth in the past decade with the rise of e-commerce business and the internet. With digitization, people rely on more secured banking methods over the traditional banking system. FinTech app development company ensures to offer a secure and transparent banking method using simple mobile apps or websites.
Almost all the apps involving online payments, such as food ordering app, cab booking app, imobile app, share market app, use FinTech services. FinTech has made it easy for customers to send and receive money, make investments, apply for a loan, and much more. In the past, the number of successful FinTech-based app development companies have seen rapid growth. That proves how promising and reliable the business of starting a FinTech app development company is. If you also want to commence a FinTech app development company but are confused about where to start, then read this article to get the answers to all your questions related to starting a FinTech app development company.
Steps to Start a FinTech App Development Company
1. Find the Niche
The first step for starting a FinTech development company is to find the niche. There are lots of areas that come under FinTech. Before finalizing the genre, it is necessary to understand the target audience and target market. It is always recommended to initiate the business locally and then expand it to global areas. Hence, consider the below three factors:
- The age group of the target audience
- The country where the app will be operational
- Specific expertise
Different niche options that one should consider are:
- Financial Management Tools
- Payment Solution
- Data Management
- Mobile Trading and Investments
- Data Analysis
- Finance Consulting
- Crowdfunding Platforms
- Cryptocurrency Solutions
- Money Lending
- Financial Products
- International Money Transfers
2. Understand and Follow the Laws
Money makes the most vital commodity. Thus, its security is a primary concern. It is also the main reason that most of the banking and financial institutes follow an infinite number of rules and regulations so that they can ensure the security of their customer’ money and safeguard them from any fraud. The laws and regulations vary according to the country and the state. The same rules and regulations are implemented on the FinTech startups as well. Hence, it is necessary to understand these laws and regulations, the various ins and outs of the regulatory authorities, and other legalities of the finance industry.
3. Find out the Edge
Building a company selling products that are already in the market and gives the same services to the customers is one of the worst ideas for a startup. Before building an organization, one needs to scrutinize the services of its competitors and find the areas they are lacking. One can take advantage of those lacking factors and make a full-fledged app offering many improvements over the competitor’s products, giving an edge to the competing organizations.
Make sure that the company has a massive footfall. One can make profits by providing exclusive products or services to the customers. The uniqueness of the product offered offers an edge to the competitors.
4. Hire the Right Team
The success of any company depends upon the people working for the company. Therefore, it is necessary to hire the right talent who can understand the requirements of the app and create an app that is best for its users. When there is limited talent, it gets a little tricky to attract talent from the talent pool. Hiring an offshore team is a great option that one can consider. It will cut costs for oneself as they would not have to spend much on the infrastructure for the employees. It will also provide an expert team of developers having deep knowledge and relevant experience in the specific domain.
5. Choose the Correct Tech Stack
It is necessary for every FinTech startup company to have its own customized solution software. That is because no startup would depend on third-party frameworks or CMSs to take care of the transactions. Moreover, there cannot be a matching solution whose performance can compete with customized software. In addition to that, financial products are more vulnerable to data breach. Hence, data security is of utmost importance for such companies. So it is necessary that the financial product consisting of a mobile app, website, or payment platform should be secure. Moreover, data should get stored on the cloud in an encrypted form. It is a must that one should select the right software tech stack that can fulfil the needs and is secure.
6. Create an MVP
One should start with having the minimum valuable product. It is a technique that involves the creation of a website or a product having enough features to satisfy the early product users. The feedback gets received on the initial product then the final product is produced, according to the feedback.
Creating an MVP is a significant option as it offers the below advantages:
Creating an MVP allows saving cost on the investment spent on the extra functionalities not created on the initial product. This cost-saving is necessary as it is not known initially whether the product will be liked by the customers or not. MVP allows one to test the app and how the users respond to it.
MVP will allow the app creation with the most necessary features that are required the most. It results in a simple and clean product.
c. Faster Development
Development speed is another benefit of MVP. It allows the development of a simple product with the most necessary features, understands the applications of the app, knows the feedback for further amendments, and then makes the required changes. In this way, the product development in steps makes it easy and fast.
d. Reduced Risk
The use of MVP helps users to get the funds from the investors because MVP allows one to test the initial product before launching the final product, which reduces the risk of investment. It also let them understand how viable the product is by investing a lesser amount.
