Anywhere you look across the globe, financial technology startups are trying to establish themselves as companies with real staying power. There are a number of challenges that fintech entrepreneurs must face as they look to legitimize their products and services in the eyes of the public, and these five obstacles are some of the most important to overcome.
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Fintech companies straddle a line where they must follow the rules of finance as well as the rules that govern technology and whatever sector the company operates within. If a company wants to sell an insurance product, for example, they have to consider the regulations currently affecting the insurance sector, on top of the other two regulation ecosystems.
Regulations are in place for a reason, but the red tape involved can hamper the development of new products and services. Successful fintech entrepreneurs like John Cestar understand the need for patience and creativity when dealing with regulatory issues.
Finding the money to get a company off the ground is a challenge, especially when the product or service offered has not yet been well defined or proven in its market. Entrepreneurs in emerging markets face the double issue of not having many angel investors in their home country, and investors in the United States are afraid of losing capital to investments in emerging markets.
3. Tech Development
New businesses must find or develop technology for the company to use as well as to use in customer-facing applications. The entrepreneurs themselves may not be tech experts, so it’s imperative to hire people who are if the company is to make smart choices regarding purchasing or developing technology. Many fintech companies go for a hybrid approach in which they purchase or license an existing product and get the rights to modify it in-house for their particular needs.
4. Human Resources
Competent humans across the board are a key element in the development of a great company. Everyone from sales to customer service has to represent the company’s values and be able to perform their job at a baseline level of skill to justify the company’s investment in them. Entrepreneurs often try to cut corners by running with a skeleton staff or offering low wages that attract low-grade talent. Avoid falling into this trap if you want to see how powerful a resource employees can be for a new startup.
5. Establishing Reputation
While many potential customers like the idea of being able to do more with their finances digitally, there’s still the question of how to insert enough human interaction to build trust and rapport with these individuals. Without a face-to-face relationship, it’s harder to build relationships that lead to long-term loyalty. Some companies have overcome this by adding human interaction at key points in a formerly all-digital customer journey, and others have come up with other strategies like more friendly user experiences to bridge the gap.
Any entrepreneur attempting to establish their product or service in the industry should keep these five challenges in focus as they forge a new path to success.