Strategic FinTech investors can be pilot customers, technical and product advisors, distribution partners, strategic partners collaborating on product development, an M&A acquirer. Financial institutions continue to attract IT companies to automate their traditional ways of doing business – saving, spending, borrowing, investing. It attracts funding that finally helps companies grow. More companies pour into the case, it is unmanageable to sift through and identify which ones will fare well. Fintech also incubates several industries and sectors such as education, investment management, fundraising, retail banking, non-profit services, and progress in the crypto market.
General Points to Consider While Venturing a Start-up
Company overview, Mission/vision of the company, the team, the problem, the solution, the market opportunity, the product, the customers, the technology, the competition, the traction, the business model, the marketing plan, financials like projected revenues – key assumptions – EBITDA, and considering how much capital you’re trying to raise, what progress will you make with that capital
How Indian Companies Are Progressing Towards Fintech?
India in particular has experienced two critical drivers that tag along in digitization. After the multiplier effect of the opening of ‘Jan Dhan’ accounts, the Indian government now wants to fit together insurance products to ride the heavy swell of the opportunity. Such accounts are potent to drive micro-credit and micro-investment and raise the bar for financial inclusion.
India caught up with its pre-pandemic output in the second quarter of the fiscal year (2019-2020) but is also expected to do the same for the rest of the year. India is amongst few economies in the world to rebound strongly from COVID and Omicron-induced economic contraction of 2020-2021.
Social Alpha and Small Industries Development Bank of India (SIDBI) coalesced with Swavalamban Divyangjan Assistive Tech Market Access (ATMA) fund to offer financial grants to Social Alpha-incubated start-ups, for assistive technology in the financial sector. Every start-up gets Indian Rupees 20 Lakh to fund up to 50% of product price for the initial users to improve the access and reduce expenditure for procuring new technologies.
The Acclivity of Assistive Technologies in Fintech
Assistive technology is an emerging market in India, social alpha and venture development platform for science and technology start-ups also incubate technology, venture acceleration, and seed capital programmes. It also offers access to risk capital, building a network of clinical partners and NGOs to support the start-ups.
The need to include digital accessibility in Banking and Financial has been growing exponentially over the past few years. As user convenience underpins the scalable architecture, the ‘smartphone’ adoption is now transpicuous of the identity for the masses. The payments industry has always been constrained by distribution. The ingression of technology has eliminated such constraints.
The Ascension of Fintech
Investment in Fintech has been on the rise globally, crossing $100 billion. As it continues to grow, the companies offer outsized growth opportunities.
Fintech companies (Startups, medium-sized, large enterprises encompass a broad landscape of businesses) include:
- Stock Trading Applications like TD Ameritrade, Robinhood, and Schwab
- Payment infrastructure, issuances, processing like Square, Revolut, Ant Financial, and Stripe
- Cryptocurrencies and digital cash like Bitcoin.
- Blockchain Technology likes Ethereum.
- Lending marketplaces like Prosper, OnDeck, and LendingClub
- Companies that simplify insurance like Lemonade, Fabric, and Oscar
- Companies involved in money transfer and remittances like TransferWise, Venmo, and PayPal
- Companies involved in mortgage lending like better Mortgage and Lending homes.
- Certain Neobanks like Monzo, N26, and Chime
- Robo investment advisors like Wealthfront, and Betterment
- Enterprises for an online business loan like Kabbage, and Lendio
- Financial software and infrastructure to fuel similar apps like Plaid
- Apps for financing and payments, small business credit cards like Brex and Fundbox
- Cybersecurity institutions to protect money laundering, risk of chargeback and other similar cybercrimes. E.g.: EverCompliant, Crowdstrike, and Forter
- Companies involved in Credit reporting like Credit Karma
Challenges with Fintech Startups
If not struck out with:
- Raising Venture Capital or Strategic Financing
- Having an Investor Pitch Deck
- Regulatory Issues for Fintech Companies
- Competing With Big Financial Brands
- Cost-Effective Marketing to Acquire and Retain Customers
- Getting Early Adopters and Avoiding Slow Sales Cycles
- Cybersecurity and Data Privacy Issues
- Intellectual Property and Technology Issues for Fintech Companies
- Business, Revenue, and Expense Model Issues
- Legal Issues for Fintech Startups
To acquaint you with Fintech start-up types and their services, we’re rounding up the finance firm types to help you begin with empowering your micro-investing. But you need to ensure:
- If your company has been properly organized,
- Where the company is incorporated,
- Will your company attend to important contractual issues,
- Will your company comply with applicable security laws when issuing stock or options,
- Have you split the deal and equity between co-founders and what will happen if the co-founder leaves the company,
- Is your company complying with employment laws,
- Do you have appropriate policies in place,
- Employee manual, key tax considerations,
- Employee equity plan to incentivize employees,
- Liability limitations, the arbitration provision in the event of a dispute,
- Confidentiality and Invention Assignment Agreements,
- Obtaining appropriate employment documents from employees
- Do you have any existing regulations that regulate the company’s products or services?
- What licenses will you require?
- If given a chance will you partner up with another company? If yes, what will be the economic split? What will be the risks and what will be your long-term approach?
- With so many Fintech biggies out there, how do you plan to differentiate yourself?
- What does the customer acquisition cost?
- How will your company detect fraud?
- Is your service customer-friendly? Will you provide long-term value to the customer?
- Is your company capable of raising sufficient capital to cover the company’s anticipated burn rate?
Fintech Startup Types
- Micro-finance Bank – Micro-Finance is a banking service suitable for low-income groups.