7. Get Funds to Invest
Starting a FinTech company needs massive investment. Also, it requires a good team of experts to develop an incredible app. It requires capital to hire and pay the talent, and also involves the risk to employment attached to a startup. Alternatively, one can partner with professionals who can create an app for them, and there will be no need to pay for hiring talent. Moreover, one can create a wonderful presentation for investors or a product demo so that investors get ready to invest in the business.
As the competition in FinTech is increasing, so is the investment. VCs are quite selective while selecting the startups to invest in. So, it is necessary that the product a company is offering should be unique and entice the users, fulfilling the current market requirements.
The FinTech startups need to collaborate with some applicable institutions because they are getting funds from them.
These both the institutions FinTech startups and financial ones can assist the others outreach by putting in a distinctive and special feature along with the alliance.
To give strength in transformation and revolution, collaboration would be the best proposition. Here, one can grasp good knowledge at low risk and cost. One of the main reasons to collaborate, refer to a particular domain is Credibility.
8. Get a Partner
The users do not rely easily upon a rising organization, especially when it comes to an unstable domain. So, it becomes simple to clear these obstacles when one gets connected with a big name. Partnering with the financial institutions gives a lift to the startups as they drive big customer data as well as customer base along with them. It also helps to make accessible products and improves the efficiency of the product.
Rules and Regulations for FinTech Startups
In order to start a FinTech app development company, one needs to follow some rules and regulations specific to the country or area of operation.
There is no doubt that FinTech products have a good amount of benefits for both investors as well as customers. Anyways, many risks have been triggered by increasing FinTech startups. These risks are related to governance, protection of the consumers, and data privacy. That is the reason behind developing the rules and regulations by the regulators for each startup heading to the FinTech world. FinTech startups need to make sure that they keep updated with these rules and make them an essential part of their strategy, as these rules change often.
Below are the regulations that need to be followed for FinTech startups:
1. Federal Trade Commission (FTC)
This federal agency safeguards clients from misleading practices. It helps the customers by conducting investigations against the companies breaking the law and takes care of all the complaints about fake advertisements and data security. However, considering the complaints against these companies, recently, the FTC has paid special attention to prevent misleading innocent customers. For example, FTC sued a company in 2018, offering loans to customers without telling them hidden charges of 5%. FTC wants these FinTech startups to be transparent towards their clients. Taking appropriate action against these companies is the prime lesson.
2. Consumer Financial Protection Bureau
The CFPB agency ensures that these financial institutions and banks do not cheat their customers. This agency has launched a consumer network for FinTech startups to put a stop to the frauds. This network assists the FinTech startups to get in touch for new updates in the FinTech space and also promotes regulation for financial pioneers.
3. European Union GDPR Rules
Below are some crucial points related to GDPR that one should know before starting a FinTech app development company:
- GDPR rules need to get followed even if the location of your operation is not EU.
- One needs to note down the policies, processes, and regular reviews of security measures.
- Personal data should only be worked for a specific purpose.
- Customers should have the right to data portability. It implies that customers should be able to switch between personal data and service providers.
- EU authorities should get informed within 72 hours of any data breach that occurred.
4. Anti Money Laundering Laws
- Anti-money laundering laws got established to prevent illegal financial operations. These laws were created to discover any suspicious activity, such as terrorist financing, money laundering, market manipulation, and securities fraud.
- The anti-money laundering laws are enforced as part of FinTech solutions using Machine Learning and Blockchain. With this, it gets easy for the banks to comply with these rules.
It was all about various regulations related to the starting of a FinTech app development company. Thus, make sure that your startup is regulated as per these rules and regulations.
Starting a FinTech app development company is not that easy, considering the various pitfalls it has to offer. It takes a lot of effort and time to succeed in the FinTech industry. Therefore, it needs a lot of dedication with expertise and honesty in the work, along with a lot of patience to succeed in this competitive domain. In this article, you read the different steps to follow for starting a successful FinTech app development company.
Although it needs a huge capital to start, following the MVP and other investment-related tips shared in the article, one can get the finance-related issues resolved. Apart from finance, one also needs an expert talent pool who can work to create an incredible application for your company. Hopefully, this article must have helped you a lot in getting different tips to start a FinTech app development company.
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