This article looks at the process of setting up a fintech business in Europe.
Fintech entails the integration of finance and technology. Its application ranges from areas of finance, including saving, lending, borrowing, spending and transferring money. A central theme with fintech is disruption. This means using technology to make finance easier, more inclusive, more relevant, cheaper or perhaps, faster.
Setting up a fintech requires both financial and non-financial investment and it is important that you have thought-through and planned well in advance before deep-diving into the deep end.
Step 1 - Establish your Niche and USP
Don't be a 'me too'. If a certain business model is working for someone else it doesn't necessarily mean that it will also work for you. Once you have established the fintech vertical you wish to operate in have a look at the leading companies within that vertical and try to understand what they are doing really well. For example, you may find that they are simple, easy to use or have rich functionality. Establish your differentiator and double-down on it. Make sure your branding and positioning make your differentiator loud and clear.
Step 2 - Build The Right Team
This is one of your most important decisions in the business and may ultimately determine the ultimate success of your business. Whilst your resources may be restricted or limited at this stage, you should aim to hire a well balanced and experienced team who buy into your vision of your company. A well-balanced team covering key business function, such as, operations, management, compliance, marketing and security is what you should aim for.
Step 3 - Develop Your Tech Stack
You should decide what you will develop inhouse and what you will purchase externally. For example, if you are planning on issuing debit cards you will be required to partner with Visa/Mastercards or a principal member of theirs who will provide you with your branded debit cards. You are likely to require partnering with external vendors for your technology deck and banking services needed to operate your fintech. Choosing the right technology partners is vital. You want to make sure that such partners care about your business and are the right fit over a longer-term.
Step 4 - Obtain The Relevant Regulatory License
Financial services is a heavily regulated area and chances are that you will require a license from the financial regulator. You may wish to seek professional advice on your best route or course of action as you may find that there are a number of options. As a regulated business, you will need to ensure that you operate a compliant business and meet any license conditions and requirements.
Step 5 - Obtain funding
According to a report, fintech is Europe's largest investment category Setting up a fintech business is not cheap and requires investment. You will need to need hard, put some serious effort and persevere for any success in raising capital. Factors such as traction, team, the business proposition will play an important part in your funding endeavours.