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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:
a. Economic
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.
b. Effective
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.
Conclusion
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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