- Finance Consulting Firm – Finance consulting firm does not need a lump sum amount and is easily looked up to by everyone.
- Allowance Consultant – Companies have to deal with many different types of allowances like dearness allowance, project allowance, entertainment allowance, interim allowance, overtime allowance, city compensatory allowance, tiffin/meals allowance. Allowance consultants are specialists that assist in handling this acclivitous task.
- Mutual Funds Investment Agency – The demand for mutual funds investment has been on the rise owing to the dwindling market conditions currently.
- Gold Loan Company – Metal investment is one of the safest and the ever-rising prices will benefit those who already have gold.
- Fundraising Consultants – Fundraising and bootstrapping are not preferred for start-ups but the emergence of capital investors extends capital resources to startups and other budding companies and raises funds within limits.
- Private Finance Blogs – If you have a flair for writing and an interest in finance, writing a finance blog can be a decent start-up option.
- Insurance Agency – An insurance agency can be an affordable and trustworthy idea to start with a finance-based insurance business.
- Retail Loan Brokerage Company – Retail loan brokerage companies make their own money and are scalable, affordable and fast-paced.
- Business for Deal Broking – Such companies help other businesses in getting the best finance deals.
- Forex Trading – Trading indifference in currencies by looking at the Foreign Exchange prices and a bit of luck can be a comme il faut business option.
- Debt Collection Agent – You can work in conjunction with big financial enterprises to recover debts by following up with their customers.
- Tariff Consulting – Become expert tariff consultants to fix the taxes levied on various goods and services.
- Angel Investment Company – Try inventing an angel investment company to fund financial ideas into business opportunities.
- Audit Firm – Try opening an audit firm to help other businesses in cutting costs, investigate potential fraud, and identify inefficiencies.
- Commercial Bank – Joining the league of established banks in the government sector, semi-government and private sector, commercial banks might seem insignificant but can still be an add-on.
- Freelance Bookkeeping – Keeping a track of office tasks, back-end operations, maintaining accounts, part-time or full-time can be a lucrative option.
- Stock Broking – Stockbroking involves investment advisors to clients who are authorized to buy and sell the shares. It can be highly profitable owing to an ever-increasing demand in near future.
- Tax Consulting – Many of us are unsure and unaware of the taxes. Tax consultants’ firms/people help their clients in making them understand the percentage of the tax they are paying and making an informed decision about all pertaining tax-related issues.
- Venture Capital (VC) firm – Venture capital firms are based on capital by wealthy investors. If you want to be one, you can scale up in the process and can be a great help for other companies simultaneously.
- Mortgage Bank – Specialized banks offering mortgage loans are popular and effective start-up options.
- Finance-related Coaching – Taking coaching classes for finance, accounting, and marketing and becoming a finance-related coach can be a considerable option.
- Finance-related Podcast – Creating finance, accounting, economics videos and documentaries for students or business professionals.
- Finance-related Books/Magazines – Try writing a book, or for a finance magazine if you’re already passionate about finance and wish to transcribe your thoughts on paper.
- Credit Repair Business – Credit repair businesses help in improving credit scores and overall ability to borrow money from others.
- Investment Management Firm – These businesses help people acquire capital and make judicious investments.
- Build Investment Tools/Products – Automated tools and products that help make investments like chatbots and virtual assistants can be a remunerative idea.
- Start ATM installation & Maintenance Company – It is for those who hardly hit banks for depositing or withdrawing currency.
- Supply of POS Machines – Point of sale terminals have been absorbed by almost every industry, especially by retail marketplaces. So opting to manufacture it can be a considerable start-up idea.
- Risk Management Consultant – Risk underlies every business and specialized consultants are highly desirable.
- Credit & Thrift Business – Such businesses help you pool all your resources and offer loans at the agreed rate of interest.
- Commodities Trader – Physical commodities like oil, fruits, gold, and grocery items are not only a money-making option but are also ever-expanding.
- P2P Lending – Such businesses match up lenders and borrowers through their online platform, thus saving time and resources.
- Real Estate Appraiser – Such people evaluate the value of goods, services, properties and are often associated with banks.
- Bill Reminder App – Although it can be assembled along with the Internet banking application, a separate team to jot down a collection of reminders for an individual can produce a sizable profit.
- Crypto Exchange Platform – Ever since cryptocurrencies have been discovered, bitcoins, ethereum, IOTA, NEO, DeFi, NFT, utility tokens, litecoin, Privacy coins, Stable coins, Binance, tether, Solana, Cardano, USD Coin, XRP are popular exchange mediums. Try your hand at Crypto exchange platform development for your startup.
- Build Regtech App – Applications that manage the regulatory compliance for the companies, with help of AI, ML and upcoming technologies are a primary requisite of most small and medium scale companies that are hoping to scale up.
- Bureau the change – These businesses help companies who deal from various locations with proper licensing, currency exchange.
Conclusive: Which Fintech Startup Idea Will You Choose?
FinTech companies fall under the category of business–to–consumer (B2C) sales model and business-to-business model (B2B) with its challenges. Eradicating the fundraising and competitive issues, FinTech start-ups are valued high in the emerging post-pandemic market. Startups can be very accurate at projecting expenses. We suggest building a business model from the ground up, avoiding overspending on sales and marketing too early and avoiding unnecessary expenses. Reach out for help!
About Author
Neeti Kotia is a technology journalist who seeks to analyze the advancements and developments in technology that affect our everyday lives. Her articles primarily focus upon the business, social, cultural, and entertainment side of the technology sector.
