Fintech has recently exploded and the industry isn’t expected to slow its speed anytime soon. Both consumers and founders are getting involved in new age technology that is changing the way the financial industry earns revenue and serves the people.
If you’re looking to get into fintech, there are some common pitfalls you should steer clear of Here are the most common mistakes that these kinds of startups make:
Don’t fight for lower prices
The way that numerous fintech startups battle competition is by leveraging their attractive prices to oust other businesses as well as traditional banks. Payment processing startups are competing to offer customers better prices in an effort to attract a bigger audience. Yet, the bigger players have the ability to scale in ways that can offer a potential customer more incentives than merely a competitive price.
Rather, fintech startups should place their man power behind areas like their services or technology instead of battling for the lowest cost for users.
Thinking that intellectual property can be easily protected
If you have created technology that you think is innovative enough to protect from an intellectual property perspective, you should take the necessary measures to solidify that protection.
Many times a startup will have a similar idea without infringing on intellectual property. When this happens, the technological aspect that gives your business the edge is now less sacred. If you business model rests solely on your intellectual property then any similar competitors have a fair chance at consuming your market share.
Choose the right venture capitalist
More important than discovering investors are determining if interested investors have the experience and network that will help position you in the right direction. Being that fintech started to populate in 2012, finding an investor experienced in complimentary fields can be very valuable.
Finding investors with the right network is very essential in this sector too. Many deals are sparked by relationships in the finance industry. Also, fintech services are often integrated services so in order to create partnerships that support such a model there needs to be an available network.
Don’t overlook legal issues
Certain areas of financial services can be highly concentrated when it comes to the legal side of the situation.
There are a number of different situations that bring along a different rulebook of laws. Consider cases like security law in emerging markets, the laws around money lenders, and the laws that accompany privacy of personal data.
Make sure to cover all legal aspects when developing your initial business plan. It’s also helpful to keep your team conscious of the ethics and legalities of every function of your business.
Fintech startups are capitalizing among the younger demographic and the 2.5 billion unbanked adults. In order for this industry to continue flourishing, we must avoid the fatal mistakes of those before us.