5 Tips for FinTech Startups
Feb 14, 2022
Every beginning is challenging. On average, nine out of ten start-ups fail, and the financial industry is not known for fostering the growth of young startups. The risk of failure and the strong competition, on the other hand, should not dissuade you from starting your own FinTech company.
Without a question, the financial services business is undergoing significant change as new initiatives and companies continue to offer more intelligent, faster, and accessible methods to manage our funds. And the fintech industry is not confined to that. Cryptocurrency, NFT and digital cash, Blockchain technology and Decentralized Finance, Insurtech, and robo-advisors, forex brokers and crypto exchanges are just few of the recent technologies that have already impacted the financial procedures of several firms worldwide.
We've compiled a list of five criteria and tips for FinTech startups, which may make them grow as reputable ones.
Analyze Your Market in Detail
The business concept lies at the heart of any new venture. The fact that an idea appears promising at first glance, on the other hand, does not imply that it will be successful in practice. Forex startups must begin analyzing the market as soon as possible in order to establish whether or not there is an adequate and sufficiently large target audience for their product or service. The lack of a financial market for a company's product or service is by far the most common reason for its failure, according to statistics. You must be aware of the size of the target market, the nature of the competition, and the prices at which comparable products and services are being sold. Never overlook market research and make sure that your business plan is perfectly aligned with the findings.
Preparing for Your Liquidity in Advance
Starting a FinTech company, for instance, forex or cryptocurrency exchange business, requires financial backing. The issue of funding is at the top of every financial and brokerage startup's list, just as it is with any other type of business. This issue can be separated into two components, broadly speaking. First of all, the startupers have to consider the issues that might be included in a standard business plan, as well as the questions that should be settled preferably before the firm is created.
These include considerations such as the amount of capital required, the anticipated outgoings, and the prospective revenues. This is the stage at which you should look into cooperating with a solid liquidity provider for startup companies as well as applicable grants and subsidies. Because you will most likely be competing with other FinTechs who have significantly more resources than you. Thus, engaging partners, possible investors, and liquidity providers early in the process is critical. You should look for companies and people who are enthusiastic about your idea and who are willing to invest in your venture.
Simple Access and Quick Integration
Financial technology organizations are beginning to adapt to new technologies such as artificial intelligence, blockchain, and complicated algorithms. Businesses, including the forex brokerage business, may benefit from new technology in a variety of ways, including avoiding revenue losses, gaining access to the proper customer, and making more accurate judgments.
Customers should be able to readily approach fintech companies in order for them to flourish. They must be able to provide their clients with attractive services that are simple to use and meet customer expectations. However, Fintech businesses providing B2B services should ensure that system connectivity is quick and reliable.
Fintech firms support banks, not compete with them. Financial technology businesses will have tremendous development potential if they can give easy access to the banking industry and speedy integrations for the services they supply.
Financial Crimes Prevention / Anti-Money Laundering Compliance
Financial crimes are a significant menace around the world. Financial service providers must take a variety of actions to combat money laundering, terrorism funding, corruption, and fraud. These safeguards help prevent financial crimes and guarantee that no developments jeopardize the company's image. Financial technology firms are among the businesses that must successfully combat financial crime. They must take precautions to ensure that the numerous financial services they provide do not act as a conduit for financial crimes.
Ensure Applying for Licenses and Registration
Why is it critical to obtain a Forex broker license? A license issued by a reputed regulator will increase your credibility and work as an additional marketing tool for attracting traders. Due to the global reach of the Internet, online brokerage firms can be registered in any country — depending on the costs they intend to target. However, you must consider another critical factor in this case: the license level. For instance, by establishing a Forex broker in a recognized financial center such as the United States, the United Kingdom, Switzerland, or Australia, you instantly boost your reputation by orders of magnitude, establishing an unbreakable competitive advantage, and gaining access to the largest markets.
However, keep in mind that obtaining a license from a respected regulator demands a significant financial investment. For example, in order to obtain a US license and operate in the Forex market, a corporation must commit at least USD 20 million in equity (excluding monies raised from consumers) and be willing to adhere to stringent reporting standards. A European Union license costs between $70,000 and $1.2 million, and the process can take up to two years.
To expedite the registration procedure and save money, you can consider a white label exchange solutions. This will help you get onboard faster and with high quality.