The rise of the fintech space sparked the emergence of highly successful global companies with the potential to change the international financial landscape. To put things in perspective, fintech company PayPal reportedly processed $1.36 trillion in payments in 2022 - more than the 2022 GDP of the Netherlands at $991 billion.
With companies such as Paypal, Stripe, Visa, and Mastercard figuring majorly in the facilitation of transactions worldwide, it is no surprise that experts project the fintech industry to become a $1.5 trillion industry by 2030.
Luiz Góes, CEO of the upstart Dubai fintech company Layered Financial Independence (LFi), shares 3 Secrets Behind Building a Successful Fintech Company.
Identify a Target Market and Pain Point
For a fintech idea to get off the ground, it must have a core purpose - a customer pain point it aims to solve. A company's fintech industry strategies can be laid to waste if the business fails to uphold this simple yet vital premise.
A founder needs to engage in deep and extensive market research to determine two things:
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A problem or challenge for which technology can provide a solution;
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A sizeable customer base for whom the new product will be of particular use.
These two aspects will be the foundational principles driving product development and company growth. By solving a significant pain point experienced by a sizeable customer base, a fintech product can achieve market viability, and the company can carve out its niche.
Additionally, it is essential to build a robust customer persona that integrates a deep understanding of the target market and their needs. Gaining a better understanding of the target market can help fintech startups continuously tailor their products and offerings with improvements and upgrades.
Build a Great Product or Service
A great concept is only valuable when it comes with equally great execution. Even if the idea is sound and the market is available, if the product you introduce to the public fails to address the customer pain point it aims to solve, it is a valueless endeavor.
A great product development process keeps the end user in mind. It focuses on how the user intends to solve a problem, how user interactions occur, and how the product can respond more intuitively to resolve a customer's pain point faster.
In addition to focusing on functionality, a fintech startup must consider compliance. Jurisdictions around the world uphold varying regulatory frameworks for fintech products and startups. Laws and regulations across differing jurisdictions can severely affect the functionalities offered by a fintech application.
Thus, startups must carefully choose where to launch their products and what functionalities will be available to users. Otherwise, the intended target market could end up with a severely impaired product that fails to meet expectations.
Discover LFi’s innovative smartphone:
Secure the Right Funding
According to data released by CB Insights, funding concerns caused 47% of startup failures last year. This figure is double the percentage of companies that failed for the same reason in 2021.
As economies worldwide continue to contract and governments focus on austerity measures to maintain stability, it will be all the more important for startup companies to secure the right funding partnerships to weather the storm.
Keep in mind that there are various types of startup funding options available. Choose funding based on your fintech startup's growth stage, goals, and business model. Venture capital and angel investors are two funding models that fintech startups can engage with to secure financing.
Venture Capital
If your fintech brand classifies as an early-stage company with a high growth potential, you can approach venture capital (VC) firms to secure funding.
Venture capital firms provide early stage-high-growth startups with funding in exchange for equity or shareholdership. This financing comes from pooled funds that VC firms are qualified to hold.
Apart from providing funding, VC firms typically require a member of the firm to have a seat on the board of directors to provide high-level guidance on strategy and decision-making.
Angel Investors
Angel investors are also another viable funding source for fintech startups. Like VCs, angel investors can provide funding, advice, and support to fintech brands looking to get off the ground. However, unlike VC firms that source financing from pooled funds, angel investors take on the risk as individuals, which means they take all the gains if the startup takes off.
Choosing the right funding source can mean the difference between success and failure for a startup early on. As such, it is crucial for fintech brands to carefully consider their options before deciding.
Luiz Góes on Fintech Leadership
As a fintech startup founder, Luiz Góes believes these three concepts are fundamental to succeeding in the startup landscape and achieving leadership in the fintech space.
"Product-market fit, product excellence, and robust funding are the building blocks of a vigorous startup company," claims Góes.
"Behind these three ingredients, fintech startups can develop a strong go-to-market that capitalizes on this period of product building as we prepare for the next bull market," he added.
Meet the team behind the LFi One:
About LFi
LFi is a technology company that aims to empower the global fintech movement with new and innovative offerings that combine cutting-edge hardware with next-generation software. Leveraging the power of advanced computing and blockchain technology, LFi seeks to realize a future of financial independence through integrated products and solutions.
Discover More. Dive deeper into LFi's groundbreaking journey. Visit our website or follow us on social to keep up with our latest updates.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
