What kind of technology is on top priority now to invest? What are the biggest challenges for those who decide to start a Fintech startup? In this article, we’ll try to find the answers to these questions and understand why regulations are so important in the financial sector, why technology can’t guarantee your success, and what you need to start a Fintech startup.

The role of Fintech technology

Technology can bring additional opportunities that sometimes are not so recognized by legacy banks or even higher technology banks. If the financial institutions decide not to change their employees quite often and if they are not hiring a lot of people from startups, sometimes they miss a point. This is where Fintech companies can grow quite significantly and cause the appearance of few ‘Fintech unicorns’ that show that they can improve technology and compete with the general banking services market, delivering significant value to customers, both in B2B and B2C verticals. 

If you decide to invest in a financial company, our advice is not to look into the technical aspect, but more on the ideas that the financial companies have. If we take an example of TransferWise, we can notice that they solve big problems for their customers and consider that it’s important to know the customer demands, and, as well, more compliance and legal aspects. In case you are an investing financial company, we have to always look at what kind of market you are going to target and what kind of product you deliver. 

Fintech challenges 

Nowadays we can observe quite a significant demand for cross-border payments because every country has its own local regulations and these regulations can be a showstopper. However, Fintech companies should always consider those regulations not as showstoppers but as the potential for squeezing between those regulations and find out how to stream the money flow in a compliant way and deliver value to the customer. 

The Fintech startups that are already in this space are more creative in compliance and regulation subjects rather on technology space. So, in case you understand consumer demand and regulation corridors between different countries, you can figure out what kind of product you need to deliver and you can use any technology to do so.

Here we highlighted some of the most critical Fintech challenges nowadays:
1. Digital identities

To improve already existing biometrics technologies, Fintech companies use one-time passwords (OTP), as well as risk-based authentication. This adaptive authentication analyses such data as a user’s geolocation, registered devices, biometric data, OTP, and many more.

2. Data ownership

While providing data ownership in your startup, you have to consider lots of technical and legal processes as well as its compliance with the standards and regulations in your country.

3. Cloud migration

Especially for the Fintech industry, it is essential to choose tools that can manage your cloud solutions in full integrity. 

4. Third-party components

Integrating with third-party components like payment gateways, analytics systems, social network buttons, chatbots can compromise the security of your Fintech product. 

5. Compliance with security protocols

Your Fintech startup has to be in compliance with the regulations and standards of the country of its regulations. 

Local Fintech regulations

If we take local regulations of countries, they are all quite similar. Some are more restricted and some are more open. If we divide all the countries on emerging and emerged, usually emerged countries like European countries or the USA, don’t have lockers to repatriate funds from those countries or to get funds into these countries. And this is because they understand how to make money on cross border flow. 

However, some emerging countries like Indonesia or Vietnam, have significant power with their people who can manufacture something. And if the country opens the border, then funds that have been made by these companies, start to go out of the country. From these perspectives, those countries put an effort to block money flow to go out from them. So these countries are usually considered to be more complicated than others.  

In Europe, there are more advanced regulations that have no significant restrictions to stop money from going from one country to the other. So, it brings fewer opportunities for Fintech startups to compete in this market because more companies start this kind of business. 

If you decide to start your Fintech startup, there are several important points you need to keep in mind:

  • It’s always necessary to research in advance and look for business potentials. When you research if you can do this in your business, you always have to take into consideration compliance, taxes, and the local environment, as well as language. In China, for example, you can’t do anything without knowing the Chinese language. Chinese people speak the most popular language in the world, and they are not so keen to learn English. Those are the opportunities where you can find significant growth. It’s not enough to develop fantastic technology and then enter the Republic of Congo. Most people in Congo don’t have bank accounts, so technology won’t help you. 
  • The more markets have emerged, the more is a demand for technology. However, it’s very complicated to compete in those markets, and your technology should be innovative and really creative and the project and the idea behind should be the only one in the market to get significant growth. Unlike in the emerging markets, you can easily create the financial schema and with commodities, you can get significant market share. 
  • If every process is organized right, you can always find an idea. If you are a startup, you always have to take into consideration that if you have an idea today, it means that there are 10 people in the world who have the same idea or maybe they started it yesterday, so you already are one step behind. 
  • When one startup has good technology, and the other one has business development, the one that has better business development – wins this competition, despite the fact that the first one has brilliant technology and faster processing.  You always have to take care of your relationships as well as customer care (is also very important). 
  • The new startup unicorns deliver custom care services in a bit better way than legacy companies with huge corporations because their approach is different. They have customer success departments, they get feedback, and then they talk to the product team in terms of how to improve the product. Their planning is a bit easier because you don’t need to align with all these big organizations and plan the budget. You can test many ideas very quickly and then find out what your customers like. 

HOW WE CAN HELP

Regardless of your location, Fintech regulations should be thoroughly examined as far as almost every Fintech solutions and standards developed these days can go globally. Also, you should be sure to partner developers that are aware of Fintech development standards and limitations. 

Over the last 5 years, we at UppLabs mastered the latest Fintech technologies and gained experience in creating reliable, secure, and sophisticated Fintech solutions and products:

  • Money transactions platform engineering
    Our fintech payment ecosystem is transparent and multifunctional.
  • Online trading and exchange platform engineering
    We create online e-trading platforms that offer real-time solutions with various trading fintech opportunities.
  • AI-based Fintech solutions
    We are ready to use AI-based solutions to collect and process huge volumes of data aggregated by Fintech companies.
  • Payment systems integration and optimization
    We automate your accounting and ERP creating the best fintech services and apps.
  • Existing services maintenance and modernization.
    Our portfolio includes the use of modern architecture that guarantees easy maintenance and easy integration with the best fintech services.

If you need IT consulting on Fintech – ask UppLabs!

Stay tuned! We have some interviews with the Fintech experts to publish!

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