Financial technology (fintech) start-ups are rapidly changing how people manage their finances. For example, almost nine in ten Americans use a fintech app for their financial needs. The global fintech market size reached approximately US$ 226.76 billion in 2023, and the market is projected to grow at an annual rate of 16.8% between 2024 and 2032, reaching a value of around US$ 917.17 billion by 2032, according to Expert Market Research. No surprise then that this kind of high growth makes fintech attractive for start-ups.
So what’s driving this explosive growth? Lower margins, lower service costs and a shift to data-driven banking is replacing traditional options, for sure. And, of course, smartphone integration is a big driver in many sectors. Here are five factors to consider before launching your fintech start-up.
1. Market research: knowing your niche
It may sound obvious, but conducting thorough market research is the foundation of a successful fintech venture. You need to choose a specific niche within the fintech industry where your start-up can provide innovative solutions. Some niches are dominated by global players with budgets to die for. Think about the niches that are currently underserved – perhaps by legacy technology or high maintenance inhouse systems.
Determining your target services means focusing your limited resources on a specific niche as a launchpad for future innovations. Then you must identify your target audience and understand their pain points.
Many fintech firms are product-driven rather than market-driven, meaning that they are inspired by the notion of providing innovative technology rather than delivering what the market is asking for. If everyone in a niche is happy with the software they have, then it will be a challenge to convince them to change vendors.
Choose a domain you understand well and have connections in. Fintech niches within investment management include:
- Reconciliation
- Trading
- Data management
- Risk management
- Portfolio management
- Post-trade processing
- Client reporting
- Portfolio accounting
- Performance measurement
- Order management
- Execution management
- Compliance
Don’t forget to look at the competition. Perform competitive analyses to identify strengths, weaknesses, opportunities, and threats among the main players. Sometimes the most successful firms in a niche are not the ones with the best software, they just have the best marketing.
2. Compliance and regulation
Time should be devoted to studying relevant laws and regulations. Rather like pharmaceuticals, fintech operates in a highly regulated environment; understanding and complying with these regulations is paramount. Key fintech regulations include:
- GDPR – General Data Protection Regulation
- PSD2 – the revised Payment Services Directive
- eIDAS – a key enabler for secure cross-border transactions.
- ISO 27001 – an international standard to manage information security.
Consider hiring legal experts or consultants to navigate the complex regulatory landscape. Stay informed about changes in regulations to adapt your business practices accordingly. Remember – in many niches the requirement for compliance presents an opportunity for software vendors.
3. Technology infrastructure and security
Prioritise security and use data encryption, access controls, and passwords to protect sensitive financial data. Invest in robust and scalable technology infrastructure. If you’re going to the cloud, then consider AWS or Microsoft Azure as a platform.
By embedding data security and privacy you will build trust with your users. Consider implementing blockchain and other emerging technologies to enhance the efficiency and security of your fintech platform.
4. Customer experience and user interface
Once you have the technology infrastructure in place, you can create an intuitive and user-friendly interface for your fintech platform. Prioritise customer experience to retain and attract users. Gather user feedback and continuously iterate on your platform to meet evolving user expectations.
5. Hiring a fractional CMO
At this point you may well be thinking of how to promote your service in order to create a pipeline. Sales will certainly be on your mind, but before you can effectively step into that domain you need to consider your marketing. Hiring a fractional CMO at this stage has major benefits.
So, what is a fractional CMO (FCMO) and why would I want one? An FCMO is an outsourced marketing executive who performs the function of a Chief Marketing Officer without your company having to commit to a full-time, in-house marketing leader. Generally speaking, a fractional CMO is a seasoned marketing professional with a wealth of experience in crafting and executing successful strategies.
If you haven’t considered the benefits of hiring an outsourced Chief Marketing Officer for your fintech company, now is the time; you commit a fraction (‘fractional’) of the cost of a full-time Chief Marketing Officer, paying only for the time used, e.g. a few hours a week for a long-term or short-term contract, or for specific projects. This enables your company to garner the expertise of a CMO without committing to a full-time marketing executive.
The two most prominent advantages of hiring a fractional CMO for start-ups are therefore cost-effectiveness and access to high-level strategic marketing expertise. This means that you get all the benefits of decades of sector-specific marketing proficiency gained in multiple businesses without paying the sky-high salaries that top CMOs now command.
Fractional CMOs can also tailor marketing strategies to suit the specific needs and goals of a fintech start-up. Years of experience in the sector mean that they know the importance of a customised approach to reach and engage your target audience effectively.
A fractional CMO who specialises in fintech will make available all their expertise to cover every aspect of your fintech business, bringing fresh, creative ideas and an objective viewpoint. Their role would include creating your strategy and implementing it, but might also involve branding, content, PR, digital (including website development), launching your product, creative activities, market research and helping with the hiring of marketing staff.
An experienced fractional CMO can contribute to your strategic planning and execute marketing initiatives that align with your overall business objectives. Their role is key to proposition development, brand building, lead generation, market positioning and many other critical decisions.
Launching a fintech start-up requires a thoughtful approach and a keen understanding of the industry’s dynamics. These are just five factors to consider before launching your fintech start-up – there are a great number more – but truly considering these five factors will greatly enhance your chances of business success. The key is staying agile, adapting to market changes, and continuously innovating to meet the evolving needs of your users.
Ready to get your fintech venture off the ground with a safe pair of hands that you can rely on? Start your new enterprise the right way with the support of our expert fintech fractional CMO services, or simply get in touch to find out more.
