Launching a new business is no easy feat for any entrepreneur. However, those who are looking to enter the fintech industry will have to face additional challenges on the road to success. From unique security threats to stringent industry regulations, fintech entrepreneurs must understand the ins and outs of fintech to help their businesses thrive. Here are a few of the most important things that entrepreneurs must do to succeed in fintech:
Carve out a place for your business
The fintech industry spans countless subdomains that range from crowdfunding and mobile banking to investments and personal finance. You will need to identify which of these niches you would like your business to fall into as you build your initial business model. In choosing a fintech subdomain, you should consider a few important factors: do you have existing expertise in a certain area? Are you looking to target a specific demographic?
You should also take this time to conduct market research, which will help you identify the most underserved consumers in the fintech sector. This information will better prepare you to build a business that will address the biggest customer pain points and position yourself for better success.
Focus on data security
As a fintech startup, your business will manage extremely sensitive customer information pertaining to their finances and identities. Cybersecurity will, therefore, be instrumental to the protection of customer data against theft and fraud. This will require your business to encrypt any potentially sensitive data that it handles. Many fintech startups choose to store their data in the cloud, which can offer heightened protection against threats such as DDoS attacks, in addition to allowing them to create data backups for additional security.
Build the right team
Behind every great startup is an even better team. Finding the best candidates for each role in your business will be crucial, especially in the world of fintech. You will need to fully flesh out both the finance and technology sides of your business with experienced, talented employees. However, startups typically struggle to attract top talent due to the fact that they can’t offer competitive salaries.
As such, hiring outside help in the form of a software development team can take some of the burden off your shoulders while still ensuring that you have the right talent for the job. As your startup grows, you can look at acquiring in-house talent to meet your needs.
Understand the industry regulations
Fintech and banking have some of the most demanding regulations of any industry, so you will need to develop a thorough understanding of any regulation and regulatory authority that will relate to your business. In the U.S., all fintech businesses must adhere to anti-money laundering (AML), Know Your Customer (KYC), Payment Card Industry Data Security Standard (PCI DSS) policies. The General Data Protection Regulation (GDPR) is a European Union regulation that will also impact your fintech business.
These regulations are only the beginning, however. Different states may have their own policies that you must follow. If you want to eventually launch your business globally, then you will need to abide by each country’s unique regulations as well.
Bear in mind that financial regulations are constantly evolving, so running a fintech business will require you to follow all regulatory developments and adapt to them quickly.
